Note that there are caveats. The displacee would need to make a
reasonable effort to sell the items in question unless the agency
allows otherwise. The URA states:
To be eligible for payment, the claimant must make a good
faith effort to sell the personal property, unless the Agency
determines that such effort is not necessary. [ 24.301(g)( 14)(i)]
This rule may be applied to any items of personal property, including
goods held for sale. However, the value of such goods is established
strictly based on their cost to the business. The URA states:
When payment for property loss is claimed for goods held
for sale, the fair market value shall be based on the cost of
the goods to the business, not the potential selling prices.
[ 24.301(g)( 14)(i)]
To apply this rule correctly to scenarios involving business
equipment intended to be abandoned, the displacing agency will
typically hire an appraiser specializing in valuation of machinery
and equipment to determine the fair market value in place. In
certain situations, such value can be determined by a qualified agent.
Generally, the value in place reflects the purchase price plus delivery
and installation costs, less depreciation. It is best to use the services
of a qualified appraiser for determining the value, which also
provides other advantages. The agency must carefully determine the
cost of moving the item “as-is.” This is a critical requirement.
The rule is explained in the Appendix of the URA as follows:
If the piece of equipment is operational at the acquired site,
the estimated cost to reconnect the equipment shall be based
on the cost to install the equipment as it currently exists,
and shall not include the cost of code-required betterments
or upgrades that may apply at the replacement site. As
prescribed in the regulation, the allowable in-place value
estimate (§ 24.301(g)( 14)(i)) and moving cost estimate
(§ 24.301(g)( 14)(ii)) must reflect only the “as is” condition and
installation of the item at the displacement site. The in-place
value estimate may not include costs that reflect code or other
requirements that were not in effect at the displacement site;
or include installation costs for machinery or equipment
that is not operable or not installed at the displacement site.
[Appendix to 24.301 (g)( 14)(i) and (ii)]
In determining the estimated moving cost, the displacing
agency should include all applicable costs: disconnecting,
removing, packing, loading, transportation (based on the
maximum of 50 miles, unless a closer site has already been
purchased or leased), unloading, reinstalling, reconnecting,
reassembly, including modifications to the personalty.
However, note the “as is” clause, which means the allowable
moving cost estimate may only include such reconnect
costs that would be necessary to install the item as it
is installed at the displacement site. The conditions at
the replacement site are irrelevant for the purposes of
this calculation. Also, moving costs may not include any
reconnect costs for equipment that is not operable (or items
not connected or installed) at the displacement site. There is
no allowance for storage costs.
One effective way to estimate the moving cost required by
this rule is to request a commercial mover to provide two
bids or estimates, one for all the personal property listed on
the business’s inventory and one for all the personal property
excluding the items that will not be moved. The difference
between the two serves as reasonable basis for item (ii)
mentioned earlier—the estimated cost of moving the item.
Implementing these rules requires appropriate coordination,
especially if outside consultants and contractors are involved.
To ensure compliance with your federal funding source,
your file should be thoroughly documented with supporting
documentation and file notes, showing all the factors relevant
to the benefit calculation. This includes the supporting
documentation of the effort to sell and the outcome of the
effort, and advertisements, offers to sell, bill of sale and other
backup. The documentation should clearly identify the items
offered for sale and/or sold, the price and terms of the sale
and delivery. In the case of equipment or machinery, the
supporting documentation should also include such specifics
as year, make/model, serial number, condition, terms of sale
and a photo of the item.
Key Calculation: The proceeds from the sale of the item,
if any, are deducted from its fair market value in place,
resulting in net value of the item for comparison with the
estimated cost of moving the item, in order to determine the
lower of the two.
When planning the move, the business must
decide whether certain items of personal
property are worth moving to
the new location.