[Anon-1]

Back to selling a business, this conversation just moved from the topic of “occupancy for the purpose of obtaining assistance of the Uniform Act” found in 24.2(a)(9)(C).

It seems that if a business is for sale and it’s facing relocation, it must sell before the property is acquired by the public agency, or after it relocates, based on the following regulation describing non-eligible people.

24.2(a)(9)(B) “A person who initially enters into occupancy of the property after the date of its acquisition for the project.”

Is that how this works? Hunter?

Code: 24.2(a)(9)(ii)(B)

Discussion

[Martyn]

The sale of a business before, during, or after the displacing public agency gains possession of the real property is a common occurrence. I’ve seen several of these types of matters which included a dental clinic, auto repair, and an industrial heat-treating business.

Each of those businesses had been planning for the owner’s retirement prior to the public project coming along. Those plans included selling the business either to a family member, an employee group, and/or a competitor. Timing the sales were a key issue because, in two of the examples, prospective purchasers were leery of buying a business that would immediately have to relocate while the purchaser would have to gain an understanding of the available relocation benefits and the uncertainties of the regulations’ language and meaning, as pointed out in the discussion above.

Each business started by contacting the displacing public agency early on in their planning stages. They received various responses. One was told they were not yet designated as a displaced person and would have to wait for that designation. One didn’t get a response to their question for months as the project was gearing up. Another was told to submit their inventory, purchase offer, and other claim documentation for the agency’s review. Of course, the business was not yet prepared to do all of that because they were still planning and didn’t have that kind of information.

Each of the business owners was able to sell their business and retire, albeit differently and later than they originally planned. Only the dental clinic business was sold after the agency took possession of the property but before relocating. The “occupancy” question did not become an issue and the purchaser felt they had a reasonable understanding of eligible relocation benefits. The other two businesses relocated under the original ownership and completed the business purchase and sale after the relocation was complete.

Many agencies struggle with giving guidance for “what-if” scenarios, they tend to want solid documentation to use for any level of evaluation. Without input from the public agency, the early bird displacee planning their relocation is left to scrutinize the language of the regulations in order to evaluate their possibilities and risks.

Under 24.2(a)(9)(ii) Persons not displaced, the language states in 24.2(a)(9)(ii)(B) A person who initially enters into occupancy of the property after the date of its acquisition for the project…. This is compelling language and could reasonably cause concern to taking ownership of the business between the agency’s possession and the business’ relocation. I have not seen this language used to deny relocation benefits in the scenarios described in this discussion or the above discussions. This language is normally used for denying relocation benefits to a business that moved its personal property into a property after the property was purchased by the agency. Unfortunately, my past experiences with this are not the evidence desired for the parties making solid decisions.

In our cases described above, the personal property had been installed prior to the agency’s purchase of the real property. Therefore, in my opinion, the personal property occupied the real property prior to the agency’s possession, and therefore the owner of the personal property is eligible to be reimbursed for its relocation costs, regardless of who the owner is.

If a legitimate business sale was made after the agency purchased the real property and for some reason, the agency used this language to deny benefits to the new owner, the worst-case scenario for the new owner, in my opinion, is that they may lose out on their reestablishment expenses, but they would be eligible for cost reimbursements for relocating the personal property.

In my opinion, most agencies would not use the language in 24.2(a)(9)(ii)(B) to deny relocation benefits based on the new ownership of the business occurring after the agency’s possession of the real property.

As always, the displaced business should attempt to work with the displacing public agency as much as possible to resolve these types of issues. And, the displacing public agency should attempt to work with the displacee as much as possible including giving guidance for “what-if” scenarios that are presented by the displacee.