2013 Acquisition 103 Part B Student Training Manual-1

The Office Of Real Estate Ohio Department of Transportation 2013 Training Course Acq.
103
ACQUISITION 103 STUDENT TRAINING MANUAL
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The Office Of Real Estate Ohio Department of Transportation 2013 Training Course Acq. 103
ACQUISITION 103 PART B
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5310 Donations of Real Estate .....53-1 5310.01 Procedure for Donation .......................................................................... 53-1 5311 Owner Retention of Improvements ............................................................................ 53-5 5311.01 Procedure for Owner Retention ............................................................. 53-5 5311.02 Procedure for Salvage Value.................................................................. 53-7 5311.03 Procedure for Amending Contract or Bill of Sale.................................. 53-8 5311.04 Procedure for the Agreement for Removal of Improvements RE 66 ...................................................................... 53-9 Quiz 2 ................................................................................................... 53-18 5312 Encroachments ........................................................................................................... 53-20 5312.01 General Information ............................................................................. 53-20 5312.02 Clearing Encroachments ...................................................................... 53-20 5313 Boundary Surveys ...................................................................................................... 53-26 5313.01 Procedure to Address the Boundary Survey ........................................ 53-26 5313.02 Procedure for Amending the Contract ................................................. 53-27 5315 Outdoor Advertising Devices .................................................................................... 53-28 5315.01 Acquisition Procedure .......................................................................... 53-28 5317 Leasing Vacant Buildings During the Acquisition Phase of a Project .................. 53-30 5317.01 Procedure to Rent ................................................................................. 53-30 5318 Acquisition of Cemeteries ......................................................................................... 53-30 5319 Offsetting the Price Paid for an Acquisition Parcel by the Value of Excess Land .................................................................................... 53-31 5319.01 Procedure to Implement Law ............................................................... 53-31 5320 Acquisition of Contaminated Property ................................................................... 53-32 5320.01 Planning for the Acquisition of the Contaminated Property ................ 53-33 5321 Acquiring Property Subject to the Garage Law ..................................................... 53-34 5321.01 Procedure to Implement the Provision of Law .................................... 53-34 5322 Acquiring Property From Individuals Working for an Instrumentality of the State ...................................................................................... 53-36 5322.01 General ................................................................................................ 53-36 5322.02 Regulation Controlling Conflict of Interest for ODOT Employees ..... 53-36 5222.03 Procedure for Conflict of Interest ........................................................ 53-36 5323 Acquiring Real Property Subject to a Life Estate .................................................. 53-38 5323.01 Identifying a Life Estate Interest ......................................................... 53-38 5323.02 Acquisitions That Do Not Displace Life Tenants ................................ 53-38 5222.03 Acquisitions That Displace Life Tenants ............................................. 53-40
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5310
Donation of Real Estate Needed for the Highway Project
The donation process is heavily regulated. These regulations include: 1. 2. 3. 4. 5. Uniform Act, Title III, Section 301 (10) 49 CFR, Subpart B, Section 24.108 23 CFR Subpart E, Section 710.505 Ohio Revised Code, Section 5501.33, 5501.331 Ohio Administrative Code: 5501:2-5-06 (H)
A donation can be requested by the District anytime during the acquisition process, but the process for donation must follow these established procedures. 5310.01 Procedure for Donation A. Before an owner can donate anything, the owner must be informed of all their rights under law. This is assured by having the negotiator review the Donation Letter form with the owner. If the owner agrees to donate, the terms and conditions of the donation shall be documented by having the owner sign the Donation Letter form. The ODOT agent must sufficiently document the acquisition file to provide evidence that the donation process was done in compliance with regulation and these procedures. The documentation shall be in the Negotiators Notes (RE 60 and RE 60-1). The agency must secure an appraisal for the owner unless the owner releases the agency from the obligation of securing an appraisal. The appraisal must be performed by a qualified appraiser. 1. If the valuation is uncomplicated with a fair market value that is $10,000 or less, the agency can waive the appraisal. ODOTs process for waiving appraisals is accomplished by using the Value Analysis format.
B.
C.
D.
E.
Any donation received prior to environmental clearance must meet environmental regulations specified in 23 U.S.C. 323 (d). For these early donations, the deed ODOT prepares must clearly state the following: 1. All alternatives to a proposed alignment shall be studied and considered pursuant to NEPA; Acceptance of the donation shall not influence the environmental assessment of the project, including the decision relative to the need to construct the project or selection of its specific location;
2.
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3.
The donated interest shall revert back to the grantor or his successors or assigns if the interest in not required for the alignment. See section 5501.331 of the Ohio Revised Code for more detail.
F.
Donations of real property may be credited to the States matching share of the project See 23 CFR 710.505 (b) for more detail. An owner may donate property in exchange for construction features or services - See 23 CFR 710.505 (c) for more detail. The instruments used for donation are the standard instruments described in Section 5400 of the Real Estate Manual for instrument procedure.
G.
The next page is an example of the Donation letter.
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5311
Owner Retention of Improvements
The owner retention process allows an owner to retain an improvement that is considered in the estimate of FMVE. The District Office must document the improvement was purchased by ODOT prior to allowing the owner to retain the improvement to ensure clearance of the right of way. The retention process is regulated at the Federal level by 49 CFR 24.103 (c) and at the State level by the Ohio Administrative Code, Section 5501:2-5-06 (C)(3). The regulations are identical and are: If the owner of a real property improvement is permitted to retain it for removal from the project site, the amount to be offered for the interest in the real property to be acquired shall not be less than the difference between the amount determined to be just compensation for the owners entire interest in the real property and the salvage value of the retained improvement. The following procedures implement these regulations and assure clearance of the required rights of way. 5311.01 Procedure for Owner Retention A. An owner may request to retain an improvement the District Office is taking for the highway project. The District is obligated to consider the owners request and the District Real Estate Administrator (REA) makes the decision regarding the owners request to retain an improvement. The District is not obligated to accept any proposed modification, but shall consider the merits of the request with respect to the clearance of the right of way, impact to the construction phase of the project and the affect to property management. When the REA allows an owner to retain an improvement, the District must document that it purchased the improvement and then the District can release the improvement back to the property owner. Project managers must monitor the removal of the owner-retained improvement from the project area to ensure it does not adversely affect the construction phase of the project. The amount ultimately paid to the owner at closing will be reduced by the Salvage Value of the item that is retained by the owner. Therefore, the District Office must ensure the Salvage Value of the item to be retained is estimated and, the property owner and the District must agree to the Salvage Value amount. 1. 2. D. Form RE 68 is the Salvage Value form used to estimate Salvage Value. See Section 5311.02 of these procedures for more detail about Salvage Value
B.
C.
Once the District and the owner agree to the Salvage Value amount, the contract is amended to reflect the amount the owner will actually be paid at closing. Additionally,
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the owner and District must complete the Agreement for Removal of Improvements form (RE 66). 1. See Section 5311.03 of these procedures for more detail about amending the contract. The RE 66 details pertinent information about when the retained improvement is to be removed from the right of way. See Section 5311.04 of these procedures for more detail about the Agreement for Removal of Improvements form (RE 66).
2.
E.
The parcel then moves to closing where: 1. The District must first document that it has purchased the improvement that will ultimately by retained by the owner. The purpose for this action is to protect the construction phase of the project. As the District can now document that it owns the improvement, its construction contractor does have the right to demolish the improvement if the owner does not remove the improvement per the terms stipulated in the RE 66. The contract or the bill of sale is used to document the purchase of the improvement to be retained. The correct form is dependent on ownership and type of taking. Funds are disbursed to the owner and the amount received by the owner is: FMVE of the Entire Acquisition Parcel Salvage Value of Improvement to be Retained The Amount Money Received by the Owner
2.
3.
(-) = 4.
The owner conveys the property right needed for the project by signing the instrument.
F.
The project manager must continue to track this acquisition parcel to ensure the improvement has been removed from the project area in the time frame and by the terms agreed to in the Agreement for Removal of Improvements form (RE 66). The negotiator must adequately document the owner retention process to demonstrate compliance with the legal requirements for retention and ODOTs procedure to implement these regulations.
G.
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5311.02 Procedure for Salvage Value Salvage Value is defined in 49 CFR Subpart A, 24.2 (a) (23) and in the Ohio Administrative Code, Section 5501:2-5-01(B)(25). The definitions are identical and are: The probable sale price of an item offered for sale to knowledgeable buyers with the requirement that it be removed from the property at the buyers expense (i.e., not eligible for relocation assistance). This includes items for re-use as well as items with components that can be reused or recycled when there is no reasonable prospect for sale except on this basis. These procedures implement these regulations. A. Salvage value is documented on form RE 68. Once the value is estimated any change must be based on reasoned and documented analysis (similar to the establishment of FMVE). B. To implement the regulation requiring The probable sale price of an item offered for sale to knowledgeable buyers with the requirement that it be removed from the property at the buyers expense, the following steps are taken: Step 1: Estimate the price a buyer would pay for an item as if it were sitting on the curb in front of the property available to be picked up by a buyer. Estimate the cost to disconnect the item and move it to the curb. Cost in Step 1 ( - ) Cost in Step 2 = Value A
Step 2: Step 3: C.
The next part of the regulation is When there is no reasonable prospect for sale, the value of components parts of the improvement that can be reused or recycled when there is no reasonable prospect for sale except on this basis. Steps 4 through 6 do not have to be taken if it can be determined a purchaser would buy the improvement while it is on-site. Step 4: Estimate the price a salvage dealer would pay for an item assuming the owner of the item had brought it to the dealers place of business. Estimate the cost to disconnect the item and transport it to the salvage dealer. Cost in Step 4 ( - ) Cost in Step 5 = Value B
Step 5:
Step 6: D.
Low Value (nominal) Salvage Value Estimates 1. It is the intention of ODOT that reasonable procedures be established for estimating salvage value. The District Offices do sell off improvements from
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time to time and it is incumbent that the person estimating salvage value analyzes prior sales of these kinds of properties in the determination of salvage value. Salvage value could also be estimated by utilizing the services of an expert in the field of the improvement that is to be salvaged. 2. The process to obtain experts that provide cost estimates can be time consuming and costly. For substantial improvements retained by the owner (over $10,000), these cost estimates are a necessity. However, for low value items which are to be retained, salvage value may be calculated as a percentage of the F.M.V.E. of the improvement to be retained. However, reason and caution must be exercised when developing this percentage and under no condition should the same percentage be used in all instances. Low value is defined as any improvement which is to be retained as having a contributory value of $10,000 or less.
E.
Once the salvage value has been determined, the negotiator shall communicate this value to the owner and, the owner is to advise the negotiator if the salvage value price is acceptable. If the owner does not agree with the salvage value estimate, the District may consider reasons for disagreement and if valid, re-analyze the salvage value estimate. However, the support for any re-establishment of salvage value must be included in any revised RE 68. The District may also utilize the administrative settlement procedure for opinion differences in salvage value. If this process does not result in a salvage value agreeable to all sides, then the negotiator shall fall back to the Districts original offer. This process shall be documented in the Negotiator Notes.
5311.03 Procedure for Amending the Contract or Bill of Sale A. Negotiations will continue and eventually an agreement to price and terms should be reached. This amount can be the FMVE or an administrative settlement amount. In either case, the total amount paid for the property must be shown on the contract or the bill of sale. Then a paragraph pre-approved by the Ohio Attorney Generals Office is inserted into the contract or bill of sale. This pre-approved paragraph documents the amount paid to the owner at closing is reduced by the salvage value of the item retained. This paragraph, available from the Office of Real Estates web page and entitled RE 220-1 Insertion for Owner Retention, reads as follows:
Seller and Purchaser agree that (i)Seller shall be permitted to retain improvements now situated on the real property to be conveyed (see RE 66/Agreement For Removal for details), (ii) the amount to be paid to the seller shall be reduced by the sum of $(insert: salvage value estimate), which is the salvage value of the retained improvement, (iii) the total amount Purchaser shall pay ultimately to the seller is $(insert: the difference between FMVE and Salvage Value); and (iv) the terms and conditions of Sellers retention are set forth in the RE 66 Agreement for Removal.
B.
The Contract For Sale and Purchase is to be used when the fee owner of the property also owns the improvement to be retained. The selection of the RE 220-B or the RE 220-L is
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dependent upon if the improvement is a building or a structure. See Section 5200 of the Real Estate Manual for more detail regarding contracts. 1. Insert the pre-approved paragraph, RE 220-1, into the contract at the end of the first paragraph of 1. Price and Consideration.
C.
The bill of sale form (RE 69 CC) is used when the improvement to be retained is owned by a tenant-owner. 1. Insert the pre-approved paragraph, RE 220-1, as a new second paragraph following the value of the tenant-owned improvement.
D.
The amount established as FMVE is never changed and remains constant through the entire acquisition process. Procedure for the Agreement for Removal of Improvements form (RE 66)
5311.04 A.
The RE 66 details the terms for removing the improvement that is to be retained by the owner. The District Office can hold back money at closing to ensure the owner performs and moves the improvement out of the project area by the date that was mutually agreed to by the owner and District. Holdbacks may be used at the discretion of the District Office and should be based on the degree of risk that the owner will not remove the item to be retained. The District Office needs to track the removal of the improvement to ensure it has been removed from the project area by the date stipulated in the RE 66 and the site has been left in a condition that is compliant with the terms of the RE 66 (i.e., the owner retained a house, moved the house, but had left the basement foundation open - contrary to the terms of the RE 66 which required the owner to fill the basement in.) The RE 66 also requires: 1. ODOT to pay the owner the agreed amount (FMVE less salvage value and less holdback; if applicable) within 90 days of the Agreement. 2. After the owner receives payment, the owner must start work to move the improvement within 14 days. After the improvement is moved, the District Office must ensure that it was done in compliance with the terms in the RE 66 and any holdback money can then be released to the owner. ODOT must pay the owner this holdback money within 60 days after it has accepted the work.
B.
3.
C.
If the owner did not comply with the terms of the RE 66, the District Office can go onto the property and remove the improvements. This is the reason why the District must document that it purchased the improvement. When confronted with this situation, the
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District should request guidance from the Ohio Attorney Generals Office. Any costs incurred by ODOT for removing the improvement can be deducted from the holdback money. D. The Agreement for Removal of Improvement process must be adequately documented to demonstrate compliance with these procedures.
The next few pages are forms used when documenting the purchase of an improvement when dealing with owner retention.
RE 68 Salvage Value Estimate The RE 220 (Contract of Sale and Purchase) RE 69AC Bill of Sale RE 220-1 Insert (Owner Retention) RE 66 Agreement for Removal of Improvements
After form RE 66(Agreement for Removal) example go to Case Study# 2
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5312 Encroachments
5312.01 General Information A. In almost every instance, an encroachment in the right of way shall be removed at the expense of the owner and, the District will not pay for the removal costs or compensate the owner for the improvements value. This right is based in Section 5515.02 of the Ohio Revised Code which states that: Any individual, firm, or corporations using or occupying any part of a road or highway on the states highway system with lines, pipes, or any object or structure, without a legal permit, shall remove same from the bounds of the highway. Section 5515.02 also allows a district to move the obstruction under certain conditions: If removal of any such lines, pipes, objects or structures is not started within 5 days after notification, the Department may do so with their own forces and the expense incurred shall be certified to the Attorney General for collection by civil action. Section 5515.02 also provides a district with emergency powers under certain situations. However, the District Deputy Director should always be consulted immediately before removing any encroachment under this provision of law. If, in the directors opinion, the obstruction or properties present an immediate and serious threat to the safety of the traveling public, the director may remove or relocate the obstruction or properties without prior notice. B. All encroachments need to be specifically identified and shown on the project plans. C. On all federal-aid projects, the certification of the right of way to FHWA must state the right of way is free and clear of all encroachments. If federal funds were not used in any phase of the project at the time the right of way was initially acquired or the acquisition occurred before the Highway Trust Fund was established (July 1, 1956), there is no requirement for a written encroachment certification. 5312.02 Clearing Encroachments A. Clearing Encroachments from an Active Project Right of way encroachments shall be cleared on all federal-aid projects. Methods of clearing encroachments are discussed in numbers 1 through 4 below. A federal-aid project is defined as a project having Highway Trust Funds in any part of the project (PE, R/W or construction).
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1.
Remove the encroachment The owner should be notified by personal contact and be made aware that a certified letter will be forthcoming indicating the time frame for removal. If the owner does not comply as instructed, the matter is to be forwarded to the Transportation Section of the Ohio Attorney Generals Office for processing. Sell or vacate the land that is being encroached upon The district may sell or vacate the land to the adjoining property owner if the right of way is not needed for present or future highway purposes. Reference the Property Management Section of the Real Estate Manual for information about disposal of land determined to be excess. Allow the encroachment to remain and lease the property The district may allow the encroachment to remain and lease the property if ODOT owns the property by fee title and has determined the right of way is needed for future highway purposes and the encroachment is not a safety hazard. The lease must be at fair market rent. Reference the Property Management Section of the Real Estate Manual for detailed information. Allow the encroachment to remain and issue a permit When ODOT owns the property by any estate that is less than fee title, the district may allow the encroachment to remain and issue a permit allowing the encroachment to stay subject to the terms of the permit. This process of issuing a permit may be used only if there were NO federal funds used in any phase of the original project at the time the right of way was acquired
2.
3.
4.
B.
For more information on encroachments reference the I.O.C. written by G. Michael Payton, Administrator, Office of Real Estate, June 3, 1996.
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5313 Boundary Surveys

The County Auditor may require a boundary survey of a residue property because a partial acquisition by ODOT leaves a residue property and this residue does not have a legal description. Should the owner sell this residue at a future date, the County Auditor may require a survey describing the legal description of the residue before the sale can be recorded. This burden placed upon the property owner may be a direct result of ODOTs highway project. If it is determined the burden is caused by the ODOT project, then ODOT must pay the cost of a boundary survey or provide the owner with a survey of their residue property. There is no consistency with respect to boundary survey requirements between the 88 counties of Ohio. The County Auditor has the right to require a Boundary Survey per Sections 319.203 and 315.251 (A) of the Ohio Revised Code. The District Offices should maintain a list of the recording requirements of each of the counties. 5313.01 Procedure to Address the Boundary Survey A. The District Office needs to determine if the County Auditor will require a boundary survey of the residue property when, at a future date, the owner decides to sell the residue or a portion of the residue. If its determined the County Auditor requires a boundary survey, ODOT shall either provide such survey or pay for a survey or reimburse the owner for the cost of such a boundary survey so that the owner does not have to pay the cost directly. 1. The cost of the boundary survey is considered an expense incidental to the transfer of title to the agency per: 1) 49 CFR 24.106; and, 2) Rule F, Section 5501:2-5-06 of the Ohio Administrative Code. This incidental expense becomes part of the closing process. The District Office may decide to provide the owner with a survey of the residue. This residue survey can be completed during the plan development process as the District has surveyors in the project area working on the highway plans.
2.
B.
If the District decides not to provide the owner with a survey of the residue property, the following procedure shall be followed: 1. The Contract for Sale and Purchase shall be amended to reflect the boundary survey. See Section 5313.02 of these procedures for more detail regarding the contract. The contract details the amount that ODOT will pay the owner for the boundary survey. The contract also requires the owner to indemnify ODOT from any future liability regarding any future boundary survey issues. The District Office should estimate the cost estimate of a boundary survey using the knowledge of its in-
2.
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house surveying staff. The cost should be based on the size and complexity of the residue property. The cost can also be obtained from local surveying companies. 3. The boundary survey costs ODOT will pay are: a. The entire cost of the boundary survey of the residue property if the ODOT acquisition causes a boundary survey to be required by the County Auditor when the owner next sells the residue property. b. 50% of the cost of a boundary survey if after the ODOT acquisition; the County Auditor will allow the owner one more transaction before it requires a boundary survey. 33.3% of the cost of a boundary survey if after the ODOT acquisition; the County Auditor will allow the owner two more transactions before it requires a boundary survey.
c.
4.
If the owner accepts these conditions, the parcel is processed through billing and on to closing. If the owner challenges the boundary survey cost estimate, the negotiator needs to determine from the owner what he/she considers to be a reasonable cost. This is a counter offer and it can be dealt with by the administrative settlement process. If settlement is approved by the District Real Estate Administrator, the contract is amended to reflect the amended survey amount. The NIAGFO letter and the FMVE are not changed. The change will be to the boundary survey amount in the contract.
5.
6.
If ODOT and the owner cannot agree on an amount for the boundary survey, ODOT will appropriate the property.
5313.02 Procedure for Amending the Contract A. The terms for the boundary survey are to be inserted into the contract. The amount established as FMVE is never changed and remains constant through the entire acquisition process. The boundary survey paragraph that is inserted into the contract has been pre-approved by the Ohio Attorney Generals Office and is to be downloaded from the Office of Real Estate web page. The correct paragraph to be selected is entitled RE 220-2 Insertion for Boundary Survey Expense. Insert this language into the contract at the end of the first paragraph of 1. Price and Consideration. The insertion reads as follows:
In addition to the foregoing [Insert $ amount from Line 1, Section 1] being paid for the reasons aforesaid, Purchaser shall pay to Seller the further sum of [Insert $ amount for
B.
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Boundary Survey Expenses] to offset any and all of the expenses Seller might incur for a survey of the residual lands of Seller at such future time as when Seller seeks to transfer all or any part of the residual lands of Seller. In accepting such offset of [ Insert $ amount for Boundary Survey Expenses], Seller does hereby release and forever discharge Purchaser from all debts, claims, demands, actions and causes of action whatsoever, past, present or future which can or may ever be asserted, as a result of the Seller obtaining a survey of the residual lands of Seller and/or the effects or consequences thereof.
5315 Outdoor Advertising Devices

Outdoor advertising devices (also known as billboards or signs) located within areas to be acquired for ODOTs highway projects can present unique problems when these devices are not properly permitted and/or encroach into the States right of way. The ODOT Office of Advertising Device Control (ADC) does maintain records on these devices and can advise of legal or illegal status. There is a difference between outdoor advertising devises and signs that advertise a place of business (or other business-related signs like entrance or exit signs). 1. Business signs are generally situated in front of a place of business and identify places of business. The sign face does not generate income. These signs can be owned by the fee owner of the land or could be tenant-owned. Outdoor advertising devises exist to generate income, are typically permitted, and the sign face is frequently changed to reflect new ads. Billboards are common examples of outdoor advertising devices. Other forms of advertising exist on buildings, bus shelters, buses and taxis, and in malls, airports, subways, and at sports stadiums and arenas. The Outdoor Advertising Association of America, Inc. classifies these advertising formats into: 1) billboards; 2) street furniture; 3) transit; and, 4) alternative media.
2.
5315.01 Acquisition Procedure A. Highway plans must identify an outdoor advertising device as a take item, but may not have determined if the device was legally permitted. The District Office must contact ADC and request a determination of the legal or illegal status of any outdoor advertising device that is to be acquired prior to valuing the sign or making an offer to the sign owner. ODOT does not pay for advertising devices that are not legally permitted or that are an illegal encroachment into the States right of way. The RE 95 process is required for any taking of any sign or advertising device. This is required as there is a high propensity for signs (advertising devices) to be tenant-owned. See the 5200 Section of the Real Estate Manual for more detail about the RE 95. See the
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5302 Section of the Real Estate Manual for more detail about tenant-owned improvements. C. Acquisition parcels that include an outdoor advertising device generally involve multiple ownerships. Often there is a fee owner of the land and a tenant-owner of the outdoor advertising device. Additionally, there can be a third party lease between the owner of the billboard structure and another company that is leasing the sign faces. 1. The District Office needs to secure copies of any leases, if possible, that exist between the outdoor advertising company and the fee owner of the property. This information needs to be provided to the appraiser. These circumstances may require two or more separate negotiation parcels. The acquisition process for the tenant-owner parcel, typically the outdoor advertising device, must comply with the Federal regulations that govern tenantowned improvements. The Federal regulation is 49 CFR 24.105 and the ODOT procedure for acquiring tenant-owned improvements is Section 5302 of the Real Estate Manual. The entire acquisition process must comply with the Uniform Act. Additionally, the acquisition files must sufficiently document compliance with these procedures and Federal regulation.
2. 3.
D.
After the District Office acquires the outdoor advertising devise, it shall report the terms and conditions of the sale to the Office of ADC.
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5317 Leasing Vacant Buildings During the Acquisition Phase of a Highway Project
Unless the District Office controls the possession of the building, either by the owner conveying the title of the property to ODOT at closing or by an appropriation action, the property owner has the right to lease vacant buildings to tenants and the District will need to provide relocation benefits to these subsequent tenants. 1. Federal regulation requiring relocation eligibility for subsequent tenants is 49 CFR 24.2 (9) and 49 CFR 24.2 (6)(viii) (C).
The resulting eligibility for relocation benefits can increase project costs due to large rent supplement payments. Therefore, project management decisions to rent vacant buildings within the take area can lower project costs and facilitate the clearance of the right of way by taking these types of buildings off the market. 5317.01 Procedure to Rent A. No properties are to be rented until the original tenant has voluntarily moved from the site. Before a building or unit is rented there will be coordination between the relocation and acquisition functions in the District Office. A negotiator or relocation agent is to negotiate with the property owner for the rental of the vacant building or unit. The negotiated rental amount is to be reasonable and justified. The District Office has discretion for the ultimate rental amount agreed to with the owner. The justification for the rental amount is to be a part of the Negotiators Notes, even if the rent was negotiated by a relocation agent. If the property owner refuses to rent the property/unit for the amount determined, negotiations will discontinue and the owner is free to rent to whomever he/she chooses. The agent shall use the rental contract form RE 123.
B.
C.
D.
E.
5318 Acquisition of Cemeteries

A highway project taking real property occupied by a cemetery may need to disinter human remains and relocate the remains to another suitable location. This process presents time intensive challenges and therefore, early involvement with District Office and the Transportation Section of the Ohio Attorney Generals is critical for project delivery.
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A cemetery may be privately owned or may be owned by a township or a city. Depending on ownership classification, there are legal mandates regarding disinterring and moving human remains. These legal requirements may require notification of relatives and/or court action. Also, in some instances, the ODOT may not be able to exercise its right of eminent domain. Due to the multiple complexities involving the acquisition of real property from a cemetery, guidance and direction shall be obtained as early as possible from the Attorney Generals Office (AGO) and there shall be no acquisition of any cemetery property until the AGO provides guidance on how to proceed with the acquisition.
5319 Offsetting the Price Paid for an Acquisition Parcel by the Value of Excess Land
The District Office may offset acquisition costs along a project corridor by selling off excess land located along that corridor to owners whose properties are being acquired for the project. If the value of the excess land exceeds the amount of compensation, the owner will need to pay ODOT the difference at closing. This is permitted under Section 5501.34 (F) of the Ohio Revised Code. Chapter 163 of the Ohio Revised Code was amended in 2007 and its amended provisions do not prohibit ODOT from conveying property pursuant to ORC 5501.42 (F). See the following provision: The amended code allows an owner the right to repurchase back from ODOT, property that was not used for its intended purpose see ORC 163.211. However, ORC 163.02 (D)(3) states that the provision in 163.211 does not affect the authority of the Director to convey unneeded property pursuant to ORC 5501.42 (F). 5319.01 Procedure to Implement this Law A. The District Office makes a determination if there are any excess lands along the same corridor as the property being acquired for the highway project. Land determined to be excess and available to be sold along the project corridor must be appraised according to Section 5501.34 (F) of the Ohio Revised Code. The process of determining the valuation format must also consider if there were any Federal funds utilized in the purchase of the land now considered as excess. Federal funding requires the approval of FHWA prior to the disposal of the excess land. So, to avoid valuation problems, it is prudent to involve FHWA in the decision of the appropriate valuation format for the land disposal. There is no one valuation format that is appropriate in all instances when determining the correct valuation format. The District Office shall analyze the conditions of the disposal parcel and shall then choose the appropriate valuation format as described in the appraisal section of the Real Estate Manual.
B.
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C.
The negotiator shall offer the property owner the established FMVE for the real property needed for the highway project as is typical with any offer using the forms and procedures described in the 5200 Section of the Real Estate Manual. This process is done to ensure compliance with the Uniform Act and to preserve ODOTs appropriation authority if agreement with an owner cannot be reached. Depending if there are buildings in the take area, the negotiator shall use the correct variation of the Contract For Sale and Purchase, either RE 220-B or RE 220-L. The terms and conditions for the compensation offset are to be inserted into the contract. A paragraph is inserted into the contract that has been pre-approved by the Ohio Attorney Generals Office. This paragraph is downloaded from the Office of Real Estate web page. The paragraph selected is entitled RE 220-3 Insertion for Land Swap. Insert this paragraph into the contract at the end of the first paragraph of 1. Price and Consideration. The insertion reads as follows:
Purchaser and Seller agree further as follows: (1) Seller will sell the real property identified in Exhibit A attached hereto (see Section 2, below) to Purchaser for a Total Purchase Price of [Insert $ amount from Line 1, Section 1]; (2) pursuant to R.C. 5501.34(F), Purchaser has declared the real property identified as [ Cty-Rte-Sec], Parcel No. ## - E to be excess land that has an appraised value of [Insert $ amount of appraised value of E parcel], which is more particularly described in Exhibit 1 attached hereto and by this reference incorporated herein; (3) also pursuant to R.C. 5501.34(F), the consideration to be delivered by Purchaser to Seller for the real property identified in Exhibit A shall include the real property identified in Exhibit 1; and (4) the appraised value of the real property described in Exhibit 1, namely [Insert $ amount of appraised value of E parcel] shall be credited against the Total Purchase Price of [Insert $ from Line 1, Section 1] , and the difference between the those two sums, namely [Insert $ difference between Total Purchase Price and Appraised Value of E parcel], shall be paid in cash or equivalent by [Insert Purchaser or Seller, whoever owes balance] to the other party.
D.
E.
At closing, the District Office acquires the property needed for the project and conveys the excess land to the owner. The conveyance of the excess parcel under this section shall be by Governors Deed as prescribed in Section 5501.34 (G) of the Ohio Revised Code. The procedures for the Governors Deed are in Section 7400 of the Real Estate Manual under Property Disposal. The negotiator is to sufficiently document this process to show compliance with the Ohio Revised Code and these procedures.
F.
5320 The Acquisition of Contaminated Property

The acquisition of contaminated property present unique acquisitions requiring much information at the start of the acquisition process so that wise decisions are made and so the appraiser can be adequately scoped to ensure ODOT receives a valid appraisal. This requires an immense amount
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of communication between the District Office, Office of Real Estate, the Office of Environmental Services, the Office of Chief Legal and the Ohio Attorney Generals Office. The District Office needs to beware of purchasing at such an accelerated schedule that adequate environmental studies have not been completed which result in the purchase of a property that is heavily contaminated and where ODOT paid full market value and was not aware of the contamination. 5320.01 Planning for the Acquisition of the Contaminated Property A. Contaminated properties should be identified during the planning phase of a project. Once contamination is uncovered, meetings may be required to adequately address relevant issues. The District Environmental Coordinator (DEC) shall memorialize any meeting by taking notes detailing the relevant issues that were discussed and will distribute these notes by IOC (Interoffice Communication) to the District Real Estate Administrator (DREA) prior to the acquisition phase of the highway project. If the DEC decides a meeting is unwarranted, the DEC must advise the Real Estate Administrator regarding the contamination at the initiation of the acquisition phase of the highway project. At the acquisition phase of the DEC and DREA shall jointly decide if meeting is required to address contamination to ensure a valid appraisal is obtained. If it is determined a meeting is needed, it is recommended the District receive input from: 1. 2. 3. 4. The Office of Environmental Services (the Environmental Site Assessment Supervisor) The Office of the Ohio Attorney General, Transportation Section The Office of Real Estate, the Appraisal Unit The appropriate District personnel such as DEC and DREA
B.
At this meeting, all issues regarding the contamination shall be discussed and ultimately a decision will be made about how to value the property. These discussions should include: 1) The type and extent of contamination within the take and on the residue property; 2) Information from BUSTR (Bureau of Underground Storage Tank Regulation; 3) Environmental site assessment investigations that have been done and the results of those investigations; 4) Would the contamination have been found if ODOTs project had not impacted the property; 5) Would the owner be required to clean the site if ODOTs project had not impacted the property; 6) Ignoring the way ODOT handles contaminated dirt, how would a property owner typically clean or remediate the site; 7) What is the cost to remediate the site; 8) Would a lending institution loan money to someone to purchase this property and if so, under what conditions; 9) What property right should be purchased. C. Generally, there are three valuation options: 1. Assume there is no contamination and value the property as if it were clean.
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2.
Assume there is no contamination and value the property as if it were clean (minus) the cost to clean the site or remediate the contamination. Make no assumptions and value the property as it exists - as contaminated.
3.
5321 Acquiring Property Subject to the Garage Law

Ohio eminent domain law provides the owner of a residence with a unique right commonly known as the The Garage Law. This law is Section 163.05 (G) of the Ohio Revised Code and is stated as follows: In the event of an appropriation where the agency would require less than the whole of any parcel containing a residence structure and the required portion would remove a garage and sufficient land that a replacement garage could not be lawfully or practically attached, the appropriation shall be for the whole parcel and all structures unless, at the discretion of the owner, the owner waives this requirement, in which case the agency shall appropriate only the portion that the agency requires as well as the entirety of any structure that is in whole or in part on the required portion. This provision of the Revised Code is only applicable in instances where the ODOT highway design removes the garage and there is insufficient land to replace the garage. If the design does not remove the garage, but impacts it such that it may not be feasible to continue its use as a garage, the owner may be entitled to compensation in the form of damages, but we would not acquire the entire property per R.C. 163.05(G). The law requires the District Offices to interrelate acquisition, appraisal and relocation processes to ensure an owner is adequately made aware of their rights and benefits and to ensure the project can be cleared by the District R/W Clear Date. The following procedures are established to implement this regulation into ODOTs acquisition process. 5321.01 Procedure to Implement the Provision of Law A. The District Office must identify properties subject to this garage legislation early in the project (i.e. during the preliminary right of way plan phase when acquisition work plans and cost estimates are being prepared). Early identification is critical as these categories of properties may be eligible for relocation benefits, will require before and after appraisals, will require two offers of compensation and may require much more time than what is typical to complete. The owners of these properties need to be among the first to receive good faith offers and if determined eligible, relocation offers. When a property appears to meet the conditions of the Garage Law, the District is to physically inspect the outside of the property and compare it against the R/W plan to determine:
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B.
1. 2. 3. 4. C.
If the property is utilized as a residence. If there is an existing garage with the property before the taking. If the taking will remove the garage. If there is room on the residue property to replace the garage.
The garage cannot be replaced If the determination is the garage cannot be replaced on the residue property, Ohio eminent domain law requires ODOT to acquire the entire property unless the owner waives this requirement and chooses to retain the residue property without the utility of the garage which is taken as a part of the project. The District Office will make the property owner aware of all acquisition compensation and relocation benefits potentially available to him/her before the owner can make an informed decision about waiving the requirement for the agency to purchase the entire property. The garage can be replaced on the residue If it is determined the garage can be replaced on the residue property, the District Office will only acquire what it needs for the project and will estimate damages, if any, to the part not acquired. The appraiser must be scoped to support within the appraisal report that a garage can be physically replaced on the residue, can be legally replaced on the residue and can be functionally replaced on the residue. The appraiser must value the property before the taking having a garage and then value the property after the taking having no garage. The owner will be offered compensation for the part taken and damages, if any, to the part not taken. ODOT is not required to offer compensation to replace the garage. Treated as a relocation parcel A residential use property subject to the Garage Law is to be treated as a relocation parcel and a pre-acquisition survey needs to be completed as early as possible. See Section 6203 of the Real Estate Manual for more detail regarding relocation procedures and pre-acquisition surveys. During the pre-acquisition survey, the agent shall inform the owner of the Garage Law legislation. The appraisal process A before and after valuation shall always be done of the property. If the owner changes his/her mind, the before and after value can always be used to make an offer for the whole, or, to make a separate offer for the part needed for the project and damages, if, any, to the part not taken. The appraiser must be scoped to support within the appraisal report whether or not a garage can be physically replaced on the residue, legally replaced on the residue or functionally replaced on the residue. The appraisal reviewer shall fill out form RE 22 in a format similar to an uneconomic remnant. The form shall detail the amount of compensation assuming ODOT purchased the entire property and the amount of compensation assuming the owner keeps their residue property.
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D.
E.
F.
The District Office shall establish two different FMVEs which will be the basis for two good faith offers. G. The NIAGFO The first good faith offer shall consider the property as if ODOT acquired the whole property. Prior to this offer, the relocation comping process should start. The acquisition offer and the relocation offer are to be made on the same visit with the property owner. The second good faith offer shall consider the property as if the owner decided to waive the requirement of the agency to purchase the entire property. This offer will assume the owner keeps the residue property. H. The negotiator shall adequately document this process and shall document the decision of the property owner in the Negotiator Notes. The negotiator shall have the owner sign the Garage Acquisition Election form which documents the owners decision about selling the whole property to ODOT or keeping the residue property.
5322 Acquiring Property From Individuals Working for an Instrumentality of the State
5322.01 General A. Any official or employee of an instrumentality of the state (including employees of the state or an LPA) who has an interest in property impacted by the project cannot be in a decision making position with respect to any aspect of the project. This is a conflict of interest. Officials or employees who have an interest in property impacted by the project and who are in a decision making position must disclose this fact and recuse themselves from any involvement in the project. Officials or employees who have an interest in property impacted by the project but who are not in a decision making position must disclose this fact and sign a Conflict of Interest form. 5322.02 Regulation Controlling Conflict of Interest for ODOT Employees A. Federal Code, 23 CFR, Part 1 Section 1.33 Conflicts of interest. No official or employee of a State or any other governmental instrumentality who is authorized in his official capacity to negotiate, make, accept or approve, or to take part in negotiating, making, accepting or approving any contract or subcontract in connection with a project shall have, directly or indirectly, any
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financial or other personal interest in any such contract or subcontract. No engineer, attorney, appraiser, inspector or other person performing services for a State or a governmental instrumentality in connection with a project shall have, directly or indirectly, a financial or other personal interest, other than his employment or retention by a State or other governmental instrumentality, in any contract or subcontract in connection with such project. No officer or employee of such person retained by a State or other governmental instrumentality shall have, directly or indirectly, any financial or other personal interest in any real property acquired for a project unless such interest is openly disclosed upon the public records of the State highway department and of such other governmental instrumentality, and such officer, employee or person has not participated in such acquisition for and in behalf of the State. It shall be the responsibility of the State to enforce the requirements of this section. B. Ohio Revised Code, Title 2921.42 (A) (1) No public official shall knowingly do any of the following: Authorize, or employ the authority or influence of his office to secure authorization of any public contract in which he, a member of his family, or any business associates has an interest. 5322.03 Procedure for Conflict Of Interest A. Federal and state law prohibits any official or employee of an instrumentality of the State of Ohio from participating in any acquisition activities or decision-making activities when real property owned by the employee is affected by a highway project. Consequently, any official or employee who has an interest in real property that may be acquired or appropriated must recuse themselves from any participation in the acquisition process or decision making activities. 1. 2. Instrumentality of the State of Ohio includes ODOT and LPAs. Acquisition activities include, but are not limited to, the decision to acquire or appropriate property needed for the project, appraisals, appraisal reviews, negotiations, relocation, appropriations, closings and title work. Decision making activities can include, but are not limited to: planning, funding, design, construction, acquisition, any step in the Project Development Process (PDP) or in the project selection process. Recuse is defined as to remove (oneself) from participation to avoid a conflict of interest. If an official or employee is part of any decision making activity related to the project and determines that they, a family member or business associate have an
3.
4.
5.
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interest in property that is affected, that person must immediately disclose this fact and recuse themself immediately from the project. 6. If the official or employee is not part of any decision-making process, that person does not need to recuse themselves, but still must disclose the fact that he/she owns an interest in the real property that is needed for the project no later than the initial negotiation contact when the negotiator presents the Notice of Intent to Acquire and Good Faith Offer. a. Once the official or employee discloses the fact they have an interest in the property to be acquired, the negotiator shall have the official or employee sign the form entitled Conflict of Interest Statement. The form can be downloaded from the Office of Real Estate web page. Once the official or employee signs the form, the District Real Estate Administrator shall sign the form. The owner is then provided a signed copy and another copy is retained in the parcel file. Additional copies are distributed as follows: District Deputy Director if the person is an employee of the District; or, Central Office Deputy Director if the person is an employee of Central Office. For LPA projects, the County Engineer or the City Manager or Mayor are to be provided a copy of the signed form.
a.
c.
5323 Acquiring Real Property Subject to a Life Estate

The creation of a life estate divides the fee simple estate into two lesser estates held by the life tenant and the remainderman. The life tenant holds the beneficial interest in the property for his or her life, or the life of a third party, while the remainderman holds all other rights to the fee simple estate, plus the right to the beneficial interest in the property upon death of the life tenant or the third party. A life estate has been defined as total rights of use, occupancy, and control, limited to the lifetime of a designated party, often known as the life tenant. It has been well established that a life tenant is an owner in the constitutional sense and is entitled to compensation in an eminent domain proceeding. Source: Real Estate Valuation in Litigation, 2nd edition, page 54
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5323.01 Identifying a Life Estate Interest A. If a life estate is a matter of public record, the Title Report should identify the life estate. However, a life estate can exist without being recorded. In these instances, the existence of a life estate can be identified during the RE 95 process and/or the pre-acquisition survey done on relocation parcels. A life estate cannot be ignored. Life estates must be identified as early as possible so there is adequate time to perform acquisition and relocation activities. Once identified, the District Office must develop a plan of action to acquire the property rights needed for the highway project and if required, relocate the life tenant off the project area. If uncertain of what action to take, the District Office is to call Central Office Real Estate. It may also be necessary to obtain additional guidance from the Ohio Attorney Generals Office. Once a life estate is uncovered it is categorized into either: 1. An acquisition that does not displace the life tenant, or a 2. An acquisition that displaces a life tenant
B.
C.
5323.02 Acquisitions That Do Not Displace Life Tenants A. These acquisitions are not relocation parcels and the life tenant retains occupancy on the residue property. The appraiser is scoped to value the property assuming a single ownership. The RE 22 is completed. The reviewer shall not allocate compensation into the life estate interest or the remaindermen interest. FMVE is established. The negotiator shall create the Notice of Intent to Acquire and Good Faith Offer (NIAGFO). The owner named on the NIAGFO is the life estate interest and the remaindermen interest. The amount of compensation is the total FMVE. All parties must agree to the price paid. ODOT will need to turn the parcel over to the Ohio Attorney Generals Office for appropriation if agreement cannot be reached with all ownership interests. The District Office should get guidance from the Office of Accounting for other allocations of compensation. When a decision is made to cut more than one warrant, assignment letters and/or release of life estate must be created by the Attorney Generals Office. A W-9 will be obtained from each life estate holder and remainderman receiving a warrant from ODOT. C. A closing is scheduled once all parties agree to the price paid. At closing, only the remainderman interest signs the ODOT instrument. The life estate interest must sign a release of life estate which will be prepared by the Ohio Attorney Generals Office.
B.
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5323.03 Acquisitions That Displace Life Tenants A. This acquisition takes the dwelling occupied by the life tenant and may entitle the life tenant to relocation benefits. Dissolve the Life Estate Allowing the Life Tenant to Become the Fee Owner 1. The District Office needs to meet with the life estate tenant and the remaindermen to determine if all parties are agreeable to dissolving the life estate, having the remaindermen convey their interest in the real estate to the life tenant and allow life tenant to become the fee owner. 2. This process must happen at the beginning of the acquisition phase of the project as it may require significant time for the parties to discuss this option and to arrive at a mutual agreement. As the ODOT project has caused the problem, the District Office is to request the Ohio Attorney Generals Office to prepare the legal documents that dissolve the life estate interest and that allow the remaindermen to convey their interest to the life estate holder. If these parties desire to use their own attorneys, ODOT shall pay reasonable attorney fees. Legal documents created by other attorneys are to be reviewed by the AGO. As this process is underway, the property is to be appraised, the appraisal is to be reviewed and FMVE is to be established. Once FMVE is established the relocation comping process can be initiated. The life tenant is considered a 180 day owner occupant. An acquisition offer and relocation offer can be made once the life tenant is legally the fee owner. The relocation offer will treat the life tenant (now the fee owner) as a 180 day owner occupant and the relocation agent shall comply with the Relocation Manual, Sections 6000 through 6700 of the Real Estate Manual. The acquisition offer will treat the life tenant as a fee owner.
B.
3.
4.
5.
C.
If the parties cannot mutual agree to dissolving the life estate, the acquisition, appraisal and relocation processes become more complex. Each situation is unique and guidance is required from Central Office Real Estate. Early identification of this issue is critical to ensure clearance of the right of way.
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2013 Acquisition 103 Part B Student Training Manual-1

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2013 Acquisition 103 Part B Student Training Manual-1

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The Office Of Real Estate Ohio Department of Transportation 2013 Training Course Acq.

ACQUISITION 103 STUDENT TRAINING MANUAL

ACQUISITION 103 PART B

Donation of Real Estate Needed for the Highway Project

The next page is an example of the Donation letter.

Owner Retention of Improvements

After form RE 66(Agreement for Removal) example go to Case Study# 2

5313 Boundary Surveys

5315 Outdoor Advertising Devices

5318 Acquisition of Cemeteries

5320 The Acquisition of Contaminated Property

5321 Acquiring Property Subject to the Garage Law

5323 Acquiring Real Property Subject to a Life Estate

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