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Recommendation 3. The market value standard (title I, sec. 102)
It is recommended that the market value standard be retained as the basic measure of compensation "for the real property taken" by Federal agencies, but that the Congress provide a definition of the standard which will assure
(a) That the compensation required for property shall be the highest price which the property could reasonably be expected to bring if exposed for sale in the open market for a reasonable
time, unaffected by the project *** Comment.-In California and several other States, the market value standard has been defined as entitling a property owner to payment of the highest reasonable price, i.e., the top of the reasonable range of market value. In other States, and under the Federal law, the objective is uncertain.
There is no single magic figure which constitutes “the” market value of a property, and ordinarily a parcel of real estate can be expected to sell at any one of several prices within a reasonable range of one another. Obviously, no rule can refine the market value standard to scientific precision. However, this is no reason for failing to try to clarify the standard so that all who use it will have the same objective.
Since public takings generally involve an unwilling seller, it is reasonable to require that the property owner have the benefit of any doubt, and the Government's objective should be to pay the “top of the range of reasonable value.
This recommendation would adopt the highest reasonable price as the Federal market value standard.
(b) That any decrease in the value of property caused by administrative actions or public announcements of a proposed public project, other than that due to physical deterioration within the reasonable control of the owner, will be disregarded in determin
ing the compensation for the taking. Comment. As discussed at chapter VII, part F-2, the Federal law is not clear on whether decreases in market value caused by preliminary administrative actions or public announcements of a proposed public improvement are to be disregarded in determining compensation for property taken for public use.
The property owner should not be penalized for decreases in value of this kind, and this recommendation would make it clear that they are to be disregarded.
(c) That in partial takings, the Government will pay only the difference between the value of the entire property immediately before the taking and the value of the remaining property immediately after the taking, considering all benefits and all damages that affect the value of the remaining property which are
caused by the project for which the part is taken. Comment. This provision would provide parallel rules for the treatment of damages and benefits in Federal land takings, and would permit the full use of the "before and after" process in determining compensation. It would eliminate a restriction in the present rule of severance damages which sometimes results in inequities to property owners; and would make it clear that all damages and all benefits affecting the value of remaining property, that are caused by the project for which a part is taken, are to be considered in determining compensation.
The legal issues are discussed at chapter VII, parts G, H, and I. Recommendation 4. Requisition of buildings and structures (title
I, sec. 103(a)) It is recommended that legislation be enacted to require that any Federal agency which takes land or an interest in land for public use shall be required to take a similar interest in any building, structure, or other improvement which is a part of the real property, if it must be removed or will be damaged because of the project for which the land is taken.
Comment.—This recommendation would require the Government to acquire tenant-owned permanent buildings or structures located on railroad rights-of-way or other private property. This recommendation together with recommendation 5 would eliminate the railroad lessee problem. The legal issues are discussed at chapter VII, part J2. Recommendation 5. Tenant-owned buildings and fixtures (title I,
sec. 103(c)) It is recommended that legislation be enacted to provide (1) that a Federal agency which takes real property shall not invoke the provisions of an 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 the amount which such buildings, structures, or other improvements contribute to the market value of the real property, or its removal value, whichever is the greater.
Comment.--This recommendation would provide for equal treatment of property owners and tenants with respect to buildings and structures on the land taken. The Government would be required to pay for property as if in a single ownership, and the contributory value of the tenant's improvements would be paid to the tenant. The legal issues are discussed at chapter VII, part J2. Recommendation 6. Uniform Federal standard for determining
the fixture problem in Federal takings (title I, sec. 103(b)) It is recommended that legislation be enacted to provide a uniform standard for determining, for the purpose of land takings by Federal agencies, whether a structure or other improvement is a part of the real property.
Comment.--As discussed at Chapter VII, J3, there are conflicting Federal court decisions on the question whether a structure or other improvement is a part of the real property. This recommendation would provide an objective Federal standard for application in all Federal takings.
Under this standard, consideration would be given to the economic effect of a taking on the property owner and his tenants. If the article is capable of use elsewhere and does not lose substantially all its value, the property owner will be protected by the moving expense payment recommended elsewhere. On the other hand, if an article is so designed, constructed, or specially adapted to the purpose for which the real property is used that (1) it is an essential accessory or part of the real property, (2) it is not capable of use elsewhere, and (3) it would lose substantially all its value if removed from the real property, it would be unfair for the property owner in a Federal taking to bear this loss because of limitations of State law.
The United States would not be required, however, to pay for articles termed “trade fixtures" under the broad rules of a few States, where the articles are readily removable and may be used elsewhere without losing their value. Recommendation 7. The “Mayme Riley" problem (title I, sec. 104)
It is recommended that further study be made of the extent of the Mayme Riley problem discussed in the summary and findings, and at chapter VII, part L, in order to determine whether the head of a Government agency should be authorized to buy or condemn any note or other evidence of debt secured by the real property taken for public use, for its fair value, where such action would present hardship to the property owner and possible windfalls to second and third trust note holders. Recommendation 8. Reimbursement of expenses incidental to
transfer of title to the United States (title 1, sec. 105) It is recommended that legislation be enacted to authorize heads of Federal agencies to reimburse property owners for incidental expenses necessarily incurred in transferring title to real property to the United States including (1) recording fees, transfer taxes, and similar expenses; (2) penalty costs for prepayment of a mortgage incident to the real property; and (3) the pro rata portion of the real property taxes allocable to a period subsequent to the transfer.
Comments.-It is unreasonable to take private property for public use and require the owner, who frequently is unwilling to sell, to incur expense in order to transfer title to the property to the United States. This recommendation would authorize heads of Federal agencies to reimburse property owners for reasonable and necessary expenses of this kind. See also comment in connection with recommendation 20. Recommendation 9. Limited reimbursement for litigation ex
penses (title I, sec. 106) It is recommended that legislation be enacted to authorize the reimbursement of property owners for reasonable expenses of litigation, including legal, appraisal and engineering fees, actually incurred because of the taking of property by Federal agencies, where (1) the court determines that a condemnation was unauthorized, (2) the Government abandons a condemnation, or (3) a property owner brings an action in the nature of inverse condemnation and obtains an award of compensation (Tucker Act).
Comment.- Ordinarily the Government should not be required to pay expenses incurred by property owners in connection with condemnation proceedings. The invitation to increased litigation is evident. Earlier recommendations relative to (1) full fair value negotiation policies and (2) payment of the highest reasonable price, are believed to be more appropriate actions for safeguarding the interests of property owners and the public.
In the three types of cases covered by this recommendation, however, the property owner has no alternative but to incur litigation expenses. In cases of this kind, the Government has not made every possible effort to protect the property owner's interests, and he should not be expected to absorb costs forced on him by Government actions. Recommendation 10. Uniform policy on relocation payments and
provision of relocation assistance in Federal and federally
assisted programs (title I, secs. 107, 108, 110–115) It is recommended that legislation be enacted
(a) To require that relocation payments be provided for all displaced persons on a uniform basis in all programs conducted by the Federal Government, or with the assistance of Federal funds (other than loans or contracts of guarantee), and that relocation assistance be provided for all program displacoes consist
ent with their needs. Comments. This recommendation would implement the conclusions described in part A of this chapter.
(b) To provide four types of relocation payments
(1) Reimbursement for actual expenses. This payment would permit any person displaced or caused to move personal property to be reimbursed, upon proper application, for his actual and reasonable expenses in moving himself, his family, business, farm operation, or other personal property and, in the case of a farm operation, for his actual and reasonable expenses in searching for a replacement farm. If a displaced person disposes of personal property on moving his business or farm operation and replaces it at the new location, he would be paid an amount equal to the reasonable expense that would have been required in moving the property to the new location. In order to provide for uniformity in the implementation of this provision, the President would be authorized to prescribe uniform regulations. The President would also be authorized, but not required to establish, by regulation, a limitation on the amount of a payment.
Comment. This recommendation would permit a displaced person or any other person caused to move personal property to be reimbursed for actual and reasonable moving expenses in accordance with regulations of the President. No fixed maximum payment would be provided; however, the President would be authorized, but not required, to establish a limitation if he found it to be necessary or appropriate.
În addition to moving expenses, the farm operator would be permitted to prove his actual and reasonable costs in search of a replacement property. This continues the practice established in the Federal agency “resettlement” legislation and recognizes the fact that displaced farm operators frequently are required to move considerable distances.
Also, where a displaced person disposes of personal property at the project location and replaces it at the replacement site, he would be authorized to claim an amount equal to the reasonable costs that would have been required to move the property to the new location. This practice is authorized under administrative regulations of the Federal
agencies, which presently make "resettlement payments.” In other programs, the property owner must move his property to the new location or else forego the payment. This proposed payment provision would extend the Federal agency practice to all programs.
(2) Business concerns. A displaced person who moves or discontinues his business would have the option of accepting a fixed payment in lieu of reimbursement for actual expenses, equal to the average annual net earnings of the business, or $5,000, whichever is the lesser, if (1) the head of the agency authorized to make relocation payments is satisfied that the business cannot be relocated without a substantial loss of its existing patronage, and (2) the business is not a part of a commercial operation having at least one other establishment not being displaced, which is engaged in a similar business. “Average annual net earnings” would be defined as “one-half of any net earnings of the business, before Federal, State, or local income taxes, during the 2 taxable years immediately preceding the taxable year in which the business moves, including any compensation paid by the business to the owner, his spouse, or his dependent children during the 2-year period.” Earnings should be established by pertinent income tax returns.
Comment: -This fixed payment provision for displaced business proprietorships that cannot be relocated without a substantial loss of existing patronage recognizes the economic impact of displacement on the proprietor who must
(1) Establish a business at a different location;
(3) Discontinue business operations, and frequently lose his livelihood. This fixed payment could be made to a displaced business concern within a week from the time of a move, with a minimum of red tape and administrative expense.
(3) Residential occupants. A displaced person who moves from a dwelling would have the option of accepting a fixed payment in lieu of reimbursement for actual expenses, to include
A. A moving expense allowance, determined according to a schedule established by the head of the agency authorized to make the payment, not to exceed $200;
B. A disclocation allowance equal to the moving expense allowance in A or $100, whichever is the lesser; and
C. An additional payment of $300, if the displaced person owns the fee title or a life estate in the real property occupied. Comment.—These fixed payment provisions for displaced residential occupants provide a moving expense payment, determined in accordance with a schedule established by the agency responsible for the payment, in the same manner now authorized in federally assisted programs. A dislocation allowance of $100 or an amount equal to the moving expense payment, whichever is the lesser, is intended to reimburse the displacee for loss of property and out-of-pocket costs without the documentation required by the urban renewal “loss of property” provision.