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For a discussion of pertinent cases, see chapter VIII of this report, part A, “Constitutional Authority To Provide for the Payment of Compensation in excess of the Just Compensation Requirements of the Fifth Amendment."

The Congress has authorized relocation payments and other assistance for displaced persons in some, but not all Federal and federally assisted programs. There are vast differences in the relocation provisions of the various programs. The scope or amount of the relocation payment or the assistance provided for a displaced person frequently depends more on the program involved than the loss suffered.

A comprehensive program of relocation payments and relocation assistance is provided in the urban renewal and low rent housing programs; a less comprehensive program has been authorized for the new mass transportation program and for the government of the District of Columbia; and advisory services and limited moving expense payments are authorized in the Federal-aid highway program. Among the Federal agencies, relocation payments have been authorized for programs of the defense agencies, the Department of the Interior, except for the National Park Service, and for the National Aeronautics and Space Administration. In at least some respects, the provisions are more comprehensive than are authorized in federally assisted programs. The Tennessee Valley Authority provides relocation assistance, and gives some consideration to moving expenses in the price paid for property acquired without litigation, but makes no direct relocation payments as such. No relocation payments have been authorized in other programs. Differences in administrative application of comparable provisions add to the inconsistencies.

The problem is aggravated in the case of the Federal-aid highway program where moving expenses are authorized only in States which have implemented the Federal law. In all, 22 States make payments to Federal-aid highway displacees, but only 16 States pay all displaced persons without regard to the nature of their interest in real property.

Unless additional legislation is provided, it appears that approximately 21,684 householders and 2,695 business concerns to be displaced by Federal or federally assisted programs in each of the next 8 years will not be eligible for any kind of relocation payment. Also, approximately 800 farm operators to be displaced each year or caused to incur expense in moving personal property will not receive a relocation payment. Most will be Federal-aid highway displacees.

Chapter IX of this report summarizes the Federal and State laws providing for relocation payments or relocation assistance in Federal and federally assisted programs, and shows in several tables the variations among programs. Copies of pertinent legislation are included in appendix B.

Concern for the effects of displacement by Government action is consistent with the policy of the Nation to assure economic and social opportunity for every citizen. Economic costs of displacement should be borne by the public on a uniform basis in all programs conducted by the Federal Government, or with the assist-ance of Federal funds. A broad range of relocation services and other assistance should be provided for all program displacees, consistent with their needs.


The evidence is overwhelming that many displaced persons incur substantial economic losses for which present laws provide no assistance. There is no justification for unequal treatment in public programs; for it makes no difference to a citizen suffering a loss, whether the public action has its origin in a program for an urban renewal project, a road, a reservoir, a Government office complex, a public housing site, or any other purpose.

Displaced persons argue wtih considerable logic, that where individuals suffer substantial, clearly established losses or damages as a direct consequence of a public acquisition program, fundamental fairness requires the public, the beneficiary of the program, to bear these losses or damages just as it bears the expense of real property acquisition, design, physical construction, and other project costs. Otherwise, they are compelled to bear a disproportionate part of the real economic cost of the program.

Present relocation payment provisions, and their administration, particularly in the case of business relocations, are too cumbersome. Current requirements for detailed documentation are costly for the public and for the displaced person. Fixed payment schedules should be provided in all programs, for all residential and most business relocation claims. Simplified procedures would encourage prompt payments and substantial savings in costs of administration, with adequate safeguards for all parties.

Testimony received at public hearings and discussions with many relocation authorities and displaced property owners and tenants demonstrated great concern

the detailed documentation now required to support relocation claims. In programs authorizing payment for property losses, owners of displaced businesses sometimes find it necessary to obtain professional assistance, at their own expense, in order to establish their claims.

Congress has already authorized fixed payments for displaced families or individuals in some programs. However, agency administrative practices do not always give the displacee the option to decide whether to accept the fixed payment or to prove his actual costs.

The optional fixed-payment procedure is analogous to the practice employed successfully by the Internal Revenue Service for many years, in permitting the taxpayer to take his choice of a standard deduction, or to prove his itemized deductible expenses.

Many small business concerns suffer substantial economic injury because of the construction of public improvements, although the property they occupy is outside the project boundaries. At present these businesses are not eligible for low interest, displaced business disaster loans since they are not “physically displaced.” Loan assistance should be provided for such businesses. For example:

1. A highway-oriented business such as a restaurant, service station, etc., may suffer substantial loss of business—temporary or permanent—as a result of Federal-aid highway construction; i.e.:

(a) Access impairment for a year or more during construction;

(6) A business formerly fronting on the main travel lanes of a highway now is on a frontage road, difficult to reach from main road;

(c) Traffic formerly using roadway on which the business fronts now uses a nearby expressway; or

(d) Traffic formerly using a highway running through the center of town now takes a bypass. 2. A business concern located adjacent to an urban renewal project may serve customers, all or most of whom live within the project area. A new shopping center in the project area will serve the community to be developed there.

3. A business concern located adjacent to a reservoir project may serve customers, all or most of whom will be displaced by the project.

The problem was discussed during the subcommittee hearings at Boston earlier this year. SBA's director for Region 1 testified:

With that type of case, I would make strong recommendation to this committee some consideration be given to the man in business who has not had a physical dislocation, as you know, by rerouting or whatever it might be, we cannot do anything for him now.

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I will give you this illustration which I am sure the circumstances will bring to your attention. As you go down to Cape Cod, there is a turkey farm down there. As long as I have been going to Cape Cod this fellow has been there and had developed a nice business. He had a lovely home. Primarily what he does is precook the turkeys so you can pick them up on the way down and thereby make the wife happy and all the rest of us. This is a big business this fellow has built up. The new highway is going to loop him, completely bypassing him, and in my humble opinion it does not require a CPA to make a determination that this fellow has suffered a severe loss of business. I think some. con

sideration should be given to this type of man in business. In response to a request for comments on the practical effects of a change in the law, the Washington headquarters of SBA replied:

* It might be possible from a practical standpoint to assist some businesses and there might be no practical approach whatsoever to assist others. It would depend on the type and amount of help required to reestablish them in a paying venture. For example, those only temporarily hurt due to access impairment for a limited time could be assisted with reasonable expectation of repayment. Others might be in such poor financial condition that no loan of any type or at

any interest rate would be practical or of any real assistance.? SBA also answered the following question :

Q. It has been suggested that if the DBDL program is extended to small businesses not physically displaced, SBA might find it difficult to determine whether there has been “substantial economic injury” in specific cases, and the amount of such injury. As we understand it, however, the

* *

1 See testimony of Thomas Noonan, supra, p. 101. 2 Included with SBA letter dated Apr. 13, 1964.

drought and excessive rainfall disaster program does not in-
volve physical displacement, and these determinations must
be made for every loan under that program. Has SBA had
any major difficulty in making these determinations? Ex-

A. Only in isolated cases has it been difficult to determine
the extent of injury in DDL and ERDL loans. These dis-
asters cover occurrences which have a specific effect on the
farmer and his ability to pay the businesses dependent upon
him. Generally, the results are the effect of only one season's
bad weather and previous years' records can be compared to
see how operations were affected by the disaster. In the
DBDL program, if the business is not displaced it will be
difficult to arrive at how much of its needs come from the
actual project affecting it or how much was caused by the
slow deterioration of the whole area, as in the case of urban
renewal projects. It is our feeling that we should not make
a disaster-type loan to a business which had become profit-
less or close to it as a result of the gradual lessening of pur-
chasing power in the area or the failure of the business to
survive against competition. If, on the other hand, there
was realty owned which had to be upgraded or lost, it would
be fairly easy to determine the amount of injury sustained
in this connection. We believe this would be just as easy to
operate as the present program if upgrading in place was
included. The same criteria for upgrading equipment and
inventory could be used as used for a business actually dis-

placed. The market value standard generally provides a reasonable measure of compensation "for the real property taken,” but subsidiary rules relating to the determination of market value in many jurisdictions are not always clear and sometimes result in inequities.

In some jurisdictions, property owners are penalized for decreases in the market value of their property resulting from preliminary administrative actions or public announcements of a proposed project; in other instances the public is compelled to pay enhanced property values created by the very project for which land is needed.

Property owners are not always compensated for all damages affecting the value of their remaining property that are caused by the project for which a part is taken; and many States restrict or do not permit the public to deduct benefits affecting the market value of a remainder property that are caused by the project for which a part is taken.

In some States the property owner is entitled to be paid the highest price which a property could reasonably be expected to bring if exposed for sale in the open market, unaffected by the project; i.e., he is entitled to be paid the “top of the reasonable range of market value. In other States, and in many Federal acquisitions, the objective is uncertain.

Some jurisdictions permit a public agency to invoke the provisions of a lease between a property owner and his tenant, providing for removal of buildings or structures by the tenant at the expiration of the term, in order to defeat the tenant's right to compensation for the improvements or to limit the tenant's compensation for improvements to their value for removal from the land.

Under Federal law an agency can also achieve this result in a case where most of the term of a lease has expired, or an agreement is terminable in the event of condemnation, or on short notice. The Gov. ernment enters into a separate agreement with the property owner for his interest, and substitutes itself for the landlord. This problem frequently arises in cases where the facts show that in all likelihood the tenancy would have been renewed or would have continued indefinitely but for the Government's action. The Congress has enacted relief legislation in a number of such instances, the most recent example being a private law to compensate certain parties for improvements located on railroad rights-of-way within the Red Rock Reservoir project, Iowa (Private Law 88–322, Approved Sept. 2, 1964).

The subcommittee encountered a different, but somewhat similar problem, during a public hearing

at Pinecrest, Calif., in 1963. Testimony revealed that the Forest Service many years ago, encouraged private citizens to accept special-use permits for the specific purpose of building summer-use cabins. Some permits could be revoked by the Government at will. Others were for fixed terms. Testimony indicated that permittees were encouraged to believe that lease provisions were "technicalities," and that their cabins could be regarded as private homes. As a result, many people made substantial investments in buildings, improvements, and community facilities. The testimony indicated also that permittee-owned cabins have been bought and sold in the market over the years, with little concern for the status of title to the land.

Some of these lands now are required for public use, but there is no way of compensating permittees for their investments or for the costs of moving the buildings to other sites which have been offered. In cases of this kind, it would seem appropriate to provide some authority for Forest Service either to acquire improvements at their depreciated values or to assist in the cost of moving the structures to the new locations.

Another problem area results from the fact that, in a number of States, concern over the lack of authority to pay moving expenses and property losses of displaced business concerns, have led to court decisions holding that trade fixtures, whether or not attached to the real property, have become parts of the real property. Some Federal courts have applied State law in determining the obligation of the Federal Government in these instances, which results in different meanings being given to real property and discourages uniformity in the treatment of property owners in Federal acquisitions.

There are significant differences among Federal agencies and among Federal, State, and local government agencies with respect to policies and procedures for the acquisition of real property. In some instances, there are material differences in the practices of agencies within the same executive department.

The area of most concern to property owners relates to negotiation policies. Some Government agencies try to acquire property at prices below their approved appraisals. Other agencies always offer property owners the amount of their approved appraisals.

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