financial woes brought on by the action of the public. The business displacement allowance set forth in section 3(b) could be of more benefit to a businessman than those set forth in existing relocation payments depending upon the individual facts of his case, depending on the size of his business and his income therefrom. It certainly will help the operator of a small marginal business who in the past seems to have taken the brunt of the loss without assistance. Section 4 of S. 1681 is generally in accordance with the Agency's policies toward assisting businesses who are forced to relocate by action of the Agency. We feel that if the provisions of this section are complied with earnestly and if they are followed faithfully and orderly, the result will be, as has been the case of our Agency, a successful relocation program. Section 6(a) (2) (B) contains a provision which we endorse. It gives a relocatee, if he disposes of personal property on moving his business and replaces such property at a new location, the right to be paid an amount equal to the reasonable expenses that would have been required in moving such property to the new location. This provision will give an incentive to a businessman to replace old and perhaps outmoded equipment with new, modern, efficient equipment and reduces his cost in making the new equipment functionable. In some instances, especially in larger plants, it will encourage the relocatee to modernize his new operations by purchasing new equipment and effect a greater operating efficiency at a reduced cost. This section provides for prompt payment after moving. We have found that many times a small businessman will go to a bank or financial institution, borrow the money to pay the tradesmen who have moved him and then will have to wait many months prior to being reimbursed under existing Federal programs for the expenses incurred. This is particularly true of claims which require a mandatory review under current urban renewal regulations. Section 8, in effect, compels agencies operating in projects assisted by Federal funds to make uniform relocation payments. Under current practices in this State, the State of Rhode Island, under the interstate highway program, has one set of relocation payments while the agency operating under urban renewal regulations has an entirely different set. Our relocation payments are far broader and more extensive than anything now paid by the State of Rhode Island. It is extremely difficult to explain to a man who has a business that is acquired by the State with Federal funds why he is entitled to one sum of money when his neighbor across the street, who has property acquired by another agency financed with the same Federal funds, is entitled to a greater sum of money. This provision will eliminate this grave inequity and make all payments uniform. S. 1201 also contains provisions pertaining to relocation. These begin at section 107. They appear to be substantially in accordance with those set forth in S. 1681, and our comments concerning S. 1681 in this regard, are applicable here. Section 108 (a) of S. 1201 permits the giving of relocation services to persons occupying property adjacent to property acquired if substantial economic injury is caused by the public improvements for which the property is acquired. This section has caused considerable discussion among Agency personnel familiar with relocation payments. Opinion is divided as to whether payment in addition to relocation service should be provided; however, the giving of relocation services is unobjectionable. We do not believe the proposed legislation makes provision for compensation for any of the following: 1. Loss of business. 2. Loss of goodwill. 3. Loss of access to a road not occasioned by a taking. 4. Loss of business or business profits due to interruption of business. 5. Noise and fumes caused by increased traffic. 6. Rerouting or diversion of traffic. 7. Increase or decrease in traffic. 8. Damages caused by the necessity of taking a circuitous route because of the construction of a divided limited access highway. 9. Damage due to annoyance and inconvenience suffered by the general public. 10. Loss of rental profits just prior to condemnation when tenants vacate because of condemnation. 11. In general all other types of damage considered potentially speculative and remote damages which are uncertain or difficult to ascertain. The law which prohibits compensation for payment of the losses enumerated above may appear to be unjust and cause hardship upon certain condemnees. The remedy is not through the courts. The remedy is through the legislature of the State. The courts in and of themselves cannot relieve most of these hardships. Our eminent domain procedures are, in the words of a 1962 American Bar Association report, the product of "rules handed down in a bygone, comparatively uncomplicated age." They were devised to satisfy the requirements of the time when land was relatively cheap and when the takings included very little improved land. It would appear that on a nationwide basis it would be impossible to change the eminent domain law of all 50 States and make it uniform. I do not envision any uniform law of condemnation such as we have under the Uniform Reciprocal Support Act, the Uniform Commercial Code, the Uniform Administrative Procedures Act and other practically identical laws which have been adopted in many of the States. The remedy to these injustices appears to lie in the hands of Federal Government in one manner or other. It would appear that a remedy to these hardships could be effected through the use of Federal grants or through the imposition of a clause in a contract which makes Federal funds available requiring that payment be made in one manner or another to alleviate some of the conditions of hardship which exist. Insofar as loss of business, loss of goodwill, loss of business or business profits due to the interruption of business as a result of the condemnation, it would appear that a method of compensation could be worked out through resort to the Federal or State tax returns filed by the individuals over a period of years prior to the taking. It would appear that hardship and financial loss incurred by a property owner who finds himself on a secondary road or deprived of access to a primary road as a result of highway or other takings could be compensated for by paying the difference in the fair market value of the property before and after the construction of the new highway or other public facility. In such cases some arbitrary distance from the taking area would have to be set. It would appear to be impossible to make any reasonable suggestion for evaluating losses occasioned by the increase or decrease of traffic and the hazards, noise, and fumes occasioned thereby. It could very well be, and it often happens, that a piece of property used for residential purposes may lose its value as such but suddenly increase in value for commercial or industrial use when traffic and its accompanying problems affect its location. The loss of rental profits or rental income could be compensated for by using as a basis the rental reported on the Federal income tax return submitted by the property owner and deducting that actually received as compensation made accordingly. A reasonable time limit for compensation should be established. Mr. Chairman and members of the committee, it has been an honor to appear before you, and it is hoped that what we have done in this matter may be of some assistance to you in formulating the recommendations which you are to make to the Congress of the United States. Senator MUSKIE. Well, thank you very much, Mr. McCarthy. I wish that we had more time, because you have, obviously, a wealth of background information and experience to give us. That is always useful to have in this kind of a record. We do appreciate your contribution. Mr. McCARTHY. Thank you. Senator MUSKIE. We will recess until tomorrow morning at 10 o'clock. (Whereupon, at 12:30 p.m. the subcommittee adjourned to reconvene at 10 a.m., Wednesday, July 14, 1965.) UNIFORM COMPENSATION FOR RELOCATION WEDNESDAY, JULY 14, 1965 U.S. SENATE, SUBCOMMITTEE ON INTERGOVERMENTAL RELATIONS, Washington, D.C. The subcommittee met, pursuant to recess, at 10:10 a.m., 1202, New Senate Office Building, Senator Edmund S. Muskie (chairman of the subcommittee) presiding. Present: Senators Muskie and Simpson. Staff members present: David B. Walker, staff director; Robert E. Berry, minority counsel; Arnold H. Raphaelson and Mark H. Freeman, professional staff members; and Dee Craven, assistant chief clerk. Senator MUSKIE. The subcommittee will be in order. Our first witness this morning is Mr. William L. Slayton, Commissioner, Urban Renewal Administration. We appreciate your interest in coming to give us the benefit of your experience, background, and wisdom. STATEMENT OF WILLIAM L. SLAYTON, COMMISSIONER, URBAN RENEWAL ADMINISTRATION Mr. SLAYTON. Mr. Chairman and members of the subcommittee, I am appearing here at the request of Housing Administrator Robert C. Weaver to testify on the two bills that you are now considering, S. 1201 and S. 1681. Although the views I present are those of the Housing Agency, they are based largely on the experience of the urban renewal program. We are very proud of the role the urban renewal program has played in pioneering the concept of governmental responsibility for families and businesses displaced in the course of carrying out public programs. From its inception 16 years ago, this program has required that there be decent, safe, and sanitary housing available for displaced families. For the past 9 years, this requirement has been supplemented with a system of payments to families, individuals, and businesses to cover moving costs and personal property losses. In many ways, the bills you are now considering are outgrowths of this experience and recognize the appropriateness of extending these benefits to other Federal programs. I would like to discuss the bills under consideration by comparing their provisions with the similar provisions of the urban renewal legislation and then indicating our recommendations in the light of our experience. S. 1681, introduced by the chairman as the "Uniform Relocation Act of 1965," would establish uniform relocation procedures and payments to be followed in all direct Federal and federally assisted programs involving the displacement of families, individuals, and businesses. 265 S. 1201, introduced by Senator Sparkman as the "Fair Compensation Act of 1965," includes comparable provisions on relocation, but also would establish standards for fair compensation in the taking of property; amend the Federal tax laws; and increase the authority of the Housing and Home Finance Agency and the Small Business Administration to provide assistance to displaced persons and small business concerns. These latter proposals of S. 1201—especially those relating to fair compensation-are of a highly complex and, to some extent, controversial nature. The recommendation of the Bureau of the Budget that action on the latter provisions be deferred until next year is sound. The working out of equitable and uniform relocation provisions is itself a major task. Senator MUSKIE. May I ask at this point whether your statement subsequently provides specific reasons why this should be postponed? Mr. SLAYTON. No, this is the only reference I make to it in my statement. Senator MUSKIE. I think it would be helpful if you would illustrate either subsequently or today the controversial nature of the specific proposals. Mr. SLAYTON. I shall discuss that now-or I can submit it later for the record, whichever you prefer. Senator MUSKIE. Submit it later for the record, please. (Mr. Slayton subsequently submitted the following:) SUPPLEMENTARY STATEMENT REGARDING LEGISLATIVE PROPOSALS IN S. 1201 RECOMMENDED FOR DEFERRAL In addition to the provisions contained in S. 1201 regarding uniform relocation payments and procedures, that bill embodies numerous other recommendations which were developed through a select subcommittee study of the House Public Works Committee. These provisions are summarized and discussed under separate titles below. TITLE I. REAL PROPERTY ACQUISITION Part A. Federal programs Uniform policy on land acquisition practices.-Section 101 would establish the following guidelines to be used by Federal agencies in Federal land acquisition: (1) Every reasonable effort should be made to acquire the property by negotiated purchase; (2) A fair and reasonable price should be established and a prompt offer made; (3) The owner should be given full disclosure of value of the property and benefit or damage to his remaining property; (4) No owner should be required to surrender possession until the price has been paid or the amount of appraised fair value or condemnation award deposited in court; (5) At least 180 days moving notice should be given; (6) Permission should be given the owner to remove buildings and improvements not required by the agency; short-term rentals by former owner should be at fair rental value for a short term; (7) Condemnation would not be advanced or deferred in order to compel the owner to agree on purchase price; (8) No owner would be required to institute legal proceeding to prove taking; (9) No owner should be left with uneconomic remnant; and (10) Effect on owners and tenants in area should be considered. These guidelines would not be deemed to create legal rights or liabilities but would be required to be followed to the greatest extent possible. Compensation for property acquired.-Section 102 would require fair value to be paid as compensation and would establish fair value as the highest cash price at the date of valuation the property could bring if exposed for sale for a reasonable time taking into consideration all lawful uses. Any change in price caused by the public improvement for which the property is to be acquired would not be considered. The date of valuation would be the date of possession or purchase agreement, date of filing a declaration of taking, effective date of court order of possesssion, or date of trial, whichever is earliest. Buildings, structures, and improvements.-Section 103 would require the head of any Federal agency acquiring an interest in land to acquire a like or greater interest in all building structures and improvements to be removed or which will adversely be affected by the contemplated public use where the structures are an integral part of the land or cannot be removed without injury to the property. Authority to acquire evidence of debt.-Section 104 would authorize the head of a Federal agency to acquire any evidence of debt secured by the property to be acquired and enforce collection of any debt so acquired. The debt to the United States could not exceed the fair value paid by the United States for the note or evidence of the debt. Expenses incidental to transfer of title to United States.-Section 105 would require that the owner be reimbursed, to the extent the head of the Federal agency deems fair and reasonable, for recording fees, transfer taxes, mortgage prepayment penalties, and a pro rata portion of real property taxes. Litigation expenses.-Section 106 would direct the court in a Federal ton demnation proceeding to award the owner litigation expenses, including attorneys fees, if the final judgment on the right to condemn is for the owner or if the proceeding is abandoned. This section would also permit such compensation in certain civil actions brought against the United States awarding compensation for taking of property by a Federal agency. Requirements for approval of contracts or agreements for Federal financial assistance.-Section 112 would prohibit contracts for Federal financial assistance with a State agency for land acquisition or for a public improvement for which real property is to be acquired unless such agency had entered into an agreement which provided, in addition to specified relocation payments and procedures, (1) that at least 180 days written moving notice would be given; and (2) that it is a policy of the State that a fair price be established and a prompt offer made before negotiations for property purchases. This section would also increase, after January 1, 1967, the requirements prerequisite to Federal financial assistance for land acquisition or a public improvement for which real property is to be acquired to include all the requirements of this section and the requirements of section 111(a) relating to a program of relocation payments and services, plus agreements by the State agency that: (1) The owner will not be required to surrender possession of his property until the State agency pays the purchase price or deposits the appraised value in court or deposits or pays the final condemnation award; (2) any decrease in property value due to the nature of the public improvement will be disregarded in determining compensation for the property; and (3) no building will be deemed to be other than a part of the real property solely because of the right of a tenant, as against the owner of any other interest in property, to remove such building, and the tenant shall receive the amount which the building contributes to the value of the property or its value for renewal, whichever is greater. The provisions of title I relating to fair compensation are both complex and far-reaching. It must be kept in mind that there are already established detailed State laws and procedures on such matters as property condemnation awards. These are in many cases directly based on State constitutional requirements for fair compensation. Requirements similar to those proposed in paragraphs (1), (4), and (5) of section 101 have been made applicable to various Housing Agency programs by section 402 of the housing and urban development bill of 1965 which will soon be approved by the President. We would hope by next year to be able to evaluate both the merits of these proposals in practice and any procedural problems they may cause the State and localities. Meanwhile, we would recommend deferral of adoption of the other provisions contained in this portion of title I, and also deferral of their application to other programs. |