Business Relocation Process at the Virginia Department of Transportation

Abstract

Details are given of the business relocation program at the Virginia Department of Transportation (VDOT), with a focus on the adequacy of federal payment ceilings for reestablishment and in-lieu-of-moving-costs (ILO) benefits. Under the federal Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, relocated businesses have two payment options: reimbursement of actual moving costs and business reestablishment expenses or an ILO payment. The act specifies a $10,000 maximum, or ceiling, for reestablishment payments and a $20,000 maximum for ILO payments. Reports and policies on business relocations were reviewed, and interviews with relocation professionals in Virginia, other states, and the Federal Highway Administration were conducted. The study also included a mail survey of businesses relocated by VDOT. Statistical analyses were performed using VDOT business relocation data to estimate ( a) what the average reestablishment and ILO payments would have been without the federal limits and ( b) how much higher the limits would need to be to ensure that the majority of relocated businesses were compensated adequately. Substantial evidence was found that the federal limits on reestablishment and ILO payments are too low. For businesses relocated by VDOT, a maximum reestablishment payment of $26,534 and a maximum ILO payment of $31,112 would provide much more assurance that most businesses were being compensated for their true relocation costs (both values unadjusted for inflation since 1987)