Grant Administration: Section 10.1 Relocation and Displacement

The URA applies to all federally assisted activities that involve the acquisition of real property, easements, or the displacement of persons, including displacement caused by rehabilitation, and demolition activities. If CDBG assistance is used in any part of a project, the URA governs the acquisition of real property and any resulting displacement, even if local funds were used to pay the acquisition costs. 49 CFR Part 24

Displacement Overview & Definitions
Private persons, corporations or businesses that acquire property or displace persons for a CDBG-assisted project are subject to the URA. Under the URA, all persons displaced as a direct result of acquisition, rehabilitation, or demolition, for a CDBG-assisted project, are entitled to relocation payments and other assistance under the URA. All acquisitions made in order to support a CDBG activity are subject to the URA. Acquisition that takes place on or after the date of submission of a CDBG application to fund an activity on that property is subject to URA, unless the grantee shows that the acquisition was unrelated to the proposed CDBG activity. Acquisition that takes place before the date of submission of the application will be subjected to the URA if CDFA determines that the intent of the acquisition was to support a subsequent CDBG activity. The URA provisions apply to all types of long-term acquisition of property, including when acquiring full fee title, fee title subject to retention of a life estate or a life use, long-term leases (including leases with options for extensions) of 50 years or more, and to permanent and temporary easements necessary for the project.

Displacement results when people or a non-residential entity moves permanently as a direct result of the acquisition, demolition, or rehabilitation of property for CDBG-funded projects.
In order to understand applicable relocation requirements, it is necessary to understand some key terminology.

Who Is Displaced under the URA and CDBG?
The URA, the CDBG regulations and Section 104(d) each address specific circumstances that would qualify someone as a “displaced person.”

Under the URA, the term “displaced person” means:

  • A person who moves permanently from the real property after the property owner (or person in control of the site) issues a vacate notice to the person. An owner who refuses to renew an expiring lease in order to evade the responsibility to provide relocation assistance will also trigger URA coverage for the tenant. See 49 CFR 24.2(a)(9) and Handbook 1378, Chapter 1, Paragraph 1-4 I
  • The effective move date of the displaced person is based on whether the grantee:
    – Has site control at the time the grantee submits an application for CDFA funds for the project that is later approved, then the household is considered displaced on the submission date of the application; or
    – Does not have site control when the application for CDFA funds, the effective date will be the date the grantee obtains site control.
  • A person who moves permanently from the real property after the initiation of negotiations, unless the person is a tenant who was issued a written notice of the expected displacement prior to occupying the property (otherwise known as a “Move-In Notice”)
  • A person who moves permanently and was not issued a Notice of Non-displacement after the application for CDFA funds is approved. See Handbook 1378: Chapter 1-4, Paragraph I- 4

Even if there was no intent to displace the person, if a Notice of Non-displacement was not provided, HUD has taken the position that the person’s move was a permanent, involuntary move for the project since the person was not given timely information essential to making an informed judgment about moving from the project.

Under CDBG, the regulations define a “displaced person” as someone who moves after a specific event occurs:

  • This event establishes a presumption that a project may begin (e.g., date of submission of an application). It is presumed that displacement before this date did not occur “for the project” and is not covered by the URA, unless rebutted by convincing evidence to the contrary.
  • It is also presumed that a permanent, involuntary move on or after that date is a displacement “for the project,” unless the grantee or state determines otherwise.

HUD must concur in a determination to deny a person relocation benefits on this basis:

  • When an owner either evicts a tenant or fails to renew a lease in order to sell a property as “vacant” to a grantee for a HUD-funded project, HUD will generally presume that the tenant was displaced “for the project.” (Evictions for serious or repeated violations of the lease are permissible, but the owner must follow state tenant-landlord laws governing eviction.)
  • In cases where the tenant was not notified of their eligibility for URA benefits, the grantee is responsible for finding the displaced tenant and providing appropriate relocation assistance, unless the grantee can demonstrate that the move was not attributable to the project.
  • CDBG regulations also define a “displaced person” as:
    – A tenant who moves permanently after the CDFA-funded acquisition or rehabilitation, and the increased rent is not affordable (they are “economically displaced”).

The CDBG program regulations cover “economic displacement,” while the URA is silent on this issue. If rents are increased after a CDBG project is completed, and the new rent exceeds 30% of the tenant’s gross monthly income, they would be “economically displaced.” The URA also protects the following “displaced persons”: (Also see Handbook 1378; Chapter 1; Paragraph 4-5; 24 CFR 570.606(b)(2)(D))

  • A tenant-occupant of a dwelling who receives a Notice of Non-displacement but is required to move to another unit in the building/complex may be considered displaced, if the tenant moves from the building/complex permanently and either:
    – The tenant was not offered reimbursement for all reasonable out-of-pocket expenses incurred in connection with the move within the project; or
    – Other conditions of the move within the project were not reasonable.
  • A tenant who moves permanently after the building has a change from residential use to a public use as a direct result of a CDBG-assisted project (for example, the building now leases units to serve persons who were homeless or require supportive housing). Under the CDBG program, leases of 15 years or more are considered acquisitions for the purposes of the URA.
  • A nonresidential tenant who receives a Notice of Non-displacement, but moves permanently from the building/complex, if the terms and conditions under which the tenant may remain are not reasonable.

It is expected that the grantee or property owner will negotiate these terms and conditions. A tenant who believes the offer is unreasonable may relocate and file an appeal seeking assistance as a “displaced person.”

When Section 104(d) is triggered:

  • The term “displaced person” means any lower-income household that moves from real property permanently as a direct result of the conversion of an occupied or vacant occupiable low- and moderate-income dwelling unit or the demolition of any dwelling unit, in connection with a CDFA- assisted activity. 24 CFR 570.606(b)(2)(i)

Persons Not Considered Displaced
A person does not qualify as a “displaced person” (and is not entitled to relocation assistance at URA levels), if:

  • The person has no legal right to occupy the property under state or local law, specifically not meeting the requirements of adverse possession (see Attachment 10-1); or
  • The person has been evicted for serious or repeated violation of the terms and conditions of the lease or occupancy agreement or other good cause, the grantee determines that the eviction was not undertaken for the purpose of evading the obligation to provide relocation assistance; or
  • The person moves into the property after the date of the application for CDFA funds and, before moving in, was provided a “Move-In Notice,” which consist of a written notice of the project, its possible impact on the person (e.g., the person may be displaced, temporarily relocated or suffer a rent increase) and the fact that he or she would not qualify for assistance as a “displaced person” as a result of the project. See Attachment 10-2 Sample Notice to Prospective Tenants for a sample notice to provide to prospective tenants.

People are also not considered displaced if:

  • The person occupied the property for the purpose of obtaining relocation benefits.
  • The person retains the right of use and occupancy of the property for life following its acquisition (life estates).
  • The person is determined not to be displaced as a direct result of the project. Grantees may not make this determination on their own. Contact CDFA for determination assistance.
  • The person is an owner-occupant of the property who moves as a result of a voluntary acquisition. (Refer to Chapter 5 of HUD Handbook 1378 and Voluntary Acquisition section in Chapter 9: Acquisition for more information on voluntary acquisition.) (NOTE: Tenants living in properties that are acquired via a voluntary acquisition are covered by the URA regardless of their willingness to move.)
  • The person leaves due to code enforcement, unless the code enforcement results in rehabilitation or demolition for an assisted project. There should be sufficient separation of time and activities, otherwise an owner-occupant or tenant who is required to move permanently as a direct result of this rehabilitation or demolition may be eligible for relocation assistance. Consult with CDFA if activities occur close together.
  • The person, after receiving a notice of eligibility, is notified in writing that he or she will not be displaced.
    – Such a notice cannot be delivered unless the person has not moved, and the agency agrees to reimburse the person for any expenses incurred to satisfy any binding contractual relocation obligations entered into after the effective date of the notice of eligibility.
  • The person is an owner-occupant who voluntarily applies for rehabilitation assistance on his or her property. When the rehabilitation work requires the property to be vacant for a period of time, this assistance is considered optional.
  • The person is not lawfully present in the United States unless denial of benefits would result in “exceptional and extremely unusual hardship” to a lawfully-present spouse, child, or parent. This prohibition covers all forms of relocation assistance under the URA including both replacement housing payments (RHP) and moving assistance.

See the following links for more information:
49 CFR 24.2(a)(9)(ii)(C)
49 CFR 24.2(a)(9)(ii)(I)
Handbook 1378, Chapter 1, Paragraph 1-4 J (3)
Handbook 1378, Chapter 5
49 CFR 24.2(a)(9)(ii)(E)
49 CFR 24.2(a)(9)(ii)(G)
49 CFR 24.2(a)(9)(ii)(H)

The current URA regulations include a definition of the phrase “exceptional and extremely unusual hardship,” which focuses on significant and demonstrable impacts on health, safety, or family cohesion. This phrase is intended to allow judgment on the part of the grantee and does not lend itself to an absolute standard applicable in all situations. When considering whether such an exemption is appropriate, a displacing agency may examine only the impact on an alien’s spouse, parent, or child who is a citizen or lawful resident alien.

An “alien not lawfully present in the United States” is defined as an alien present in the United States who has not been admitted or paroled into the United States pursuant to the Immigration and Nationality Act (8 United States C.1101 et seq) and whose stay in the United States has not been authorized by the United States Attorney General. It includes someone who is in the United States after the expiration of the period of stay authorized by the United States Attorney General or who otherwise violates the terms and conditions of admission, parole, or authorization to stay in the United States.
When a household contains some members, who are present lawfully but others are present unlawfully, there are two different computation methods, one for moving expenses and one for replacement housing payments (RHP). For moving expenses, the payment is to be based on the proportion of lawful occupants to the total number of occupants. For example, if four out of five members of a family to be displaced are lawfully present, the proportion of lawful occupants is 80 percent and that percentage is to be applied against the moving expenses payment that otherwise would have been received.

For the RHP, the unlawful occupants are not counted as a part of the family and its size is reduced accordingly. Thus a family of five, one of whom is a person not lawfully present in the U.S., would be counted as a family of four. The comparable for the family would reflect the makeup of the remaining four persons and the Replacement Housing Payment (RHP) would be computed accordingly.
Initiation of Negotiations (ION)

The date of the Initiation of Negotiations (“ION”) serves as a milestone in determining a person’s eligibility for relocation assistance, including moving costs and a replacement housing payment. CDBG regulations establish a program-specific definition of ION as the trigger for issuance of the Notice of Eligibility for Relocation Assistance or Notice of Non-displacement.

For CDBG programs, the term “initiation of negotiations” is defined as the following:

  • If the displacement results from privately undertaken rehabilitation, demolition or acquisition, the execution of the grant or loan agreement between the grantee and the person owning or controlling the real property.
  • If the displacement results from grantee demolition or rehabilitation and there is no related grantee acquisition, the notice to the person that he or she will be displaced by the project (or the person’s actual move, if there is no such notice).
  • When there is voluntary acquisition of real property by a grantee, the term “initiation of negotiations” means the actions described above, except that the ION does not become effective, for purposes of establishing eligibility for relocation assistance, until there is a written purchase agreement between the grantee and the owner. (See Voluntary Acquisition section in Chapter 9: Acquisition.)

Whenever real property is acquired by a grantee that has eminent domain/condemnation powers under the statutes of New Hampshire and the acquisition is an involuntary transaction, the initiation of negotiations means the delivery of the Notice of Offer of just compensation by the grantee to the owner to purchase the real property for the project. 24 CFR 570.606

After the ION, any person who seeks to rent a unit in the project must be issued a Move-in Notice before executing a lease; otherwise, the project will incur liability for relocation costs if the persons are found to be eligible as displaced persons. 49CFR 24.2(a)(15)

The definition of what is a “project” differs for URA and for Section 104(d):

  • The term project is defined under URA as an activity or series of activities funded with federal financial assistance received or anticipated in any phase. In addition, URA states that program rules will further define what is considered a project.  Handbook 1378, Chapter 1, Paragraph 1-4 DD
  • Under Section 104(d), a project is an activity or series of activities undertaken with HUD financial assistance received or anticipated in any phase. Section 104(d) benefits are triggered if the activity is a CDBG or HOME funded activity and the HUD assisted activity is part of a single undertaking. 49 CFR 49.2(a)(22)

In order to determine whether a series of activities are a project, look at:

  • Timeframe: Do activities take place within a reasonable timeframe of each other?
  • Objective: Is the single activity essential to the overall undertaking? If one piece is unfinished, will the objective be incomplete?
  • Location: Do the activities take place on the same site?
  • Ownership: Are the activities carried out by, or on behalf of, a single entity?
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