Replacement Housing Payments

(1) Payments for 90-Day Owner-Occupants. (a) Eligibility. A displaced person is eligible for replacement housing payments as an owner-occupant under this paragraph if: 1. The person has actually owned and occupied the displacement dwelling for not less than 90 days immediately prior to the initiation of negotiations; and 2. The person purchases and occupies a decent, safe and sanitary dwelling within one year after the later of the following dates: (i) The date the person receives final payment for the displacement dwelling where the acquisition is by settlement or, in the case of condemnation, the date the full amount of the estimate of just compensation is deposited with the court; or (ii) The date on which the displacing agency meets its obligation to make a comparable replacement dwelling available to the person, as provided in Rule 1680-06-02-07, Paragraph (5). 3. If the displaced person purchases a replacement dwelling before the one-year deadline but is unable to occupy the dwelling for reasons beyond the displaced person’s control, the requirement to occupy the replacement dwelling within the one-year period may be waived. (b) Amount of Payment (Basic Computation). The replacement housing payment made to an eligible 90-day owner-occupant shall be in an amount, not to exceed $31,000, necessary to relocate the owner-occupant to a comparable replacement dwelling within the one-year eligibility period, as defined in Subparagraph (a) above. Such payment shall be determined by calculating the sum of: 1. The amount, if any, by which the acquisition cost of the replacement dwelling exceeds the base compensation received for the displacement dwelling, with such cost differential to be determined in accordance with Subparagraph (c) below; 2. The amount of any increased interest costs and other debt service costs that are incurred in connection with the mortgage(s) on the replacement dwelling, as determined in accordance with Subparagraph (d) below; and 3. The reasonable expenses incidental to the purchase of the replacement dwelling, as determined in accordance with Subparagraph (e) below. (c) Determining the Cost Differential Between the Replacement Dwelling and the Displacement Dwelling. 1. Acquisition Cost of the Replacement Dwelling. (i) Replacement Dwelling. For the purposes of calculating the replacement housing payment for a 90-day owner-occupant under this Rule, the acquisition cost of the replacement dwelling shall be the lesser of: RELOCATION ASSISTANCE PROGRAM CHAPTER 1680-06-02 (I) The reasonable cost of a comparable replacement dwelling, as determined in accordance with Subparagraph (3)(a) below; or (II) The purchase price of a decent, safe and sanitary replacement dwelling actually purchased and occupied by the displaced person. (ii) Retention of Displacement Dwelling. In the alternative, if the owner- occupant retains ownership of his or her displacement dwelling and moves it from the displacement site to reoccupy it at the replacement site, the acquisition cost of the replacement dwelling shall be the sum of: (I) The cost of moving and restoring the dwelling to a condition comparable to that prior to the move; (II) Any additional cost necessary to make the unit a decent, safe and sanitary replacement dwelling; (III) The current fair market value for residential use of the replacement site, as determined by appraisal or any other reasonable method, unless the claimant rented the displacement site and there is a reasonable opportunity for the claimant to rent a suitable replacement site; and (IV) The retention value of the dwelling, if such retention value is reflected in the “acquisition cost” used when computing the replacement housing payment. 2. Adjustments to Base Compensation for Displacement Dwelling. (i) Mixed-Use and Multi-Family Properties. If the displacement dwelling was part of a property that contained another dwelling unit and/or space used for non-residential purposes, and/or is located on a lot larger than typical for residential purposes, only that portion of the compensation payment actually attributable to the displacement dwelling shall be considered when computing the cost differential. (ii) Insurance Proceeds. To the extent necessary to avoid duplicate compensation, the amount of any insurance proceeds received by a person in connection with a loss to the displacement dwelling due to a disaster (fire, flood, etc.) shall be included in the base compensation for the displacement dwelling when computing the cost differential. (d) Increased Mortgage Interest Costs. 1. The payment for increased mortgage interest costs shall be the amount that will reduce the mortgage balance on a new mortgage, if any, to an amount that could be amortized with the same monthly payments for principal and interest as that for the mortgage(s) on the displacement dwelling. It shall also include other debt service costs, if not paid as incidental costs, and shall be based only on bona fide mortgages that were valid liens on the displacement dwelling for at least 180 days prior to the initiation of negotiations. 2. The computation of the increased mortgage interest costs payment shall be based on the following: RELOCATION ASSISTANCE PROGRAM CHAPTER 1680-06-02 (i) The payment shall be based on the unpaid mortgage balance(s) on the displaced dwelling. In the event, however, that the person obtains a smaller mortgage than the mortgage balance computed in the buydown determination, the payment shall be prorated and reduced accordingly. In the case of a home equity loan, the unpaid balance shall be that balance which existed 180 days prior to the initiation of negotiations or the balance on the date of acquisition, whichever is less. (ii) The payment shall be based on the remaining term of the mortgage(s) on the displacement dwelling or the term of the new mortgage, whichever is shorter. (iii) The interest rate on the new mortgage used in determining the amount of the payment shall not exceed the prevailing fixed interest rate for conventional mortgages charged by mortgage lending institutions in the area in which the replacement dwelling is located. (iv) Purchaser’s points and loan origination or assumption fees, but not seller’s points, shall be paid to the extent that: (I) They are not paid as incidental expenses; (II) They do not exceed rates normal to similar real estate transactions in the area; (III) The displacing agency determines them to be necessary; and (IV) The computation of such points and fees shall be based on the unpaid mortgage balance(s) on the displacement dwelling, less the amount determined for the reduction of such mortgage balance(s) under this part. (v) The displaced person shall be advised of the approximate amount of this payment and the conditions that must be met to receive the payment as soon as the facts relative to the person’s current mortgage(s) are known and the payment shall be made available at or near the time of closing on the replacement dwelling in order to reduce the new mortgage as intended. (e) Incidental Expenses. The incidental expenses to be paid are those necessary and reasonable costs actually incurred by the displaced person incident to the purchase of a replacement dwelling, and customarily paid by the buyer, including the following: 1. Legal, closing and related costs, including those for title search, title insurance, preparing conveyance instruments, notary fees, preparing surveys and plats, and recording fees; 2. Lender, FHA or VA application and appraisal fees; 3. Loan origination or assumption fees that do not represent prepaid interest; 4. Certification of structural soundness, and termite inspection when required; 5. Credit report; RELOCATION ASSISTANCE PROGRAM CHAPTER 1680-06-02 6. Owner’s and mortgagee’s evidence or assurance of title, e.g., title insurance (not to exceed the costs for evidence or assurance of title for a comparable replacement dwelling); 7. Escrow agent’s fee; 8. State revenue or documentary stamps, sales or transfer taxes (not to exceed the costs for a comparable replacement dwelling); 9. Mortgage default insurance (based on the unpaid mortgage balance(s) on the displacement dwelling or the new mortgage amount, whichever is less); and 10. Such other costs as the displacing agency determines are normally incidental to the purchase of similar real estate in the area. (f) Rental Assistance Payment for 90-Day Owner-Occupant. A displaced 90-day owner-occupant eligible for a replacement housing payment under Paragraph (1) of this Rule may choose to rent a replacement dwelling. In such case, the displaced person is entitled to receive a rental assistance payment, not to exceed $7,200, in lieu of a replacement housing payment. The amount of the rental assistance payment shall be calculated and disbursed in accordance with Subparagraph (2)(b) of this Rule. (2) Replacement Housing Payments for 90-Day Occupants. (a) Eligibility. A tenant or owner-occupant displaced from a dwelling is entitled to a payment, not to exceed $7,200, for rental assistance, as computed in accordance with Subparagraph (b) below, or down payment assistance, as computed in accordance with Subparagraph (c) below, if the displaced person: 1. Has actually and lawfully occupied the displacement dwelling for at least 90 days immediately prior to the initiation of negotiations; and 2. Has rented, or purchased, and occupied a decent, safe and sanitary replacement dwelling within one year (unless the displacing agency extends this period for good cause based on occurrences beyond the displaced person’s control) after: (i) In the case of a tenant, the date the person moves from the displacement dwelling, or (ii) In the case of an owner-occupant, the later of: (I) The date the person receives final payment for the displacement dwelling, or in the case of condemnation, the date the full amount of the estimate of just compensation is deposited with the court, or (II) The date the person moves from the displacement dwelling. (b) Rental Assistance Payment. 1. Amount of Payment. An eligible displaced person who rents a replacement dwelling is entitled to a payment, not to exceed $7,200, for rental assistance. RELOCATION ASSISTANCE PROGRAM CHAPTER 1680-06-02 Such payment shall be 42 times the amount obtained by subtracting the base monthly rent for the displacement dwelling, as calculated in accordance with Part 2 below, from the lesser of: (i) The monthly rent and estimated average monthly cost of utilities for a comparable replacement dwelling; or (ii) The monthly rent and estimated average monthly costs of utilities for the decent, safe and sanitary dwelling actually occupied by the displaced person. 2. Base Monthly Rent For Displacement Dwelling. The base monthly rent for the displacement dwelling is the lesser of: (i) The average monthly cost for rent and utilities at the displacement dwelling for a reasonable period prior to displacement, as determined by the displacing agency, except that: (I) For an owner-occupant, the monthly rent shall be the fair market rent for the displacement dwelling, or (II) For a tenant who paid little or no rent, the monthly rent shall be the fair market rent, unless its use would create a hardship because of the person’s income or other circumstances; (ii) Thirty (30) percent of the persons average gross household income if their income is classified as “low income” by the U.S Department of Housing and Urban Development’s Annual Survey of Income Limits for Public Housing and Section 8 Programs (http://www.fhwa.dot.gov/realestate/ua/ualic.htm). If the person refuses to provide appropriate evidence of income or is a dependent (a full time student or resident of an institution may be assumed to be a dependent unless the person demonstrates otherwise), the base monthly rent shall be established solely on the criteria in Subpart 2(i) above; or (iii) The total of the amounts designated for shelter and utilities if the person is receiving a welfare assistance payment from a program that designates the amounts for shelter and utilities. 3. Manner of Disbursement. A rental assistance payment may, at the displacing agency’s discretion, be disbursed either in a lump sum or in installments. However, except as limited by Subparagraph (3)(h) below, the full amount vests immediately, whether or not there is any later change in the person’s income or rent, or in the condition or location of the person’s housing. (c) Down Payment Assistance Payment. 1. Eligibility. A displaced person eligible for a rental assistance payment under Paragraph (2) of this Rule is also eligible to receive a down payment assistance payment if the person chooses to purchase a replacement dwelling. Any displaced person eligible to receive a replacement housing payment as a 90-day owner-occupant is not eligible for this payment. 2. Amount of Payment. The amount of the down payment assistance payment shall be equal to the amount the person would receive under Subparagraph (2)(b) of RELOCATION ASSISTANCE PROGRAM CHAPTER 1680-06-02 this Rule if the person rented a comparable replacement dwelling. At the discretion of the displacing agency, the down payment assistance payment may be increased to any amount not to exceed $7,200, or the amount the person would receive as a replacement housing payment if the person met the 90-day occupancy requirement, whichever is less. The displacing agency’s discretion to provide the maximum shall be exercised in a uniform and consistent manner, so that eligible displaced persons in like circumstances are treated equally. 3. Application of Payment. The full amount of the down payment assistance must be applied to the purchase price of the replacement dwelling and related incidental expenses. (3) Additional Rules Governing Replacement Housing Payments. (a) Determining the Acquisition Cost of Comparable Replacement Dwelling. The upper limit of a replacement housing payment shall be based on the cost (asking price) of a comparable replacement dwelling identified for the displaced person. 1. If available, at least three comparable replacement dwellings shall be examined and the payment computed on the basis of the dwelling most nearly representative of, and equal to or better than, the displacement dwelling. An obviously overpriced dwelling may be ignored. If an adjustment is made in the replacement housing payment computation and the displaced person purchases the selected comparable dwelling but at a price higher than the adjusted price, the replacement housing payment will be adjusted upward to reflect the actual purchase price of the replacement dwelling. 2. If the site of the comparable replacement dwelling lacks a major exterior attribute of the displacement dwelling site, e.g., the site is significantly smaller or does not contain a swimming pool, the value of such attribute shall be subtracted from the acquisition cost of the displacement dwelling for purposes of computing the payment. 3. If the acquisition of a portion of a typical residential property causes the displacement of the owner from the dwelling and the remainder is a buildable residential lot, the displacing agency may offer to purchase the entire property. If the owner refuses to sell the remainder to the displacing agency, the fair market value of the remainder may be added to the acquisition cost of the displacement dwelling for purposes of computing the replacement housing payment. 4. To the extent feasible, comparable replacement dwellings shall be selected from the neighborhood in which the displacement dwelling was located or, if that is not possible, in nearby or similar neighborhoods where housing costs are generally the same or higher. (b) Inspection of Replacement Dwelling. Before making a replacement housing payment or releasing a payment from escrow, the displacing agency or its designated agent shall inspect the replacement dwelling and determine whether it is a decent, safe and sanitary dwelling. (c) Statement of Eligibility to Lending Agency. RELOCATION ASSISTANCE PROGRAM CHAPTER 1680-06-02 If the displaced person qualifies for a replacement housing payment but has not yet purchased or occupied a replacement dwelling, the displacing agency shall, upon the request of the displaced person, provide a written statement to any interested party, financial institution or lending agency, that the displaced person is eligible for the payment of a specific sum subject to the displacing agency’s requirements. (d) Revisions to the Replacement Housing Payment. When replacement housing, similar in price and comparability to the dwelling used in the original replacement housing computation, is no longer available, the displacing agency shall make any necessary referrals to comparable housing currently available, and the displacing agency shall revise the replacement housing payment subject to the following requirements: 1. The revised offer may not be less than the original offer merely because a less expensive comparable becomes available. 2. A replacement housing payment offer shall be revised and may be less than the original offer if: (i) The appraisal is updated and the offer for the displacement dwelling and site is increased; (ii) In condemnation cases, the final award is greater than the acquisition offer for the displacement dwelling and site; or (iii) In the case of an administrative settlement, the initial acquisition offer for the displacement dwelling and site is increased. 3. Except in those cases where the acquisition offer is increased, the primary purpose of a revised replacement housing payment offer is to provide the displaced person with information regarding currently available replacement housing. Therefore, if replacement dwellings similar in price and comparability to the dwelling used in the original replacement housing payment computation are available, a revised offer is not necessary. However, current listings must be provided to the displaced person if requested. (e) Purchase of Replacement Dwelling. A displaced person shall be considered to have met the requirement to purchase a replacement dwelling under any one of the following conditions: 1. The displaced person purchases an existing decent, safe and sanitary dwelling. 2. The displaced person purchases and rehabilitates a substandard dwelling; provided, that in such a case the displacing agency shall pay the person an amount, not to exceed the amount offered as a replacement housing payment, to the extent that the sum of the following exceeds the acquisition price for the displacement dwelling: (i) The purchase price of the substandard dwelling; plus (ii) The costs of undertaking any actions pre-approved by the displacing agency as being necessary to make the dwelling decent, safe, and sanitary, but not to make the dwelling comparable. RELOCATION ASSISTANCE PROGRAM CHAPTER 1680-06-02 3. The displaced person relocates a dwelling that the displaced person owns or purchases; provided, that in such a case the displacing agency shall pay the person an amount, not to exceed the amount offered as a replacement housing payment, to the extent that the sum of the following exceeds the acquisition price for the displacement dwelling: (i) The retention value or current fair market value of the relocated dwelling; plus (ii) The cost of moving the relocated dwelling; plus (iii) The cost of undertaking any actions pre-approved by the displacing agency as being necessary to restore the relocated dwelling to a condition comparable to that prior to the move; plus (iv) The cost of undertaking any actions pre-approved by the displacing agency as being necessary to make the relocated dwelling a decent, safe and sanitary dwelling; plus (v) The cost of purchasing the replacement site, up to an amount not to exceed the cost of an available suitable replacement site, or the current fair market value of the replacement site, in any case where the relocated dwelling is moved to remainder land adjacent to the site of the displacement dwelling or on other land previously owned by the displaced person. 4. The displaced person constructs a decent, safe, and sanitary dwelling on a site which the displaced person owns or purchases; provided, that in such a case the displacing agency shall pay the person an amount, not to exceed the amount offered as a replacement housing payment, to the extent that the sum of the following exceeds the acquisition price for the displacement dwelling: (i) The cost of constructing a decent, safe and sanitary dwelling; plus (ii) The cost of purchasing the replacement site, up to an amount not to exceed the cost of an available suitable replacement site, or the current fair market value of the replacement site, in any case where the relocated dwelling is constructed on remainder land adjacent to the site of the displacement dwelling or on other land previously owned by the displaced person. 5. The displaced person contracts for the purchase or construction of a dwelling on a site provided by a builder or on a site the person owns or purchases. 6. The displaced person occupies a decent, safe, and sanitary dwelling that the displaced person previously owned, in which case the acquisition cost for the replacement dwelling shall be the current fair market value of that dwelling. (f) Occupancy Requirements for Displacement or Replacement Dwelling. No person shall be denied eligibility for a replacement housing payment solely because the person is unable to meet the occupancy requirements for a displacement or replacement dwelling set forth in these Rules for a reason beyond the displaced person’s control, including: RELOCATION ASSISTANCE PROGRAM CHAPTER 1680-06-02 1. A disaster, an emergency, or an imminent threat to the public health or welfare, as determined by the President, the agency funding the project, or the displacing agency; or 2. Another reason, such as delay in the construction of the replacement dwelling, military reserve duty, or hospital stay, as determined by the displacing agency. (g) Conversion of Payment. A displaced person who initially rents a replacement dwelling and receives a rental assistance payment under Rule 1680-06-02-.13, Subparagraph (2)(b), is eligible to receive a replacement housing payment under Rule 1680-06-02-.13, Paragraph (1), or a down payment assistance payment under Rule 1680-06-02-.13, Subparagraph (2)(c), if the displaced person meets the applicable eligibility requirements for such payments, including purchase and occupancy within the prescribed one-year period. Any portion of the rental assistance payment that has been disbursed shall be deducted from the replacement housing payment or down payment assistance payment. (h) Payment After Death. A replacement housing payment is personal to the displaced person and upon his or her death the undisbursed portion of any such payment shall not be paid to the heirs or assigns, except that: 1. The amount attributable to the displaced person’s period of actual occupancy of the replacement housing shall be paid; 2. The full payment shall be disbursed in any case in which a member of the displaced family dies and the other family members continue to occupy a decent, safe, and sanitary replacement dwelling; and 3. Any portion of a replacement housing payment necessary to satisfy the legal obligation of an estate in connection with the selection of a replacement dwelling by or on behalf of a deceased person shall be disbursed to the estate.