2013 Acquisition 103 Part B Student Training Manual-1

7/28/2019 2013 Acquisition 103 Part B Student Training Manual-1

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The Office Of Real Estate

Ohio Department of Transportation

2013 Training CourseAcq. 103

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ACQUISITION 103STUDENTTRAINING MANUAL


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ACQUISITION 103

PART B


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5310 Donations of Real Estate .....53-15310.01 Procedure for Donation .......................................................................... 53-1

5311 Owner Retention of Improvements ............................................................................ 53-55311.01 Procedure for Owner Retention ............................................................. 53-5

5311.02 Procedure for Salvage Value .................................................................. 53-7

5311.03 Procedure for Amending Contract or Bill of Sale .................................. 53-85311.04 Procedure for the Agreement for Removal

of ImprovementsRE 66 ...................................................................... 53-9

Quiz 2 ................................................................................................... 53-18

5312 Encroachments ........................................................................................................... 53-20

5312.01 General Information ............................................................................. 53-205312.02 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 .................................................................................... 53-315319.01 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 ..................................................... 53-345321.01 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 ................................................................................................ 53-365322.02 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 .................................................. 53-385323.01 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 ProjectThe donation process is heavily regulated. These regulations include:

1. Uniform Act, Title III, Section 301 (10)

2. 49 CFR, Subpart B, Section 24.1083. 23 CFR Subpart E, Section 710.505

4. Ohio Revised Code, Section 5501.33, 5501.331

5. 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 formwith the owner.

B. 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.

C. 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).

D. 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.

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;

2. 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;


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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 forconstruction features or services - See 23 CFR 710.505 (c) for more detail.

G. The instruments used for donation are the standard instruments described in Section 5400

of the Real Estate Manual for instrument procedure.

The next page is an example of the Donation letter.


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5311 Owner Retention of ImprovementsThe 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 ofway. 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 rightsof 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.

B. 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.

C. 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 theDistrict must agree to the Salvage Value amount.

1. Form RE 68 is the Salvage Value form used to estimate Salvage Value.

2. See Section 5311.02 of these procedures for more detail about Salvage Value

D. 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 Improvementsform

(RE 66).

1. See Section 5311.03 of these procedures for more detail about amending the

contract.

2. 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).

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 termsstipulated in the RE 66.

2. 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.

3. 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

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).

G. The negotiator must adequately document the owner retention process to demonstrate

compliance with the legal requirements for retention and ODOTs procedure to

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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 therequirement 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 saleto 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.

Step 2: Estimate the cost to disconnect the item and move it to the curb.

Step 3: Cost in Step 1 ( - ) Cost in Step 2 = Value A

C. The next part of the regulation is When there is no reasonable prospect for sale, thevalue 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.

Step 5: Estimate the cost to disconnect the item and transport it to the salvage

dealer.

Step 6: Cost in Step 4 ( - ) Cost in Step 5 = Value B

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 consumingand 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 mayconsider 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 eithercase, 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 of1. 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.

5311.04 Procedure for the Agreement for Removal of Improvements form (RE 66)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.

B. 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 termsof 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.

3. 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.

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 theowner 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 theexpense 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.

2. 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.

3. 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.

4. 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

B. For more information on encroachments reference the I.O.C. written by G. MichaelPayton, Administrator, Office of Real Estate, June 3, 1996.


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5313 Boundary SurveysThe 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 burdenplaced 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 theclosing process.

2. 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.

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 thecontract.

2. 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 ofits in-


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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 Auditorwhen 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.

c. 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.

4. If the owner accepts these conditions, the parcel is processed through billing andon to closing.

5. 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.

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.

B. 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 of1. 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


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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 SurveyExpenses], 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.

2. 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 onbuildings, 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.

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.

B 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 ofthe 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.

2. These circumstances may require two or more separate negotiation parcels.

3. The acquisition process for the tenant-owner parcel, typically the outdoor

advertising device, must comply with the Federal regulations that govern tenant-

owned improvements. The Federal regulation is 49 CFR 24.105 and the ODOTprocedure 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.

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 relocationbenefits 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.

B. 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.

C. 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 forthe rental amount is to be a part of the Negotiators Notes, even if the rent was negotiated

by a relocation agent.

D. 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.

E. The agent shall use the rental contract form RE 123.

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 LandThe 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 ODOTthe 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 purposesee 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.

B. 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 thepurchase 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 valuationformat 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.


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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.

D. 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 of1. 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 TotalPurchase 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.

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 beby 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.

F. The negotiator is to sufficiently document this process to show compliance with the Ohio

Revised Code and these procedures.

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 thecontamination.

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 Administratorregarding the contamination at the initiation of the acquisition phase of the highway

project.

B. 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. The Office of Environmental Services (the Environmental Site Assessment

Supervisor)

2. The Office of the Ohio Attorney General, Transportation Section

3. The Office of Real Estate, the Appraisal Unit4. The appropriate District personnel such as DEC and DREA

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.

3. Make no assumptions and value the property as it exists - as contaminated.

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 afterappraisals, 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.

B. 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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1. If the property is utilized as a residence.

2. If there is an existing garage with the property before the taking.

3. If the taking will remove the garage.

4. If there is room on the residue property to replace the garage.

C. 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.

D. The garage can be replaced on the residue

If it is determined the garage can be replaced on the residue property, the District Officewill 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.

E. Treated as a relocation parcel

A residential use property subject to the Garage Law is to be treated as a relocationparcel 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.

F. 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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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 wholeproperty. 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.

5322Acquiring 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 ofinterest.

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 ofsuch 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 ordecision making activities.

1. Instrumentality of the State of Ohio includes ODOT and LPAs.

2. 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.

3. 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.

4. Recuse is defined as to remove (oneself) from participation to avoid a conflict of

interest.

5. 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


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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 theinitial 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.

a. Once the official or employee signs the form, the District Real Estate

Administrator shall sign the form.

c. 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.

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-acquisitionsurvey done on relocation parcels.

B. 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.

C. 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

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.

B. 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.


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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.

B. 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.

3. As the ODOT project has caused the problem, the District Office is to request theOhio 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

payreasonable attorney fees. Legal documents created by other attorneys are to

be reviewed by the AGO.

4. 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.

5. 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.

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.

Documents

2013 Acquisition 103 Part B Student Training Manual-1