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Businesses displaced were largely in urban areas. Since urban renewal, Federal-aid highways and public housing alone account for 97 percent of the business displacement, an evaluation of their displacements will be sufficient to show that business displacements are located largely in urban areas. Of course, all 7,180 businesses displaced per year by urban renewal projects were located in urban areas. Approximately 2,463 of the 3,199 businesses displaced per year by Federal-aid highways were located in urban areas. This is 77 percent of the businesses displaced under that program. All of the businesses displaced by low-rent housing projects were located in urban areas. Adding the three programs together, we find that 93 percent of their displacements were in urban areas, and 7 percent were in rural areas. The number and percentage breakdown of unrounded data for urban and rural areas is shown below:
It is unlikely that this 93 percent for urban displacements would be materially changed if the rural-urban breakdown were added for the remaining 285 business displacements per year caused by the other programs.
Slightly more than one-half of the displaced business establishments were occupied by tenants. Of the 10,900 businesses displaced per year, 5,590 were occupied by nonowners, or approximately 51 percent. The remaining 5,310, or 49 percent, were occupied by owners. The breakdown of owner and nonowner occupied businesses displaced by the two groups of programs is shown below:
As in the case of dwellings, the large number and the large proportion of displaced businesses that are occupied by tenants is important because relatively few tenants generally would share in compensation payments made for real property they occupied.
Many of the occupants displaced from business establishments did not receive moving cost or other resettlement expense payments. This fact is based on an evaluation of displacements from business establishments and the number of moving cost payments made to displacees for the same time period. As in the case of data for displacements from dwellings, agencies were asked to indicate whether the payments they reported would give a representative picture of the proportion of displacees paid for moving costs or other relocation expenses.
Most agencies showed that the relationship between displacements and actual moving cost payments reported was representative. In Federal-aid highways, some modification was necessary.
There were 10,900 displacements per year from business establishments under direct Federal and federally assisted programs. Moving cost payments per year for the same time period amounted to 6,040, or roughly 55 percent of the total displaced. Adjustments to make the data more representative indicate that at most, some 61 percent received moving expense payments, while 39 percent did not. The proportion of displaced occupants paid under the programs causing most of the displacements are listed below. Unrounded data are used in the table.
1 No adjustment required.
. Because provision for moving cost payments in the Federal-aid highway program was first authorized in 1962, it is not possible to provide a truly typical or normal percentage of displacees paid. The data here are comprised of actual payments per year (346) plus instances in which business displacees still had time to file applications for payment (605) also on a per year basis.
• An adjusted total of approximately 6,645 would result, giving an adjusted percent of 61.
Because of the emerging programs for paying those displaced from business establishments by Federal-aid highways, data on moving cost payments in the past do not fully reflect the proportion of displacees who would be covered in the future. A review of current programs and expected future displacements shows that approximately 2,300, or 59 percent, of the 3,875 operators to be displaced from business establishments per year by Federal-aid highways will not be covered by State programs paying moving costs. The remaining 1,575, or 41 percent, will be covered. A breakdown of the approximate number and percentage of future business displacements covered by moving cost payment programs is given in the table below.
Availability of relocation payment programs-Operators of businesses to be
displaced by Federal-aid highways per year
For all programs, approximately 2,695 operators of business establishments displaced per year will not be covered under moving cost payment programs. Most of these will be displacees in Federal-aid highway projects. A sizable number also will be displacees caused by General Services Administration acquisitions. Other programs will account for some of the displacees not covered by moving cost payment programs. Expected displacements per year are shown below, with a breakdown of future displacements covered by current moving cost payment programs. Availability of relocation payment programs-Operators to be displaced per year
from business establishments in the future under all programs
Approximately 35 percent of the businesses displaced from urban renewal projects discontinued operations and approximately 23 percent of the businesses displaced by Federal-aid highways discontinued operations. The data underlying these facts are presented below.
A survey of 50 local public authorities for urban renewal was made by the Urban Renewal Administration to provide a representative national picture of the relocation of displaced businesses in 1963. It disclosed several facts. Some 43.2 percent of the operators owned the property they occupied in the project area and 56.8 percent did not. Of all displaced businesses, 64.7 percent reestablished operations while 35.3 percent discontinued' operations. There appeared to be little difference in the rate of discontinuance for owner-operated and nonowner-operated businesses displaced. Of those operators that reestab
lished, 42.5 percent owned the property they occupied in the project and 57.5 did not. Of the operators that discontinued operations, 44.5 percent owned the property they occupied in the project area and 55.5 percent did not.
Of course, the proportion of displaced businesses that discontinue differs from one urban renewal project to the next. For example, a study of 211 businesses displaced from the Southwest urban renewal area C and C-1 in Washington, D.C., disclosed that approximately 40 percent of the businesses discontinued upon being displaced. For additional information on this study of business displacement, seo appendix F.
Complete data on relocation and discontinuance were provided by the Bureau of Public Roads for 2,726 of the businesses displaced by Federal-aid highways during the period October 23, 1962, through March 31, 1964. Data were obtained from all but four States. Results for the 2,726 businesses are as follows:
Approximately 77 percent of the displaced businesses reestablished, while approximately 23 percent discontinued. There was little difference in the rate of discontinuance for owner-operated and nonowner-operated businesses, the rate being approximately 23 percent for each.
From the sample data and other data on business displacement and discontinuance given to the subcommittee, it was possible to compute a discontinuance rate for businesses displaced per year in the recent past under each of the major Federal and federally assisted programs. It was possible also to use these rates in determining the likely number of displaced businesses that discontinued under all programs.
Approximately 31 percent of the businesses displaced in the recent past discontinued. This amounts to approximately 3,387 of the 10,900 businesses displaced per year by all programs. Both the discontínuance rates and the number of discontinued businesses are shown below:
Business displacement and discontinuance
Displace- Rate at which Discontinued ment per
displaced businesses year in past businesses per year
35.3 22.7 26. 3 21.5 26.5 16.3
1 2.535 1 726
62 29 27 8
i Computed from total displacement and percentage of discontinued businesses.
Proprietorships, most of which are small and have a small income, are harder hit by displacement than are corporations, based on the study of 211 businesses displaced from the Southwest urban renewal area C and C-1, Washington, D.C. It showed that 60 percent of the proprietorships and approximately 45 percent of the corporations had increased earnings during the year of displacement compared to previous years. For those businesses experiencing decreases, proprietorships had decreases well in excess of $1,000, with many being greater than $3,000, while most corporations had decreases in excess of $5,000. Although proprietorships typically had smaller dollar decreases, the decreases constituted a greater impact on their previously small earnings and frequently resulted in earnings during the year of displacement well below $3,000.
A comparison was made of earnings before and after the year of displacement for those businesses that were able to relocate. Slightly more than half of the proprietorships that reestablished elsewhere had average earnings after displacement that exceeded their earnings before displacement. However, of those proprietorships that did reestablish, just under one-half had lower average earnings after displacement than before displacement. By contrast, only one-fourth of the corporations that reestablished showed decreased earnings in the years after displacement as compared to the years before displacement. Three-fourths showed increased earnings.
An evaluation of earnings by proprietors who discontinued their businesses upon being displaced showed only about one-half were able to maintain or increase the level of earnings they experienced before displacement. Limited data on corporations that discontinued showed decreased earnings by them in the year of displacement.
An evaluation was made of earnings received by businesses to determine the proportion that experienced a reduction or an increase in earnings since the preacquisition period. The average of preacquisition earnings for each business was compared with the average of earnings for the business during the year of displacement and years after displacement.
Proprietorships did not fare as well as corporations. One-half of the proprietorships showed increased earnings since the preacquisition period, and one-half showed decreased earnings since the preacquisition period. Decreases were common in the group of proprietors that rented real property and in the group that owned the real property they occupied—being slightly greater in the former. Decreases were common also in the group of proprietors that relocated their businesses and in the group that discontinued their businesses. By contrast 79 percent of the corporations that relocated after displacement and for which information was available had increased earnings since the preacquisition period.
The inescapable conclusion is that the small businesses, usually proprietorships, are least able to withstand displacement. If they reestablish, they are the ones that most often experience loss of earnings in their new location. Also, proprietorships are the most likely to be required to discontinue, and their owners are the most likely to experience loss in earnings during and after displacement. However, corporations and partnerships also may be required to terminate operations and experience decreases in earnings.