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Section 8: Fixed Moving Payments - Businesses, Farms and Nonprofit Organizations

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Overview

In place of actual moving and reestablishment expenses, an eligible business or farm operation may choose a fixed payment (not less than $1,000 or more than $40,000) based on its average annual net earnings. To qualify for the fixed payment method, the following factors must apply.

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Business

For a displaced business to be entitled to a fixed payment, TxDOT must determine the following:

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  • The business owns or rents personalty:
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  • The business cannot be relocated without a substantial loss of its existing patronage (clientele or net earnings).
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  • The business is not part of a commercial enterprise having more than three other entities not being acquired by TxDOT that are under the same ownership and engaged in the same or similar business activities.
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  • The business is not operated in a displacement structure solely for the purpose of renting such structure to others.
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  • The business is not operated at the displacement site solely for the purpose of renting the site to others.
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  • The business contributed materially to displacee income during the two taxable years preceding the taxable year in which displacement occurs or during such other period as TxDOT determines equitable.

Two or more displaced legal entities constitute a single business entitled to a single fixed payment. In making this determination, consider all relevant factors including the extent to which:

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  • the same premises and equipment are shared;
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  • substantially identical or interrelated business functions are carried out and business and financial affairs are commingled;
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  • the entities are held out to the public as one business; and
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  • one person (or closely related persons) owns, controls, or manages the entities’ affairs.
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Farm Operation

For partial acquisition of land that was a farm operation before acquisition, fixed payment must be allowed only if TxDOT determines that:

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  • the partial land acquisition caused the operator to be displaced from the farm operation on the remainder; or
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  • the partial acquisition caused a substantial change in the nature of the farm operation.
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Nonprofit organization

A displaced nonprofit organization may choose a fixed payment of from $1,000 to $40,000, in place of actual moving and reestablishment expenses, if TxDOT determines that it cannot be relocated without a substantial loss of service. A nonprofit organization is assumed to meet this test unless TxDOT demonstrates otherwise. Financial statements for the two 12-month periods preceding acquisition must support any payment exceeding $1,000.

Payment should equal the average of the last two years annual gross revenues less administrative expenses. Operating expenses to carry out the purposes of the nonprofit organization are not to be included in administrative expenses. Monetary receipts and expense amounts may be verified with certified financial statements or financial documents required by public agencies. Examples of three types of income and expenses include:

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  • gross revenues - Membership fees, class fees, cash donations, tithes, receipts from sales, or other forms of fund collection that enable the organization to operate;
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  • administrative expenses - Primarily for administrative support, such as rent, utilities, salaries, advertising, and similar items, as well as fund-raising expenses; and
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  • operating expenses - Purchase of capital assets such as office furniture, filing cabinets, machinery, trade fixtures, product inventory, stationery, envelopes, stamps, brochures, or other items used to carry out the purposes of the organization.
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