FEDERAL-AID POLICY GUIDE
October 20, 1992, Transmittal 7

NS 49 CFR 24E

OPI: HRW-11

1. REPLACEMENT HOUSING PAYMENT (RHP) COMPUTATIONS OF PARTIAL ACQUISITIONS: UNECONOMIC REMNANT VS. A REMAINING BUILDABLE LOT (49 CFR 24.403(a)(3)). The requirements for computing a replacement housing payment of a partial acquisition with a remaining uneconomic remnant differs from a partial acquisition with a remaining buildable lot.

   1. Uneconomic remnant - Section 301(9) of the Uniform Act requires the agency to offer to acquire the uneconomic remnant. The value of the remnant cannot be used in the RHP computation if the owner does not elect to sell it to the agency. However, if the owner does elect to sell the uneconomic remnant to the agency, its value may be included.

   2. Remaining buildable lot - 49 CFR 24.403(a)(3) of the governmentwide single rule is permissive on a uniform statewide basis regarding the offer to purchase this type of remainder. If an agency offers to purchase the remaining buildable lot, its value may be included in the computation regardless of the owner's acceptance or rejection. However, if the agency does not offer to purchase, the value of the remainder may not be used in the computation.

2. RELOCATION ASSISTANCE - INCIDENTAL EXPENSES AND MORTGAGE FINANCING (49 CFR 24.401(b)(3) AND 24.401(e)). Where there is no mortgage on the acquired dwelling, the costs incurred in connection with securing mortgage financing on the replacement dwelling should not be considered as an eligible incidental expense. When a displaced 180-day owner occupant purchases a replacement dwelling, the incidental expenses to be paid under 49 CFR 401(b)(3) shall be those costs necessary and reasonable which are actually incurred by the displaced person incident to the purchase of a replacementdwelling. Costs incurred in connection with securing mortgage financing in cases where there is no mortgage on the acquired property are not considered necessary to enable the displacee to relocate to a comparable housing. Also, any additional costs in securing a larger mortgage on the replacement dwelling than would be required on a comparabledwelling would not be considered a necessary expense. However, if the displacing agency determines that the displacee needs to obtain a loan in order to relocate, e.g., in the case of an owner-occupant with a partial interest who must obtain a loan to purchase a replacement property, the cost of obtaining the loan could be considered "necessary", and would be an eligible incidental expense.

3. REIMBURSEMENT OF "SWEAT EQUITY" IN NEW CONSTRUCTION (49 CFR 24.401(c)(1) AND 49 CFR 24.403(c)(4) AND (c)(5)). The value of the displacee's labor can be considered part of the actual cost of construction when he/she builds his/her own replacement dwelling. This could also include time and expenses involved in supervising the construction in cases where the displacee acts as his/her own general contractor. The expenses must be actual and reasonable, however, and the profit factor should be deducted since this is not an incurred expense.

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