included as a project cost in the same manner and to the same extent as other program or project costs, notwithstanding any other provision of § 42.35.

(3) Payment not to exceed low bidBusiness or farm operations. Payment to a displaced person for moving expenses shall not exceed the amount of the low bid submitted in accordance with paragraph (d) (2) of this section unless submission of bids is not, under paragraph (d) (2), required.

(4) Personal property of low value and high bulk-Businesses or farm operations. Where, in the judgment of the State agency, the cost of moving any item of personal property of low value and high bulk which is used in connection with any business or farm operation would be disproportionate in relation to its value, the allowable reimbursement for the expense of moving such property shall not exceed the difference between the cost of replacing the same with a comparable item available on the market and the amount which would have been received for such property on liquidation. This subparagraph shall apply to such situations as the moving of junkyards, stockpiles, sand, gravel, minerals, and metals.

(d) Documentation in support of a claim (1) All claimants. A claim for a payment under paragraph (a) of this section shall be supported by a bill or other evidence of expenses incurred. By prearrangement between the State agency, the site occupant, and the mover, evidenced in writing, the claimant or the mover may present an unpaid moving bill to the State agency, and the agency may pay the mover directly.

(2) Businesses and farm operations. Each claim in excess of $500 for the costs incurred by a displaced person for moving his business or farm operation shall be supported by a bid (unless otherwise provided in this section), submitted to the State agency at least 15 days prior to the commencement of the move, from three reputable firms covering the moving costs involved. Whenever it is not feasible to obtain three bids for any category of work, a lesser number of bids shall be submitted, together with a written justification by the displaced person; and no relocation payment shall be allowed in such cases unless the State agency has approved the justification. Where such bid requirement cannot be complied with under State law, or where estimates in an amount of less than $500

were obtained in good faith by the displaced person, such claim shall be supported by estimates in lieu of bids.

§ 42.70 Actual direct losses of tangible personal property.

(a) General. A State agency shall make a payment to a displaced person who satisfies the pertinent eligibility requirements of § 42.65 and the requirements of paragraph (b) of this section, for actual direct losses of tangible personal property as a result of moving or discontinuing a business or farm operation, in an amount determined by the State agency in accordance with paragraphs (c) and (d) of this section.

(b) Requirements for payment. No payment shall be made to a displaced person for actual direct loss of property unless such displaced person (1) complies with the requirements of § 42.65 (b) with respect to actual reasonable moving expenses except as provided ir said section, and (2) makes a bona fide effort to sell the personal property for which such actual direct loss is claimed.

(c) Determining actual direct loss of property. (1) Subject to the limitations of paragraph (d) of this section, the amount of actual direct loss of any item of property claimed shall be determined as follows:

(i) Except as provided in subparagraph (2) of this paragraph (c), the fair market value of the property for continued use at its location prior to the displacement shall be ascertained by an appraisal either secured by the claimant and concurred in by the State agency, or secured by the State agency and concurred in by the claimant.

(ii) If the value of the property for which actual direct loss is claimed does not warrant the expenses of an appraisal, then its fair market value for such continued use shall be computed as follows: The original cost of the item to the claimant (exclusive of installation) multiplied by the figure obtained by dividing the period of the remaining useful life of the property at the date of removal by the period of the normal useful life of the property at the date of its acquisition by the claimant.

(iii) The property shall be disposed of by a bona fide sale (as determined by the State agency) at the highest price offered after reasonable efforts have been made over a reasonable period of time to interest prospective purchasers. A trade-in of the property may be con

sidered a bona fide sale, and the trade-in allowance, exclusive of any amount of discount that would be allowed on the price of the property being acquired in the absence of the trade-in, shall be the amount realized upon the sale of the property.

(iv) If the amount realized from the sale, after deducting ordinary and reasonable expenses of the sale, is less than the fair market value for such continued use, the difference between the net amount realized and the fair market value is the amount of actual direct loss of the property.

(2) If a bona fide sale is not effected because no offer is received for the property, after reasonable efforts have been made over a reasonable period of time to sell it, then its fair market value for continued use, ascertained as provided in this section, is the amount of actual direct loss of the property.

(d) Limitations. (1) The amount of payment for actual direct loss of any item of property shall not exceed the amount determined in accordance with paragraph (c) of this section or the estimated amount that would have been required to relocate such property, whichever is less.

(2) No payment shall be made under this section for any item of personal property sold or traded in and replaced with a substitute item. However, nothing in the preceding sentence shall preclude a payment for moving expenses, in accordance with § 42.65 (a) (8), with respect to the replacement of such item.

(3) The cost of an initial appraisal to determine actual direct loss of property shall, notwithstanding any other provision of § 42.35 with respect to Federal share of costs, be included as a project cost in the same manner and to the same extent as other program or project costs. No payment shall be made under these regulations for the cost of any appraisal made subsequent to such initial appraisal.

(e) Documentation in support of a claim. A claim for payment under paragraph (a) of this section shall be supported by written evidence of loss of tangible property which may include appraisals, certified prices, copies of bills of sale, receipts, canceled checks, copies of advertisements, offers to sell, auction records, and such other records as may be appropriate to support the claim.

§ 42.75

Actual reasonable expenses in searching for a replacement business or farm.

A displaced person who satisfies the pertinent eligibility requirements

of

(b)

§ 42.65 with respect to actual reasonable moving expenses, is eligible for actual reasonable expenses, in an amount not to exceed $500 unless the State agency determines that a greater amount is justified, in searching for a replacement business or farm, including expenses incurred for: (a) Transportation; meals and lodging away from home; (c) time spent in searching, based on the hourly wage rate of the salary or earnings of the displaced person or his representative, but not to exceed $10 per hour; and (d) fees paid to a real estate agent or broker to locate a replacement business or farm.

§ 42.80 Alternate payments-individuals and families.

(a) General. A person or family, who is displaced from a dwelling who is eligible for a payment for actual reasonable moving expenses under § 42.65, may elect to receive and shall be paid, in lieu of such payment: (1) A moving expense allowance not to exceed $300 and determined in accordance with approved Federal Highway Administration schedules established by the State in which the displacement occurred, and (2) a dislocation allowance of $200.

(b) Limitations-joint occupants of single-family dwellings. If individuals (not a family) who are joint occupants of a single-family dwelling submit more than one claim, an eligible claimant for a payment under paragraph (a) of this section may be paid only his reasonable prorated share (as determined by the State agency) of the total payment applicable to a single individual, and the total of alternate payments made to all such claimants moving from such dwelling shall not exceed the total fixed payment applicable to a single individual. § 42.85 Alternate payments-businesses and farm operations.

(a) General. A displaced person who is displaced from his place of business or farm operation and is eligible for payments under § 42.65, § 42.70, or § 42.75 and complies with the requirements set out in paragraph (b) of this section may elect to receive and shall be paid, in lieu

of such payments, a payment equal to the average annual net earnings of the business or farm operation as determined in accordance with paragraph (d) of this section, except that such payment shall be not less than $2,500 nor more than $10,000. For purposes of this section, the dollar limitation specified in the preceding sentence shall apply to a single business, regardless of whether it is carried on under one or more legal entities.

(b) Requirements-businesses. In the case of a business, no payment shall be made under this section unless the State agency determines that (1) the business cannot be relocated without a substantial loss of its existing patronage, based on a consideration of all pertinent circumstances including such factors as the type of business conducted, the nature of the clientele, and the relative importance to the displaced business of its present and proposed location; (2) the business is not part of a commercial enterprise having another establishment which is not being acquired for a project and which is engaged in the same or similar business; and (3) the business contributes materially to the income of the displaced owner.

(c) Determination of number of “businesses." In determining whether one or more legal entities constitute a single business, the following factors, among others, shall be considered:

(1) The extent to which the same premises and equipment are shared;

(2) The extent to which substantially identical or intimately interrelated business functions are pursued and business and financial affairs are commingled;

(3) The extent to which such entities are held out to the public, and to those customarily dealing with such entities, as one business; and

(4) The extent to which the same person or closely related persons own, control or manage the affairs of the entities.

(d) Determination of “average annual net earnings." "Average annual net earnings" for the purpose of this section shall be computed on the basis of the net earnings of the business or farm operation, before Federal, State, and local income taxes, during the 2 taxable years immediately preceding displacement (or if the business or farm was not in operation that long, such other period as may

be approved by the State agency), and includes salaries, wages, or other compensation paid by the business or farm operation to the owner, his spouse or his dependents. If the State agency determines that such 2-year period is not equitable for establishing earnings, the period used for determining average annual net earnings shall be a substitute period determined by the State agency to be representative.

(e) Determination of ownership. The term "owner" as used in this section includes the sole proprietor in a sole proprietorship, the principal partners in a partnership, and the principal stockholders of a corporation, as determined by the State agency. For purposes of determining a principal stockholder, stock held by a husband, his wife and their dependent children shall be treated as one unit.

(f) Documentation in support of a claim. A claim for payment under paragraph (a) of this section shall be supported by such reasonable evidence of earnings as may be approved by HUD. If no other evidence is available, such claim shall be supported by copies of Federal income tax returns.

§ 42.90 Replacement housing payments for homeowners.

(a) General. A State agency shall make to a displaced person who is displaced from a dwelling and who satisfies the pertinent eligibility requirements of § 42.55 and the conditions of paragraph (b) of this section, a payment not to exceed a combined total of $15,000 for:

of

(1) The amount, if any, which when added to the acquisition cost of the dwelling acquired for the project equals the reasonable cost (as determined in accordance with paragraph (c)(1) this section) of a comparable replacement dwelling: Provided, That such amount shall not exceed the difference between the acquisition price of the acquired dwelling and the actual purchase price of the replacement dwelling.

(2) The amount, if any, to compensate the displaced person for any increased interest costs, as determined in accordance with paragraph (c) (2) of this section, which such displaced person is required to pay for financing the acquisition of a replacement dwelling: Provided, That no such payment shall be made unless the dwelling acquired by

the State agency was encumbered by a bona fide mortgage which was a valid lien on such dwelling for not less than 180 days prior to the initiation of negotiations for acquisition of such dwelling.

(3) Reasonable expenses, determined in accordance with paragraph (c)(3) of this section, incurred by the displaced person incident to the purchase of the replacement dwelling, but not including prepaid expenses.

(b) Eligibility conditions. (1) A displaced person is eligible for the payments specified in paragraph (a) of this section if such displaced person: (1) Is displaced from a dwelling acquired for a project, or demolished (in accordance with local code) in connection with a project; (ii) has actually owned and occupied such dwelling for not less than 180 days prior to the initiation of negotiations for its acquisition; (iii) purchases and occupies a replacement dwelling which is decent, safe, and sanitary within 1 year subsequent to the date on which he received final payment from the State agency of all costs of the acquired dwelling or the date on which he moves from the acquired dwelling, whichever is later.

(2) For the purpose of this paragraph (b), a person has "owned" a dwelling if he (i) held fee title, a life estate, a 99year lease, or a lease with not less than 50 years to run from date of acquisition of the property for the project, (ii) held an interest in a cooperative housing project which includes the rights of occupancy of a dwelling unit therein, (iii) is the contract purchaser of any of the foregoing estates or interests, or (iv) has a leasehold interest with an option to purchase.

(3) In the case of demolition in connection with a project the term "initiation of negotiations" shall mean, for the purposes of this paragraph (b), the date such person vacates the dwelling.

(4) The term "Purchases", for the purpose of this paragraph (b), includes the acquisition, construction or rehabilitation of a dwelling, the purchase and rehabilitation of a substandard dwelling, the relocation or relocation and rehabilitation of an existing dwelling, or the entering into a contract to purchase, or for the construction of, a dwelling to be constructed on a site to be provided by a builder or developer or on a site which the displaced person owns or acquires for such purpose. Where completion of construction, rehabilitation, or relocation of

a replacement dwelling is delayed, for reasons beyond control of the displaced person, beyond the date by which occupancy is required under this paragraph (b), the State agency may determine the date of occupancy to be the date the displaced person enters into a contract for such construction, rehabilitation, or relocation or for the purchase, upon completion, of a dwelling to be constructed or rehabilitated if, in fact, the displaced person occupies the replacement dwelling when the construction or rehabilitation is completed.

(5) Where, for reasons of hardship and beyond the control of the displaced person, such person is unable to occupy the replacement dwelling by the date by which occupancy is required under this paragraph (b), the State agency may determine the date of occupancy to be the date on which the displaced person became entitled to possession of such dwelling: Provided, That the displaced person occupies the replacement dwelling within such reasonable period of time as shall be determined by HUD.

(c) Computation of replacement housing payment-(1) Cost of comparable replacement dwelling. The cost of a comparable replacement dwelling for purposes of paragraph (a)(1) of this section, shall be determined by one of the following methods:

(i) Schedule method. In accordance with a schedule as specified in § 42.160, which establishes the reasonable acquisition cost for comparable replacement dwellings;

(ii) Comparative method. On a caseby-case basis by determining the sales price (together with any adjustments necessary to reflect the market sale experience) of one or more dwellings which have been selected, by the State agency or by the displaced person with the approval of the State agency, and which are most representative of the acquired dwelling unit and meet the definition of "comparable replacement housing" set out in § 42.20(b): Provided, That this method shall be used solely at the option of the displaced person; or

(iii) Alternative to schedule or comparative method. Where the State agency determines that neither the schedule or the comparative method is feasible in a given situation, by the use of such other method as may be approved by HUD.

(2) Interest payments. Interest payments shall be equal to the difference between (i) the aggregate interest and

other debt service costs of the amount of the principal of the mortgage on the replacement dwelling, limited to the unpaid balance of the mortgage on the acquired dwelling over its remaining term at the time of acquisition, and reduced to discounted present value, and (ii) the aggregate interest and other debt service costs paid on the mortgage on the acquired dwelling. In making such computation, the aggregate interest and other debt service costs with respect to the replacement dwelling shall not exceed the prevailing interest rate currently charged by the mortgage lending institutions in the general area in which the replacement dwelling is located. The discount rate for computing the present worth of future payments of increased interest shall be computed at the prevailing interest rate paid on savings deposits by commercial banks in the general area in which the replacement dwelling is located. (An example of computation of payment for increased interest cost is set forth below as Appendix A to this part.)

(3) Expenses incident to the purchase of the replacement dwelling. Such payments shall be the amount necessary to reimburse the displaced person for actual costs incurred by him incident to the purchase of the replacement dwelling, including:

(i) Legal, closing, and related costs including title search, preparing conveyance contracts, notary fees, surveys, preparing drawings or plats, and charges paid incident to recordation.

(ii) Lender, FHA or VA appraisal. (iii) FHA or VA application fee. (iv) Certification of structural soundness.

§ 42.95 Replacement housing payments for tenants and certain others.

(a) General. A State agency shall make to a displaced person who satisfies the eligibility requirements of § 42.55 and the conditions of paragraph (b) of this section, a payment not to exceed $4,000 for either:

(1) An amount, computed in accordance with paragraph (c) (1) of this section, necessary to enable such displaced person to lease or rent a comparable replacement dwelling for a period not to exceed 4 years; or

(2) An amount, computed in accordance with paragraph (c) (2) of this section, necessary to enable such displaced persons to make a downpayment (including incidental expenses described in $42.90 (a) (3)) on the purchase of a comparable dwelling: Provided, That if such amount exceeds $2,000, such displaced person shall equally match any such amount in excess of $2,000 in making the downpayment.

(b) Eligibility conditions. A displaced person is eligible for the payments specified in paragraph (a) of this section if such displaced person:

(1) Has actually and lawfully occupied the dwelling from which he is displaced for a period of not less than 90 days prior to the initiation of negotiations for acquisition of such dwelling; and

(2) Is not eligible to receive a replacement housing payment for homeowners under § 42.90; and

(3) Where such displaced person was the owner of the dwelling, such dwelling is acquired for a project, or demolished (in accordance with local code) in connection with a project: Provided, That an owner displaced as a result of code enforcement (other than by demolition) or voluntary rehabilitation shall be entitled to a payment specified under paragraph (a)(1) of this section necessary to enable him to lease or rent a comparable dwelling for period of 3 months, or such longer period as is reasonably necessary to accomplish the code enforcement or rehabilitation, and the computation set out in paragraph (c) (1) of this section shall be adjusted accordingly.

In the case of code enforcement, voluntary rehabilitation, improvement of private property or demolition in connection with a project, the term "initiation of negotiations", for the purposes of this