Wis. Admin. Code Department of Administration Adm 92.92 - Owner-occupant who purchases

An agency shall pay an owner-occupant of a business or farm operation a payment, not to exceed $50,000, for the difference necessary to purchase a replacement business or farm operation; for the loss of favorable financing on an existing mortgage or land contract in financing a replacement property, and expenses incidental to the purchase of a replacement business or farm operation. The payment shall be computed as specified under this section.

(1) DIFFERENTIAL AMOUNT PAYABLE. A differential amount payable is an amount, if any, when added to the acquisition payment for the acquired business or farm operation, equals an amount a person pays for a replacement property, or an amount determined by an agency as necessary to purchase a comparable replacement, whichever is less. A replacement payment shall include the difference between the price paid for a fixture or other real property improvement acquired and the cost to purchase and install the improvement in a replacement facility. A replacement payment shall also include the cost to modify a property to meet comparable standards and code requirements.

(2) SELECTION AND COST OF COMPARABLE AND ACTUAL REPLACEMENTS. The agency shall determine the cost of a comparable replacement business or farm operation by analyzing 3 or more comparable replacement business or farm operations and selecting the one that is the most comparable. Fewer may be analyzed if 3 are not available.

(a) An agency may adjust the asking price of the selected comparable if considered justified on the basis of local market conditions. The agency's relocation plan shall specify if adjustments will be made for the project, the basis for this determination and the method of adjustment to be used.

(b) The cost of physical changes or improvements necessary to meet comparable standards in the selected comparable or the actual replacement shall be included in the maximum replacement payment.

(c) An agency shall select a comparable business or farm operation from the area of a displaced person provided the area is not designated for governmental acquisition and displacement, or subject to adverse environmental conditions.

(d) The selected comparable shall be equal to or better than the acquired property and a payment shall be based on new construction when there is no comparable business or farm operation available.

(3) REVISION TO SELECTED COMPARABLE AMOUNT. An agency, upon request of a displaced person, shall offer a comparable replacement business or farm operation within the maximum differential payment determined. Another comparable study shall be made to determine a new replacement payment when there is no comparable available, except the new replacement payment may not be less than the original payment.

(4) INCREASED INTEREST PAYMENT.

(a) General. An agency shall pay a displaced person for the increased interest expense and other debt service costs incurred in financing the purchase of a replacement business or farm operation, provided:

1. The acquired business or farm operation property was encumbered by a bona fide mortgage or land contract;

2. The mortgage or land contract was executed in good faith not less than one year before initiation of negotiations to purchase the property;

3. All bona fide mortgages or land contracts that were valid liens on the displacement property for at least one year before initiation of negotiations on the acquired property shall be used to compute the increased interest payment.

(b) Payment computation. The increased interest payment shall be computed as follows:

1. The interest payment difference shall be an amount which will reduce the mortgage balance on the replacement property to an amount which could be amortized with the same monthly payment for principal and interest as that for the mortgage or mortgages on the displacement property, except that the payment for a person obtaining a mortgage that is less than the mortgage balance computed in the buydown determination, shall be prorated and reduced accordingly.

2. The amount paid by a person as points, loan origination or assumption fees, but not seller's points, shall be based on the amount refinanced, not exceeding the amount which would have been paid had the original mortgage balance been refinanced, and shall be added to an amount as specified under subd. 1. The origination or assumption fee shall be limited to the fee normal for real estate transactions in the area.

(c) Interest rate on replacement mortgage. The interest rate on the mortgage for a replacement business or farm operation used in the computation may not exceed the rate typically charged by mortgage lenders in the area.

(d) Mortgage term. The payment shall be based on the remaining term of the mortgage(s) on the displacement dwelling regardless of the term on the new mortgage.

(e) Adjustment to interest payment amount.

1. Larger than typical size lot. The interest payment shall be reduced to the percentage ratio that the value of the typical and necessary part is to the value of the entire property before acquisition, when a property is located on a lot larger than typical and necessary for the type of business or farm operation being operated.

2. Multi-use property. The interest payment on multi-use property shall be reduced to the percentage ratio that the business or farm operation value of the multi-use property is to the value of the entire property before acquisition.

3. Business or farm on land with higher and better use. An agency shall compute an interest payment under par. (b), when a business or farm operation is located on land where the fair market value is established on a higher and better use, and when the mortgage is based on business or farm operation value. The interest payment shall be reduced to the percentage ratio that the estimated business or farm operation value of the parcel is to the value of the entire property before acquisition, when the mortgage is based on the higher use.

(f) Prompt payment. An agency shall advise a displaced person of the approximate amount of a refinancing payment as soon as the facts relative to a person's mortgages are known. If requested by the displaced person, the refinancing payment shall be made available at or near the time of closing on the replacement to permit reduction of the new mortgage amount.

(5) INCIDENTAL EXPENSE PAYMENT. An agency shall pay a person for actual and reasonable expense incurred incidental to the purchase of a replacement business or farm operation. The payment shall include the following:

(a) Legal, closing and related cost including title research, preparing conveyance contracts, notary fees, surveys, preparing drawings or plats and recording fees;

(b) Lender, appraisal or application fees, and loan origination or assumption fees that do not represent prepaid interest;

(c) Certification of structural soundness;

(d) Credit reports;

(e) Owner or mortgagee title insurance policy or abstract of title;

(f) Escrow agent fee;

(g) Other expense approved by an agency.

Note: The payment may not include a prepaid expense such as taxes, water, or fuel costs, or a fee, cost, charge or expense which is part of a debt service or finance charge.

(6) OWNER RETENTION. An owner-occupant may purchase the property back from an agency and move it to another location following receipt of the payment for the acquired property, and when not inconsistent with project development. The replacement payment shall be determined as follows:

(a) Amount payable. The payment shall be the amount, if any, between the acquisition price and the cost to relocate. The cost to relocate shall include the purchase-back price, the cost to acquire and develop a new site, or when moved to retained land, the market value of the site, installing utility service, constructing a foundation, moving the property, restoring it to comparable standards and other moving costs.

(b) Limitation. The differential payment computed under this section may not exceed the amount necessary to purchase a comparable replacement under sub. (2) plus any increased interest or incidental expense payment due under subs. (4) and (5).

(7) REPLACEMENT PAYMENT CONVERSION. An agency shall pay a person as specified under this section. A replacement payment for a prior move to a rental property shall be deducted from the amount payable under this section. The combined payment may not exceed $50,000.

Notes

Wis. Admin. Code Department of Administration Adm 92.92

Cr. Register, March, 1986, No. 363, eff. 4-1-86; am. (4) (a) (intro.) and 3., (b) and (5) (b), r. and recr. (4) (d), cr. (4) (f), Register, November, 1989, No. 407, eff. 12-1-89.