Alternative Payments for Business Robert Merryman Senior Vice President, O.R. Colan Associates Leslie Beaird Relocation Manager, Universal Field Services, Inc Marshall Wainright Lead Realty Specialist, Federal Highway Administration

Alternative Payments for Business John’s Machine Shop John has a small machine shop specializing in custom parts and tools He rents the building he occupies. Recently he secured two new long-term contracts that have project acquisition. John is not happy. He feels the timing of the move is bad. However, he informs you that if all the “pieces fall right” this move might be timely for his business.

Alternative Payments for Business John’s Machine Shop The new location he envisions is about twice the size of his existing work area. He intends to restructure the business so that he can handle the increased business. John would like to employ an industrial engineer to assist him in determining which of his equipment should be replaced or abandoned. John informs you that he will not be moving any of his plating tanks. John has decided that at a minimum he wants to replace his drill presses with newer machines. He also has a large quantity of scrap metal behind his building

Alternative Payments for Business The Regulations: Title 49 Code of Federal Regulations Part 24 Professional Move Planners Purchase of Substitute Property and Actual Direct Loss of Tangible Personal Property Low Value/High Bulk

Robert N. Merryman

What is a Professional Move Planner A person who derives his principal income from planning moves -Rarely a self-move item A person with specific skills needed to manage a move or specific items of equipment The person does not need Uniform Act expertise

Why Would a Business Need a Move Planner The business acknowledges that it does not know how to conduct the move -“we know how to operate this equipment, but not move it” The business has specific technical questions that precede the move - “I need help laying out my equipment at the replacement site” The business finds it cannot meet the agency’s schedule - “TriMet spokeswoman Mary Fetsch said it took a while for the company to determine what it wanted to do, and wheels did not start to turn in the moving process until the company augmented its condemnation attorney with a business consultant [Move Planner] and business attorney.”

What Do the Regulations Tell Us #1 In the planning section of the regulations: §24.205(c)(2)(i)(B) Determination of the need for outside specialists … that will be required to assist in planning the move… actual move… and in reinstallation of machinery and/or other personal property.

What Do the Regulations Tell Us #2 In the eligible actual moving expenses section of the regulations: §24.301(g) (12) Professional services as the Agency determines to be actual, reasonable and necessary for: (i) Planning the move of the personal property; (ii) Moving the personal property; and (iii) Installing the relocated personal property at the replacement location.

How Is This Service Paid The business contracts for the service The business pays the cost The agency reimburses for the eligible costs -The standard is reasonable cost, not low bid -The business may contract for services not eligible for reimbursement

How Does the Agency Control the Cost Assess the Scope of Work for the proposed services Determine the hourly rates to be reasonable Determine the overall cost to be reasonable Control any change orders

What does John Want Adequacy of the replacement site: Can his business operate at the identified location Functional layout: John wants a good layout Assistance with utility capacity: Will the utilities meet his needs or do they need to be enhanced Code issues: Sprinklers, noise, fumes, etc. Status of equipment: What should he move, abandon, or replace

Two War Tales Florida DOT – A great example Massachusetts Highways – Fraud conviction for the planner

Substitute Personal Property & Direct Loss of Tangible Personal Property Leslie Beaird

Substitute Personal Property & Direct Loss of Tangible Personal Property Substitute Personal Property What is it? An entitlement based on a business decision to replace an item of personal property rather than move it. How is the entitlement calculated? The lesser of the cost of the substituted item including installation minus any proceeds from sale or trade-in of the replaced item; or the estimated cost of moving and reinstalling the item.

Substitute Personal Property & Direct Loss of Tangible Personal Property Substitute Personal Property What must the business do in order to receive the entitlement? The business must make a good faith effort to either sell or trade-in the item being replaced and they must also purchase the replacement item.

Substitute Personal Property & Direct Loss of Tangible Personal Property Substitute Personal Property Examples Phone Systems Furniture Equipment Any item of personal property that the business wants to replace or upgrade.

Substitute Personal Property & Direct Loss of Tangible Personal Property Substitute Personal Property Calculation

Substitute Personal Property & Direct Loss of Tangible Personal Property Direct Loss of Tangible Personal Property What is it? An entitlement as a result of moving or discontinuing the business or farm operation. How is the entitlement calculated? It is the lesser of the fair market value in place of the item as is for continued use, less the proceeds from its sale; or The estimated cost of moving the item, as is, but not including any allowance for storage or for reconnecting a piece of equipment if stored or not being used.

Substitute Personal Property & Direct Loss of Tangible Personal Property Direct Loss of Tangible Personal Property What is value in place “as is” for continue use? Generally the item will be valued based on the current cost of the item as installed at the displacement site, depreciated to reflect the current condition and estimated remaining useful life. It may not include costs that reflect code requirements that were not in effect or installation costs if not currently installed. Standard professional personal property appraisal methods are acceptable.

Substitute Personal Property & Direct Loss of Tangible Personal Property Direct Loss of Tangible Personal Property What does “as is” have to do with the move cost? Like value in place “as is”, the estimated moving cost for an item is also to be limited to the “as is” condition of the item. The move cost estimate may not include reconnect costs for an item that was not operable or connected at the displacement site, they may only reflect the estimate to install the item as it currently exists.

Substitute Personal Property & Direct Loss of Tangible Personal Property Direct Loss of Tangible Personal Property What must the business do in order to receive the entitlement? The business must first make a good faith effort to sell the item being replaced, unless the Agency determines that such effort is not necessary.

Substitute Personal Property & Direct Loss of Tangible Personal Property Direct Loss of Tangible Personal Property Examples Equipment Plating tanks Inventory (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) Any item of personal property that the business no longer needs.

Substitute Personal Property & Direct Loss of Tangible Personal Property Direct Loss of Tangible Personal Property Calculation

Low Value/High Bulk Marshall Wainright

Low Value/High Bulk Cost to move an item is more than its value in the judgment of the Agency The displaced business is not obligated to move the personal property 49 CFR (g)(18)

Low Value/High Bulk Examples: Stockpiled Sand Gravel Minerals Metals Other similar items

Low Value/High Bulk Questions… What kind of metal? How much metal? Where does he sell it? What is the price for scrap metal? What is the cost of a comparable quantity delivered to the new location? What is the cost to move? What is the payment?

Low Value/High Bulk

Alternative Payments for Business Questions?