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The additional payment of $300, which is provided only for the homeowner, recognizes to some degree the closing costs and financing charges required for the purchase of a replacement home.
This fixed payment could be made almost immediately after a move with a minimum of redtape and administrative expense.
(4) Farm operations. A displaced farm operator would have the option of accepting a fixed payment of $1,000, in lieu of reimbursement for actual expenses, if the head of the agency authorized to make the payment is satisfied that the taking destroys the economic unit.
Comment. This fixed payment provision permits a displaced farm operator to claim a lump sum payment of $1,000, in lieu of actual moving expenses and costs in search of a replacement farm. The average payment for these costs in Army Engineer acquisitions, for example, has been $475. The fixed payment includes a moderate allowance for loss of property and related costs in securing a replacement farm or adjusting to a nonagricultural activity.
The farm operator caused to move from his home by the taking of the farm would also have the right to claim his actual moving expenses or a fixed residential payment, as discussed in the previous recommendation.
This provision is primarily to assist the small farm operator. The large farm or ranch operator who incurs substantial moving expenses and costs in search of replacement property ordinarily will prefer to claim reimbursement for actual expenses, as provided in an earlier recommendation.
(c) To provide that no State or local government agency need make a relocation payment greater than $10,000, in order to comply with Federal requirements for making relocation payments. Comment.--This recommendation simply fixes the maximum amount of a relocation payment that may be required of a State or local government agency as a condition of Federal aid. It does not prevent a State or local government agency from making larger payments in accordance with the recommended Federal standard if it chooses to do so.
In this regard, data supplied by the Urban Renewal Administration indicates, that of some 5,560 relocation payments to displaced business concerns in 1963, only 199, or 3.6 percent of the total, exceeded $10,000.
(d) Relocation assistance programs. To provide that relocation assistance programs will include such measures and services as may be necessary in order
(1) To determine the needs of displaced families, individuals, business concerns, and farm operations for relocation assistance;
To assist displaced homeowners and tenants in securing decent, safe, and sanitary housing, at prices within their financial means and in areas reasonably accessible to their places of employment;
(3) To assist owners of displaced businesses and displaced farm operators in obtaining and becoming established in suitable business locations, or replacement farms;
(4) To supply information concerning the FHA home acquisition program under section 221(d) (2) of the National Housing Act, the small business disaster loan program under section 7(b) (3) of the Small Business Act, and other programs offering assistance to displaced persons;
(5) To assist displaced families or individuals in adjusting to relocation; and
(6) To assure, to the greatest extent practicable, the coordination of relocation activities with other project activities, and other planned or proposed governmental actions in the community or nearby areas which may affect the carry
ing out of the relocation program. Comment.—This recommendation would implement the conclusions in part A of this chapter. It is not intended to affect other provisions of Federal law which require local government agencies to assure the availability of standard housing for displaced persons. See chapter IX, and note particularly table 3.
(e) To authorize relocation services for such persons occupying property adjacent to land taken for a Federal or federally assisted program, as in the opinion of the head of the agency authorized to provide relocation services, suffer substantial
economic injury because of the program. Comment.—This would authorize the provision of relocation services for highway-oriented and other business concerns which are not physically displaced, but frequently incur substantial economic injury because of Federal or federally assisted programs. See also comment on recommendation 14.
(f) To provide that agencies may make relocation payments and provide relocation assistance by utilizing the services of other public agencies having established organizations for conducting
relocation assistance programs. Comment. The purpose of this recommendation is to prevent unnecessary expense and duplication of functions, and to promote uniform and effective administration of relocation assistance programs.
(g) Federal share of cost. To provide that the United States will pay the first $10,000 of the cost of a relocation payment described in recommendation 10(b), in connection with a Federal-aid highway, urban renewal, low-rent housing, or mass transportation project; that Federal funds will otherwise contribute to the costs of relocation payments described in 10(b), and of relocation assistance programs described in 10(d), in the same manner and to the same extent as other project costs, but the Federal Government will not contribute more than one-half of
that part of any relocation payment which exceeds $25,000. Comment.--As stated in part A of this chapter, under present Federal and State laws, close to 25,000 householders and 2,900 business concerns to be displaced in each of the next 8 years will not be eligible for any kind of relocation payment. Most of these will be Federalaid highway displacees. Many other highway displacees will receive limited moving expenses in contrast to the far more comprehensive payments authorized in other programs. Business concerns that discontinue ordinarily will receive no relocation payment.
It is also important to recognize that of the principal Federal and federally assisted programs that cause displacement, the Federal-aid highway program is the only program in which the Congress has not authorized the use of Federal funds to pay the full cost of such payments.
This recommendation would provide that Federal funds will pay the full cost of the first $10,000 of any relocation payment on account of a federally aided urban renewal, highway, low-rent housing, or mass transportation project. Federal funds would otherwise contribute to the cost of relocation payments like other project costs, except that the Federal Government will not contribute more than one-half of that part of any relocation payment which exceed $25,000.
Based on data supplied by the Urban Renewal Administration, the $10,000 payment will cover the full cost of relocation payments recommended by this subcommittee in almost all cases. This is the maximum relocation payment which may be approved in the urban renewal program without submission to the Washington headquarters for approval. It is considered appropriate that State and local government agencies contribute to the cost of payments above $10,000; and that they contribute at least one-half the cost of any payment in excess of $25,000.
(h) To provide that the effective date of the requirement for making relocation payments be deferred to January 1, 1967, for any program in which the United States does not pay the full
cost of the first $10,000 of a relocation payment described in 10(b). Comment.—This recommendation gives recognition to the fact that some State and local government agencies cannot legally make relocation payments at this time, and provides time for such agencies to obtain appropriate legislation. Recommendation 11. Federal programs with local cooperation
(title I, sec. 109) It is recommended that lands acquired by local interests for Federal public improvement programs should, for the purpose of making relocation payments and providing relocation services, be regarded as acquisitions by the Federal Government.
Comment.—Data supplied by the Federal agencies disclose that only a very few displacements occur in projects in which local interests provide the necessary lands for the Federal Government.
A statement provided for the subcommittee hearing at Providence, R.I., by Representative St Germain disclosed, however, a recent instance in which some 30 families were displaced from lands acquired by local interest for a Federal flood control project in Woonsocket, R.I. Because the city was to purchase the lands, the U.S. Army Engineers considered that it could not make resettlement payments. If the Army had acquired the land for the same purpose, these persons would have been eligible for resettlement payments.
This recommendation provides that land acquisition by local interests for Federal projects will be regarded as Federal acquisitions for the purpose of making relocation payments and relocation services.
Recommendation 12. Agreements by State and local government
agencies concerning land acquisition practices and proce
dures (title I, secs. 112-119) It is recommended that agreements with State and local government agencies conducting public programs with the assistance of Federal funds be required to provide
(a) that the construction or development of the public improvement will be so scheduled that, to the greatest extent practicable, no person will be required to move from his home, farm, or business location without at least 180 days written notice of
the date by which the move will be required. Comment.-See comment on recommendation 2.
(b) That it will be the policy of the head of the agency, before initiating negotiations for real property, to establish a price which he believes to be a fair and reasonable consideration therefor, such price not to be less than the appraised value of the property as approved by such agency head, and to make a prompt offer to
acquire the property for the full amount so established. Comment. See comment on recommendation 2.
(c) That no owner will be required to surrender possession of real property before the head of the agency (1) pays the agreed purchase price, (2) makes available to the owner, by court deposit or otherwise, an amount not less than the appraised value of the property as approved by the agency head, without prejudice to the right of the owner to contest the amount of compensation for the property, or (3) deposits or pays the final award of compensation in the condemnation proceedings for the
property. Comment.See comment on recommendation 2.
(d) That any decrease in the market value of property caused by administrative actions or announcements of a proposed public improvement, other than that due to physical deterioration within the reasonable control of the owner, will be disregarded in deter
mining the compensation for the taking. Comment. See comment on recommendation 3(b).
(e) That the agency (1) will not invoke any agreement between the owner and a tenant providing for the removal of buildings, structures, or other improvements by the tenant at the expiration of the term, for the purpose of defeating the tenant's right to be compensated therefor, and (2) that the tenant will be entitled to compensation in an amount not less than the value which any such buildings, structures, or other improvements, contribute to the market value of the real property, or their removal
value, whichever is the greater. Comment.--See comment on recommendation 5.
(f) That provisions (a) and (b) of this recommendation be included in agency agreements as soon as possible; and that provisions (c), (d), and (e) of this recommendation by required in
agency agreements effective January 1, 1967. Comment.—This recommendation gives recognition to the fact that some State and local government agencies cannot legally or practicably comply with recommendations (c), (d), or (e) at this time, and provides time for such agencies to obtain appropriate legislation.
Recommendation 13. Internal Revenue Code Amendments (title
II) It is recommended that legislation be enacted to amend the Internal Revenue Code
(a) To provide that an owner of property taken for public use may defer any recognition of the gain on the transfer, if he re invests the compensation received for the property in (1) any real property, (2) any property used in trade or business (as defined in sec. 1231 (b) (i) but without regard to any holding period),
or (3) any property to be held by the taxpayer for investment. Comment.-At present, the owner of land taken for public use can defer any recognition of gain on the compensation he receives by reinvesting in property of a like kind within a specified period. In general, this permits the owner to reinvest in any real property.
In some instances, particularly in large reservoir takings, comparable replacement property is not available in the general vicinity, and landowners must move considerable distances in order to reinvest. Some owners would prefer to remain in their home areas and to go into business. Frequently, the owner has reached the age where he does not believe it physically possible to start a new farming or ranching life, and would
prefer to retire to the city. The Congress has already recognized the equity of permitting the deferment of gain on the transfer, if the owner purchases replacement real estate. Where real estate is not the most practical means of reinvestment of the funds received for the property taken, it seems only reasonable to permit the owner to reinvest in a business or to buy securities. This recommendation would permit him to do so.
(b) To provide that if only a part of a property is taken for public use, the owner may show that a part of the compensation received for the property is attributable to damage to the remaining property, by (s) evidence of a contract or a condemnation judgment in which the amount of damages to the remaining property is separately stated, (2) evidence of an affidavit of the acquiring agency stating the amount allocable to damage to the remaining property, or (3) other evidence, including an appraisal
of damages to the remaining property. Comment.—This amendment would clarify for owners of property taken for public use, for Federal, State, and local government agencies, and others, the right of a taxpayer to prove that a portion of the compensation he receives for his property is allocable to damages to the remaining property.
In the past, the Internal Revenue Service has frequently taken the position that unless a purchase contract or a condemnation judgment provides expressly that a portion of the compensation is allocable to damages to the remaining property, the entire compensation will be regarded as payment for the part taken, for the purpose of the capital gains tax. There are conflicting court decisions on the point, and at least one recent decision of the U.S. Tax Court has held that the fact of damages could be proved by other means (L. A. Beeghley, 36 T.C. 154 (1961)).
In recent years, the Internal Revenue Service has relaxed its requirements to some degree; however, publications of the Service continue to leave the matter in some doubt. This recommendation, in