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Office of Planning, Environment, & Realty (HEP)

National Business Relocation Study

XI. State Supplemental Programs

At least six states have legislated or litigated enhanced benefits for displaced businesses. The logic and practicability of these programs vary but they do indicate that some jurisdictions felt strongly enough to dedicate local funds to the issue of business displacement.

The state of California provides displaced businesses with a payment for "goodwill" that in some aspects expands certain federal reestablishment benefits. The payment is based on certain accounting techniques wherein excess profits attributed to the goodwill of a business are capitalized and paid as a supplemental benefit of displacement. There is no cap on this benefit and payments in excess of $250,000 have been made. The state does credit benefits paid under goodwill against those paid as reestablishment.

In 1989 the state of Delaware expanded the federal $10,000 cap on reestablishment to a state cap of $22,500. The state program has similar eligibility requirements when compared to the federal program. Reportedly, the majority of business owners received a near maximum payment.

The state of Florida offers an interesting payment. It provides for the payment to a business of so called "business damages" but only in those instances where a business is affected by a partial taking of the real estate. The payment in theory compensates for future loss of business and would provide funds should a business elect to move due to a non-displacing partial taking.

The State of Louisiana utilizes a fair market value concept termed "full extent of the owner's loss." This permits payment for certain costs that other states would term "reestablishment" to be included in the appraisal of the subject property. An example of such an item might be higher costs incurred by the business due to loss of "grandfathering" regarding code issues. Recently, Louisiana has agreed to extend the protection of their "full extent of the owner's loss" concept to tenant businesses that incur extraordinary costs in reestablishing a business, provided they have some leasehold interest.

The state of Iowa has entertained plans to raise the reestablishment cap to $15,000 based on an internal study. As of this date, legislative action has not occurred. Iowa also notes that it has frequent eligible claims as high as $50,000 even though it is a largely rural state.

The Commonwealth of Virginia provided for enhanced business relocation benefits by legislation in the year 2000 General Assembly session. The new legislation raised reestablishment benefits to $25,000 and the option for fixed payment (a payment in lieu of all other moving and reestablishment benefits) to $50,000. The state through its Virginia Transportation Research Council felt current federal limits on these payments was inadequate.

The state of Wisconsin was an early pioneer in providing expanded benefits to displaced businesses. They use a dual system distinguishing between owner-businesses (those where the business owner also owns the real estate utilized by the business) and tenant-businesses. An owner-business can receive a payment of up to $50,000. A tenant-business can receive up to $30,000. In addition to these payments a business could also be eligible for the full $10,000 of federal reestablishment. There is potential overlap between the federal and state programs. Wisconsin has enacted operating procedures to avoid double payments.

Updated: 9/5/2014
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