South Carolina              
Administrative Law Court
Edgar A. Brown building 1205 Pendleton St., Suite 224 Columbia, SC 29201 Voice: (803) 734-0550

SC Administrative Law Court Decisions

CAPTION:
Robert J. Raih vs. SCDOT

AGENCY:
South Carolina Department of Transportation

PARTIES:
Petitioner:
Robert J. Raih

Respondent:
South Carolina Department of Transportation
 
DOCKET NUMBER:
05-ALJ-19-0068-CC

APPEARANCES:
For Petitioner: Richard D. Bybee, Esquire

For Respondent: Deborah Brooks Durden, Esquire
 

ORDERS:

FINAL ORDER AND DECISION

STATEMENT OF THE CASE

This matter is before the Administrative Law Court pursuant to S.C. Code Ann. 28-11-10 (1991 & Supp. 2004) and 49 C.F.R. §§ 24.1, et seq., upon Petitioner’s request for a contested case hearing to review a decision of Respondent South Carolina Department of Transportation denying certain residential replacement relocation assistance benefits. After notice to the parties, a contested case hearing on the merits was held on September 7, 2005, at the offices of the Administrative Law Court (ALC or Court) in Columbia, South Carolina.

FINDINGS OF FACT

Having observed the witnesses and exhibits presented at the hearing and taking into consideration the burden of persuasion and the credibility of the witnesses, I make the following findings of fact by a preponderance of evidence:

1. Notice of the date, time, place, and subject matter of the hearing was provided to all parties in a timely manner.

Background

2. The South Carolina Department of Transportation (Respondent or SCDOT) initiated a road building project involving the relocation of the intersection of Highway 41 and Highway 17 North in 2003. Petitioner was the owner of property located at 2906 Highway 17, Mt. Pleasant, South Carolina, which was necessary to acquire to complete the intersection improvement project. Therefore, the property was acquired by SCDOT pursuant to a condemnation action. The condemned property consisted of a building that contained Petitioner’s ice making business,[1] leased retail space, and purportedly an apartment utilized by Petitioner as his primary residence.

By letter dated November 6, 2003, SCDOT advised Petitioner that he was eligible for a maximum residential replacement housing payment of $26,206.00 if he purchased replacement housing for at least $80,000.00 and satisfied other additional requirements. The letter stated that the offer of payment was conditional and subject to change if the just compensation payment for the acquisition of the property changed. At the time the November 6, 2003, letter was written, SCDOT had offered Petitioner $550,000.00 as just compensation for the acquisition. SCDOT subsequently paid Petitioner $800,000.00 (plus $10,000.00 in lieu of billboard relocation expenses) pursuant to a settlement agreement the parties entered into on August 6, 2004. This settlement was not apportioned as to the amounts allocated for the ice making business, the leased retail space, or the apartment.

Evidence of Residency

3. After issuing its letter advising Petitioner that he was eligible for moving costs and replacement housing benefits, SCDOT learned that Petitioner was married to Gloria Amerson and that she owned a home on the Isle of Palms, South Carolina. SCDOT then reversed its earlier stance that Petitioner was eligible for replacement housing benefits. Petitioner argues that he and his wife maintained separate residences and that the apartment in the ice making business at 2906 Highway 17 was his primary residence.

The relevant period during which Petitioner must have been a resident of the apartment at the ice business was from March 24, 2003, to September 24, 2003. The evidence in this case certainly creates a question as to Petitioner’s actual residence during the period in question. Mr. Raih operated his ice company in a portion of the building during the relevant period of inquiry. Though Mr. Raih contends it was necessary for him to be present during the night and early morning hours to unload the ice machines, his testimony established that he was often absent from the apartment for extended periods of time. Moreover, the apartment which Petitioner claims was a separate residence from his wife was situated in the same vicinity as is his wife’s residence. Furthermore, his driver’s license, which is required by law to reflect his current address, denoted his address as 1120 Belvedere Terrace at that time, which is the address at which he resided prior to 2906 Highway 17.  See S.C. Code Ann. § 56-1-230 (1991) (ten days to notify Department of Motor Vehicles of permanent change of address). Additionally, Petitioner did not avail himself of lower property taxes on the 2906 Highway 17 property by certifying that he occupied it as a primary residence pursuant to S.C. Code Ann. § 12-43-220(C) (2000 & Supp. 2004). He also did not account for the separate costs of phone, electricity, or property insurance devoted to his personal use at 2906 Highway 17 in his income taxes.

Nevertheless, in the years prior to and including the condemnation, Petitioner's personal telephone number was listed in the Bellsouth telephone book at the 2906 Highway 17 address. Though SCDOT offered evidence that Petitioner’s property did not appear lived in, it had no direct evidence that Mr. Raih did not live at the subject apartment as he claimed. Moreover, SCDOT had no evidence that Mr. Raih was living at his wife’s home on the Isle of Palms during the critical 180 day period prior to September 24, 2003 either. Based on the above the evidence presented, I find that Mr. Raih owned and occupied the subject property as his primary residence and abode during the relevant period.

4. Subsequent to the condemnation settlement, Mr. Raih purchased another residence in Mt. Pleasant , South Carolina, which he now claims to use as his primary residence. Nevertheless, his wife continues to use the Isle of Palms home as her primary residence. Furthermore, though Mr. Raih emphasized the significance of his personal listing in the Bellsouth telephone book, he has not had such a listing since the condemnation.

Replacement Dwelling Location

5. Petitioner’s apartment was located in Mt. Pleasant, South Carolina. In computing Petitioner’s potential price differential replacement dwelling payment pursuant to 49 C.F.R. § 24.401(c), SCDOT identified three potential comparable replacement dwellings in North Charleston rather than Mt. Pleasant. SCDOT chose a residence located at 7720 Desmond Avenue in North Charleston as the most comparable. Petitioner argues that a dwelling located at 1527 Cambridge Lakes Drive in Mt. Pleasant should have been selected as the most comparable and argues that the neighborhood of the Desmond Avenue residence is not as desirable.

Petitioner’s apartment was in a commercial area of Mt. Pleasant with substandard housing units located in the immediate vicinity. The upstairs apartment had no private access and no kitchen.[2] The only access to the apartment was through the ice making business. Though the Desmond Avenue listing was in North Charleston and was a greater distance from Mr. Raih’s relocated business than the Mt. Pleasant listings, it was not feasible to locate a comparable replacement dwelling in Mt. Pleasant. The potential replacements available on the market at that time in Mt. Pleasant were far superior to this apartment. For example, the Cambridge Lakes condominium used by Petitioner as a comparable is significantly superior and has many more amenities than Petitioner’s apartment in the ice making business. In addition to having private access and a readily accessible private kitchen, it contains amenities such as a clubhouse, a golf putting green, extensive landscaping, and decorative outdoor fountains.

Therefore, SCDOT selected the Desmond Avenue dwelling from a similar, nearby neighborhood where housing costs were generally the same, if not greater, than the cost in the vicinity of Petitioner’s Highway 17 apartment. Though the North Charleston area is overall generally less desirable than Mt. Pleasant area, the Desmond Avenue neighborhood is better than the immediate neighborhood of Petitioner’s Highway 17 property. It is in a safer area that is at least as desirable with respect to the public utilities and facilities than the area adjacent to Petitioner’s Highway 17 property. Furthermore, it is in a location that is reasonably accessible to Mr. Raih’s new business location on Meeting Street. Additionally, when considering the lack of access to the Highway 17 apartment, the noise emanating from the ice machines, and the apartment’s obvious lack of amenities, the Desmond Avenue dwelling is far superior. Accordingly, the Desmond Avenue house is functionally equivalent to and more desirable than Petitioner’s displaced apartment.

Acquisition Cost of the Replacement Dwelling

6. In determining the payment for a replacement dwelling, SCDOT calculated Petitioner's residential housing payment by estimating the value of the residential apartment on a square foot allocation of the condemnation settlement amount. In other words, the displaced dwelling payment was calculated based on an approximate 10.07% allocation of the settlement amount resulting in a value of $80,560.00. Petitioner calculated the displaced dwelling value based on residential rental income. Petitioner argued that the value for the whole property exceeded the amount of the settlement.

I find that though the comparables sales approach may certainly be used to determine the value of the apartment, no acceptable comparable sales were established by either party. Furthermore, attributing 10.07% of the unallocated compensation payment to the apartment is a reasonable and more accurate method of determining the difference between the residential value of the displaced dwelling and a comparable replacement dwelling. Accordingly, an appropriate calculation of the potential price differential payment is to compare $80,560.00 as the acquisition cost of the dwelling (10.07% of the final acquisition amount of the mediated settlement or $800,000.00) to $80,000.00 (the list price of the Desmond Avenue dwelling). Moreover, the rental value of Petitioner's property is far less that the commercial value utilized in the settlement. Thus, any errors made by the use of that calculation method would work in favor of Petitioner.

Storage Claim

7. On December 15, 2003, SCDOT paid Petitioner $900.00 for storage of his personal belongings at Stow-Away Storage in Mt. Pleasant for the period from December 1, 2003 to May 1, 2004. However, Petitioner removed his personal belongings from Stow-Away Storage in December 2003, and stored them at his new business on property owned by Petitioner.[3]

CONCLUSIONS OF LAW

Based upon the above Findings of Fact, I conclude the following as a matter of law:

1. The ALC has subject matter jurisdiction in this case pursuant to S.C. Code Ann. § 1-23-600(B) (2005) and 25A S.C. Code Ann. Regs. 63-322(D) (Supp. 2004).

2. 49 C.F.R. Part 24 contains the criteria which SCDOT must follow in determining a person’s entitlement to relocation assistance payments. See also S.C. Code Ann. § 28-11-10 (1991 & Supp. 2004).

Eligibility

3. A person who is displaced under the provisions of 49 C.F.R. Part 24 is eligible for a replacement housing payment if the person, in part, actually owns and occupies the displacement dwelling for not less than 180 days immediately prior to the initiation of negotiations. 49 C.F.R. § 24.401(a);[4] See also 42 U.S.C.A. § 4623. Here, though the Petitioner’s residency at the ice making business was dubious, he sufficiently established that he owned and occupied the displacement dwelling during the 180-day period from March 24, 2003 to September 24, 2003 to meet the requisites of Section 24.401(a). Therefore, Petitioner is eligible for a replacement housing payment.

Location of the Replacement Dwelling

4. Petitioner argues that SCDOT was required to select a comparable replacement dwelling from Mt. Pleasant and that the Cambridge Lakes Condominium was the most comparable replacement dwelling available in Mt. Pleasant. 42 U.S.C.A. § 4601 defines “comparable replacement dwelling” as:

any dwelling that is (A) decent, safe, and sanitary; (B) adequate in size to accommodate the occupants; (C) within the financial means of the displaced person; (D) functionally equivalent; (E) in an area not subject to unreasonable adverse environmental conditions; and (F) in a location generally not less desirable than the location of the displaced person's dwelling with respect to public utilities, facilities, services, and the displaced person's place of employment.

See also 49 C.F.R. § 24.2(a)(6). In addition, 49 C.F.R. § 24.403 provides that when determining the payment for a comparable replacement dwelling, if a replacement dwelling cannot be selected from the neighborhood of the displacement dwelling, a comparable dwelling should be selected from “nearby or similar neighborhoods where housing costs are generally the same or higher.” Here, the Desmond Avenue replacement dwelling selected by SCDOT meets the criteria of 42 U.S.C.A. § 4601 and Section 24.403. The house and its surrounding neighborhood are more desirable than the replacement dwelling. It is well within the financial means of Petitioner and more than adequate in size. It is also located in a safe, decent area not subject to unreasonable adverse environmental conditions and is reasonably accessible to Petitioner’s relocated business.

Payment for Displaced Dwelling

5. A person eligible for a replacement housing payment is entitled to receive “the amount necessary to relocate to a comparable replacement dwelling.” 49 C.F.R. § 24.401(b). The payment shall be the sum of:

(1) The amount by which the cost of a replacement dwelling exceeds the acquisition cost of the displacement dwelling, as determined in accordance with paragraph (c) of this section;

(2) The increased interest costs and other debt service costs which are incurred in connection with the mortgage on the replacement dwelling, as determined in accordance with paragraph (d) of this section; and

(3) The reasonable expenses incidental to the purchase of the replacement dwelling, as determined in accordance with paragraph (e) of this section.

Id. In determining the acquisition cost, the Court must also determine the reasonable cost of the comparable replacement dwelling. That determination is made in accordance with 49 C.F.R. § 24.403(a). Section 24.403 (a)(1) provides that “[i]f 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.” Additionally, if the displacement dwelling was part of a property that was used for nonresidential purposes “only that portion of the acquisition payment which is actually attributable to the displacement dwelling shall be considered the acquisition cost when computing the replacement housing payment.” Section 24.403(a)(7).

Petitioner argues that SCDOT erred in its replacement price payment determination because it failed to use the Cambridge Lakes Condominium dwelling as its comparable. However, it was not feasible to locate a comparable replacement dwelling in Mt. Pleasant because the potential replacement dwellings available on the market at that time in Mt. Pleasant were all far superior to Petitioner's apartment. Therefore, SCDOT was required to select three comparable dwellings from a “nearby or similar neighborhood” where housing costs are generally the same or higher. The Desmond Avenue dwelling meets the criteria of Section 24.401(b), being a nearby or similar neighborhood where housing costs are generally the same as or higher than the costs for housing in the immediate vicinity of the subject property at 2906 Highway 17. It is in a location generally not less desirable than the location of the ice house apartment with respect to public utilities and commercial and public facilities, and is reasonably accessible to Mr. Raih’s new business location on Meeting Street. Furthermore, the Desmond Avenue house was the most similar dwelling presented before the ALC and is superior to the displacement dwelling. Therefore, the Desmond Avenue dwelling is the most comparable dwelling for purposes of calculating any potential price differential payment within the requirements of 49 C.F.R. Part 24.[5]

6. Petitioner further argues that SCDOT erred in its calculation of the maximum price differential payment because it attributed a greater portion of the condemnation acquisition payment to the residential dwelling unit than was allowable under the regulations. He contends that the value of the displaced dwelling must be established by a licensed real estate appraiser who contrasts the value of a comparable replacement dwelling in the neighborhood or near neighborhood to the displaced dwelling.

Petitioner calculated the displaced dwelling value based on residential rental income. SCDOT, on the other hand, made that determination by estimating the value of residential portion of the displacement property on a square foot allocation. In other words, SCDOT divided the total square feet of the displaced property into the residential portion of the property and determined that 10.07% of the condemnation settlement amount was attributable to the residential portion of the displacement property.

Market analysis is certainly an approved method of determining the value of property. See 49 C.F.R. 24.401(c)(2)(iii). However, Section 24.403(a)(7) does not require that a market analysis be used to determine what portion of the commendation payment is actually attributable to the residential portion of the displaced dwelling. It only requires that the portion of the payment “which is actually attributable to the displacement dwelling” be determined. Once determined, that portion is considered to be the acquisition cost in calculating the price differential payment. Such an apportionment of the payment is not equivalent to performing an appraisal to establish the market value of the dwelling. Additionally, though there are numerous provisions setting forth appraisal requirements under 49 CFR Subpart B (Real Property Acquisition), there are no such requirements under Subparts D (Payments for Moving and Related Expenses) or E (Replacement Housing Payments), which are the relevant provisions in this case. Therefore, SCDOT’s suggested method of calculating the unallocated compensation payment for Petitioner’s apartment is reasonable and in accordance with the requirements of 49 C.F.R. Part 24.

Furthermore, I find no requirement that the value of the displaced dwelling must be established by a licensed real estate appraiser or that SCDOT’s valuation estimates constituted a rendering of a real estate appraisal. During the hearing, SCDOT employees were permitted to testify as to what value they gave the displaced dwelling in calculating the price differential payment based upon the portion of the settlement they considered as the acquisition cost. The SCDOT employees were not licensed appraisers. Nevertheless, S.C. Code Ann. § 1-23-330 (2005) provides that “[t]he agency's experience, technical competence and specialized knowledge may be utilized in the evaluation of the evidence.” The employees displayed experience, technical competence, and specialized knowledge in determining the value of Petitioner's property, especially for the purposes of determining the portion of the acquisition payment which is attributable to the displacement dwelling. Accordingly, the employees properly testified to their determinations.

Moreover, SCDOT relied on the appraisal prepared by Gary Pruitt to determine the allocation in this matter. Mr. Pruitt holds a license as a S.C. General Real Estate Appraiser with an MAI designation. Mr. Pruitt’s appraisal valued the property according to a combination of the Sales and Income approaches to estimating value. In both his Sales and Income valuation analyses, Pruitt assigned the apartment the same value as the commercial space within the building. He stated his basis for doing so was that the apartment “could easily be converted to office area,” which was the highest and best use of the space. Mr. Pruitt’s testimony alone warrants a determination that 10.07% of the condemnation settlement amount was attributable to the residential portion of the displaced property.

Therefore, I find that the evidence supports that the appropriate price differential payment based upon 10.07% of the mediated settlement was $80,560.00.

Closing Costs

7. Petitioner presented evidence at the hearing of closing costs associated with the purchase of certain real property and asserted a claim for reimbursement for those costs pursuant to 49 C.F.R. §§ 24.401(d) and (e). However, the evidence did not establish that Petitioner sustained “increased interest costs and other debt service costs which are incurred in connection with the mortgage(s) on the replacement dwelling.” 49 C.F.R. § 24.401(b)(2) (Emphasis added.) Therefore, none of the costs associated with acquiring a mortgage on the replacement dwelling were required to be paid to Petitioner.

ORDER

Based upon the above Findings of Fact and Conclusions of Law:

IT IS HEREBY ORDERED that this case is dismissed.

AND IT IS SO ORDERED.

 

_________________________________

Ralph King Anderson, III

Administrative Law Judge

 

 

 

December 19, 2005

Columbia, South Carolina

 



[1] SCDOT has paid Petitioner relocation benefits related to the relocation of the ice making business and those benefits are not at issue in this proceeding.

[2] A kitchen was located in the downstairs business area of the building.

[3] SCDOT argued that pursuant to 49 C.F.R. § 24.301(h)(11), Petitioner is not entitled to payment for any costs for storage of personal property for any period of time when his belongings were stored on property owned or leased by Petitioner. 49 C.F.R. § 24.301(h)(11) provides that a displaced person is not entitled to payment for “[c]osts for storage of personal property on real property already owned or leased by the displaced person.” SCDOT has paid Petitioner $900.00 for six months of storage at the rate of $150.00 dollars per month. Nevertheless, I do not find that the issue of SCDOT’s overpayment of Petitioner’s claim for storage costs is before me in this case.

[4] The person also must fulfill other criteria that are not the subject of this case.

[5] Regardless of the location of the comparable replacement dwelling used to compute the price differential payment, a displaced person may move wherever he or she wishes to live and may apply any price differential payment toward the cost of a new home. If Petitioner wishes to live in Mt. Pleasant, he is free to do so. However, SCDOT would be neither required nor allowed to subsidize the additional costs for Petitioner to live in a home that is far superior to the apartment from which he was displaced.


Brown Bldg.

 

 

 

 

 

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