Opinion ID: 2102385
Heading Depth: 1
Heading Rank: 2

Heading: Business Relocation Expenses.

Text: Plaintiff contends that the total award of $5,900 for relocation of his business is insufficient, but like the district court we find the agency's determination of that award was entirely consistent with the controlling statute. Plaintiff's right to receive business relocation expenses is a statutory right derived from Iowa Code section 316.4, which provides: 1. Whenever the acquisition of real property for a program or project undertaken by the department will result in the displacement of any person, the department shall make a payment to any displaced person, upon proper application as approved by such department, for: a. Actual reasonable expenses in moving himself, his family, business, farm operation, or other personal property; b. Actual direct losses of tangible personal property as a result of moving or discontinuing a business or farm operation, but not to exceed an amount equal to the reasonable expenses that would have been required to relocate such property, as determined by the department; and c. Actual reasonable expenses in searching for a replacement business or farm. 2. Any displaced person eligible for payments under subsection 1 who is displaced from a dwelling and who elects to accept the payments authorized by this subsection in lieu of the payments authorized by subsection 1 may receive a moving expense allowance, determined according to a schedule established by the department not to exceed three hundred dollars; and a dislocation allowance of two hundred dollars. 3. Any displaced person eligible for payments under subsection 1 who is displaced from his place of business or from his farm operation and who elects to accept the payment authorized by this subsection in lieu of the payment authorized by subsection 1, may receive a fixed payment in an amount equal to the average annual net earnings of the business or farm operation, except that such payment shall be not less than two thousand five hundred dollars nor more than ten thousand dollars. In the case of a business, no payment shall be made under this subsection unless the department is satisfied that the business cannot be relocated without a substantial loss of its existing patronage, and is not a part of a commercial enterprise having at least one other establishment not being acquired for a highway project which is engaged in the same or similar business. For purposes of this subsection, the term average annual net earnings means one-half of any net earnings of the business or farm operation, before federal, state, and local income taxes, during the two taxable years immediately preceding the taxable year in which such business or farm operation moves from the real property acquired for such project, or during such other period as the department determines to be more equitable for establishing such earnings, and includes any compensation paid by the business or farm operation to the owner, his spouse, or his dependents during such period. This statute describes two basic methods for calculating the benefits a relocated business may receive: subsection 316.4(1) authorizes payment of specific expenses and losses incurred as a result of the business relocation; and subsection 316.4(3) authorizes payment of a fixed amount representing net earnings of the business in lieu of the payment authorized by subsection 1. The DOT awarded plaintiff $2500 initially as an in lieu payment. That figure was later revised upward to $5900 when plaintiff submitted audited income tax returns showing net income greater than he had originally reported. The DOT now makes a twofold response to plaintiff's claim for additional in lieu benefits as well as additional actual losses and expenses of relocating. First the DOT contends that plaintiff may not recover benefits under both business subsections but instead is limited to benefits under the subsection whose formula yields him the greater benefit. Secondly, the DOT argues that it correctly calculated the amount of in lieu benefits to which plaintiff was entitled. We agree with both propositions. A. Election of Benefits. Plaintiff submitted evidence adequate to support his claims for both actual expenditures and an in lieu payment, and he never made a formal, express election to receive the in lieu payment rather than actual moving losses and expenses. Nevertheless, section 316.4(3) explicitly limits eligibility for the in lieu payment to the displaced person who elects to accept the payment authorized by this subsection in lieu of the payment authorized by subsection 1 .... (Emphasis added). It makes no difference that the DOT may not clearly have informed plaintiff that he was required to elect to receive one or the other. Since plaintiff claimed benefits under both subsections, he will be allowed recovery under that subsection which provides him the greater benefit. The evidence clearly shows the in lieu payment he was awarded exceeded the recovery he might otherwise have obtained by seeking actual losses and expenses under subsection 1. The district court correctly held that plaintiff was not entitled to recover both an actual loss and an in lieu business relocation benefit. Plaintiff contends that he should be allowed his actual expenses and losses in addition to the in lieu payment because federal law authorizes the award of actual business expenses. We disagree. The Iowa statute allowing relocation assistance quite precisely tracks the wording of the Uniform Relocation Assistance Act, under which persons displaced by a federally financed program or project may receive relocation benefits. 42 U.S.C. § 4622; see Young v. Harris, 599 F.2d 870, 876 (8th Cir.1979). The Iowa regulations promulgated by the DOT, as well as Iowa Code chapter 316, are closely patterned after the federal statute and regulations. Just as a person seeking relocation benefits under Iowa law must elect between an actual moving expense payment and an in lieu payment, so must the same election be made under federal law. 42 U.S.C. § 4622(c). Consequently, regardless whether the Iowa statute or the nearly identical federal statute is applied, plaintiff was correctly limited to recovering either the in lieu payment or a payment based on actual expenses and losses. B. Calculation of the In Lieu Benefit. Plaintiff contends that the DOT erred in its calculation of average annual net earnings as defined in section 316.4(3). That provision states in relevant part: For purposes of this subsection, the term average annual net earnings means one-half of any net earnings of the business or farm operation, before federal, state, and local income taxes, during the two taxable years immediately preceding the taxable year in which such business or farm operation moves from the real property acquired for such project, or during such other period as the department determines to be more equitable for establishing such earnings, and includes any compensation paid by the business or farm operation to the owner, his spouse, or his dependents during such period. Both the DOT and the district court concluded that plaintiff was entitled to $5900 under this provision, based on an averaging of the net income shown on his income tax returns for 1977 and 1978. Plaintiff argues that the agency should have used his 1978 and 1979 returns instead, because a computation based on the 1979 rather than the 1977 return would have yielded a greater average annual net earnings figure. Further he argues that he actually relocated his business only 16 days before the beginning of 1980, so the more equitable comparison would be between his 1978 and 1979 returns. He points to the language of section 316.4(3) permitting the DOT to choose a more equitable period for establishing such earnings. We are not persuaded by plaintiff's argument. Section 316.4(3) vests the DOT with discretion to determine whether a more equitable period should be chosen and what will constitute a more equitable period. The DOT selected the two taxable years identified in the statute; it was not required to select a later year instead just because the use of a later year would yield a greater relocation benefit. Moreover, the record shows that plaintiff waited almost three years before submitting to the DOT his 1979 income tax returns. That belated submission of supporting documentation was not in keeping with the statute's mandate that displaced persons be paid benefits promptly after a move. See Iowa Code § 316.9(3) (1983). The DOT did not abuse its discretion in refusing to use the 1979 return in calculating the in lieu benefit. The DOT and the district court correctly decided that plaintiff was entitled to receive $5900 as a statutory business relocation benefit. Because plaintiff had been paid $2500 of that amount before he sought judicial review, judgment was properly entered for $3400.