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Section 11: Computation of Housing Supplement

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Overview

In determining the amount, if any, of a housing supplement, select and tabulate comparable properties on form ROW-R-107 Supplemental Payment Estimate, Replacement Housing. Based upon an analysis of these comparables (described on form ROW-R-106 Residential Property Evaluation), select the one property that is most comparable to the subject. Identify this comparable with an asterisk on form ROW-R-107 Supplemental Payment Estimate, Replacement Housing. Consider the probable selling price of the selected comparable as the cost of the replacement dwelling and, from this amount, subtract the value of the subject property. The resultant amount is the maximum amount the 90-day owner-occupant is eligible to receive in purchasing a replacement dwelling.

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Establishing Subject’s Value

Subject Located on Typical Residential Site. When a dwelling is on a tract of normal size and typical for residential use in the area, the subject’s value is the amount offered to the owner for the parcel, or the acquisition cost of the parcel established by the acquiring agency. This includes any damages to the remainder for a partial acquisition, but not the value of the remainder.

Subject Located on Non-residential Land. When a dwelling is on a tract that has a higher and better use than residential, the subject’s value is the approved value of the dwelling plus the approved value of a portion of the land that represents a tract typical for residential use in the area. If the acquisition is less than a typical residential site, add a proportion of any damages that would apply to the remainder of the typical site to the above value to establish the subject’s value.

In either situation, “major exterior attributes” (excess land if applicable, and improvements separate from the residence) not replaced at the selected comparable replacement property should be subtracted (carved-out) from the parcel’s approved value. Examples of “major exterior attributes” include, but are not limited to, such improvements as swimming pools, fencing, specialized landscape features, tennis courts, storage sheds, etc. Their values can normally be found on the approved form ROW-A-10 Tabulation of Values attached to the appraisal report.

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Carve-outs of Excess Land and Improvements

A carve-out of excess land and improvements usually involves one of the following circumstances.

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  • The acquisition involves land and improvements not necessary for use of the dwelling by its occupants (usually rural properties or a resident-business combination). In these instances, the subject’s value is the approved value of the dwelling unit, and residential improvements, plus the approved value of land associated with the residential use of the property, (OR) the total approved value of the acquired property, less the value of excess land and major exterior attributes not replaced at the selected comparable site.
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  • The selected comparable contains less than half of the acquired land associated with the residential use of the displacement property. When this occurs, a carve-out of excess land value at the displacement site will be performed in order to reflect the same amount of land located at the comparable site. If the selected comparable contains land in excess of land acquired at the displacement site, all or a portion of damages to the remaining land at the displacement site may be included in the subject value for relocation purposes.
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  • The acquisition involves two or more dwelling units, one of which is owner-occupied, on a typical city lot, or involves a business and an owner-occupied dwelling unit on a typical city lot. In these instances, the value of the owner-occupied dwelling, improvements associated with the owner occupied dwelling and the value of the land used with the occupied dwelling are added together, (OR) the excess land, non-owner-occupied dwelling(s), business, and other major exterior attributes not replaced at the selected comparable dwelling are carved-out of the approved value of the acquired property to provide the basis for computing the housing supplement.

When a carve-out of excess land and/or improvements is necessary, complete and attach form ROW-R-CARV Carveout Calculation Worksheet to form ROW-R-107 Supplemental Payment Estimate, Replacement Housing. In the tabulation, include the itemized amount of land and improvements being subtracted from the acquisition cost of the property. In the tabulation, also show any damages subtracted from the parcel acquisition cost for land or for improvements on the remainder that have no relationship to the displaced residence. The itemized values, including damages, must correspond to those in the approved appraisal report. Exclude improvements having no relationship to use of the dwelling. An exception might be made in rural areas where small barns and sheds are typical of homesteads in the area, excluding large outbuildings, corrals, and pens associated with operation of a farm or ranch as a business.

Show all itemized assets included in the subject’s value in the subject’s quality or yard improvements index, as applicable. The amount of land carved out for the dwelling site should be governed by what is typical of the area, and its value in computing the supplement is the appraised value for that part of the parcel.

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Subject is a Duplex or Triplex

When the subject is a duplex or triplex, the unit occupied by the displacee should be carved-out as in the preceding subsection. In calculating supplements for displacees from these properties, any dwelling unit that is comparable to the quarters actually occupied by the displacee, such as an apartment or unit in another duplex or triplex, or a single family residence, may be chosen as a comparable. The comparable dwelling should be the same as that acquired (i.e., if the acquired property is a triplex, then the comparable should be a triplex). If comparables are not available, then use structures of the next lowest density. Never use a higher density structure as a comparable. Use the value of the owner’s living as the base for the replacement housing computation, and not the value of the whole property. Therefore, the housing supplement is equal to the difference between the carved-out value of the owner’s living unit plus the approved value for the land, and the carved-out value of a comparable living unit plus land in the most comparable available property.

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Portion of Subject Rented Out

If the owner-occupant of a single-family dwelling rents out a portion of his/her dwelling, calculate supplemental payments to the owner-occupant in the normal manner, as though there is no tenant. Calculate the tenant’s rental supplement by choosing replacement properties that are comparable to the rooming facilities he/she occupies.

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Subject’s Value Established by LPA

Where an LPA makes an appraisal, such as for the acquisition of ROW for a Farm to Market road, furnish TxDOT with information to support the subject’s value and to permit a constructive review of the recommended replacement housing supplement forms. Minimum supporting information includes:

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