HomeMy WebLinkAbout12.e. Establisment of Criteria for Relocation Payments in Excess of Maximum Permitted by LawMEMO
TO: Port Authority Chairperson Dunn
Commissioners Anderson, Carroll, Edwards, McMenomy, Sinnwell, Wippermann
FROM: John Miller, Economic Development Coordinator
DATE: January 28, 1993
RE: Discussion of Payments in Lieu of Relocation
Conworth Inc. has been working for the Port Authority on the relocation of several businesses located on
T.H. 3. In previous visits with the commissioners, Jackie Wentworth, a partner in that firm, has stated
that the rules and regulations governing the very detailed relocation process are provided by federal law.
In particular, in P.L. 91-646 and subsequently the Federal Register of March 2, 1989 (Volume 54,
Number 40).
There are two sections of the rules that deal specifically with the issue of "payment in lieu of relocation."
1. Section 24.306 (a) provides for a maximum payment of $20,000
2. Section 24.304 (a)(13) states in part "(expenses in excess of regulatory maximums) may be
considered eligible (and) the regulatory limitation for reimbursement of such may be
waived. "
While at first these sections may sound contradictory what they actually mean is that the agency acquiring
property and moving businesses has the discretion to make additional payments when special conditions
aonly. That is in normal conditions of acquisition and relocation then the $20,000 maximum payment in
lieu of relocation applies. In special conditions more than the $20,000 can be paid.
At this point the normal question is "So what's a special condition?" Here's an answer:
-
A special condition is one that meets certain criteria previously
established by the implementing agency.
Let me give an example. Let's say that a big city redevelopment agency is rehabilitating a neighborhood.
The neighborhood includes a diverse population of people including:
• Long-time residents who maintain small shops
• Artists attracted by low rents
• Squatters in deserted buildings
• Business persons thought to be involved in illegal
or nearly legal activities
As a matter of policy, the redevelopment agency may decide that it is in the public interest to make a
larger payment to the long time residents for their small shops to allow them to continue residency
somewhere else in the city. The rationale for this action is that this payment will serve a public purpose
by providing stability to the city's population base.
Likewise the agency might determine that a strong arts community is desirable in the city and wish to
promote an artist's colony. Here larger payments could also be justified for the studies.
Page 2
However, as we are all aware, government must not act in an arbitrary and capricious
manner. It can enact policy to meet goals but it cannot undertake arbitrary actions.
In our hypothetical example then, the redevelopment agency adopts criteria for the payment of money in
sums greater than the maximum limit of $20,000 provided by law. These criteria may identify individuals
and` businesses for the bigger payment as follows:
• Any artist working in the redevelopment area for more than 3 years and renting or owning
more than 200 square feet of floor space as a business studio.
• Any resident who has lived in the redevelopment area more than ten years and operated a
business for more than three of the last ten years.
By adopting these criteria for larger payments, the redevelopment agency is not arbitrary and capricious.
Anyone meeting the criteria is eligible for a bigger payment. Those not meeting the criteria are not
eligible for the bigger payments and most likely not able to win in court as the agency is, afterall,
implementing policy.
Now back to Rosemount. The Port Authority will be acquiring several properties in the next few months
and relocating several businesses. It is to be expected that many of the businesses will choose the
"payment in lieu of relocation," that is, will ask for a cash settlement instead of payment for actual
moving expenses.
Here are two policy questions for the Port Authority. First, are there any special conditions in Rosemount
whereby the public interest is furthered by making larger payments to some groups? Second, does the
authority wish to establish any criteria that would permit payments larger than $20,000 to any relocated
Rosemount businesses based on these conditions? This is the policy issue for you to decide.
On February 9 Ron Wasmund, the appeals officer for the Port Authority, will consider the appeal of A
and G Autobody. One of the findings he will likely make is whether or not the Port Authority has
established any criteria for making relocation payments of more than $20,000. If those criteria have been
established, he will (I would guess) try to determine if they apply to A and G Autobody. I'm guessing
also that if there are no criteria established for the bigger payments, it will be more difficult for Mr.
Wasmund to find on behalf of A and G Autobody.
dw