Lesson 12: Acquisition, relocation, the URA and section 104(d)

Acquisition, demolition and rehabilitation all touch the people already living in the building, and CDBG carries two separate layers of protection for them. 24 CFR 570.606 points a grantee to the first layer, the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, implemented at 49 CFR Part 24 and usually just called the URA. The second layer, section 104(d) at 24 CFR Part 42 Subpart C, only turns on when lower-income housing is being demolished or converted away from lower-income use, and it adds an obligation the URA does not carry on its own: replacing the housing that was lost, not just compensating the person who lost it. Both layers can apply to the same project at the same time, and a grantee that only thinks about one of them has not finished the analysis.

Who counts as a displaced person under the URA

A displaced person is someone who moves from real property permanently and involuntarily as a direct result of rehabilitation, demolition or acquisition for an assisted activity. That core definition (570.606(b)(2)) also reaches further than the obvious case of someone whose home is torn down. A permanent move counts when it follows a notice to move permanently for the assisted activity, and it can count even earlier if the grantee or HUD decides the project directly caused it. A tenant is also displaced when not given a reasonable opportunity to lease a suitable unit in the same building at an affordable rent after the project, or when required to relocate temporarily without an offer to pay all reasonable out-of-pocket expenses (or under unreasonable conditions) and then not returning. A person evicted for cause, for serious or repeated lease violations, is not counted unless the eviction was meant to evade relocation duties. The reason the definition reaches this far is that a person can lose their housing just as completely through a move a grantee never pays for as through outright demolition, and the URA does not let a grantee avoid its obligations by choosing which path a displacement takes.

A grantee may adopt an optional relocation policy that goes beyond what the URA itself requires. If it does, that policy must be written, made public, and applied equally within each class of displaced persons. An optional policy is a one-way ratchet: a grantee can promise more than the federal floor, but once it does, it has to deliver that promise consistently rather than case by case.

Section 104(d) and the one-for-one replacement rule

Section 104(d) is triggered when occupied and vacant occupiable lower-income dwelling units are demolished or converted to a use other than lower-income housing in connection with an assisted activity. When that happens, those units must be replaced, unit for unit, with comparable lower-income units. The HUD field office can excuse replacement only when objective data show an adequate supply of vacant lower-income units in standard condition in the area (42.375(d)). A lower-income dwelling unit for this purpose is one where the market rent, including utilities, does not exceed the applicable Fair Market Rent for existing housing under 24 CFR Part 888. This is a rent test, not an occupant income test, so whether a particular unit counts depends on what the unit itself would rent for, not on how much the person living in it happens to earn.

The reason this rule exists is straightforward: federal money should not be the tool that shrinks the supply of lower-income housing in a community it is supposed to be helping. Demolishing an occupied low-rent unit with CDBG funds and walking away leaves that community with one fewer affordable home than it had before the grant arrived. One-for-one replacement is the mechanism that keeps the CDBG program from working against its own purpose.

The replacement window

Replacement units have to become available within a specific window: it runs from one year before the recipient makes public its required replacement information (the activity, the units lost, and the location and schedule of replacement units, 42.375(c)), to three years after the demolition or rehabilitation actually begins. Put together, that is a window of at least four years, longer if work starts after the disclosure. The window is not measured only from the day demolition starts. It deliberately reaches backward to capture replacement housing that a grantee may have already lined up before the public even learned a demolition was coming, as well as forward to give the grantee time to build or acquire replacement units after the work begins.

Within that window, the replacement units themselves have to meet several conditions. They must be:

• within the recipient's jurisdiction
• in standard condition, or raised to standard from substandard if no one was displaced from the unit and it was vacant for at least three months
• sufficient in number and size for the original occupants
• kept as lower-income units for at least 10 years from initial occupancy

That last condition, the 10-year affordability period, is what turns one-for-one replacement from a one-time construction obligation into a decade-long commitment. A grantee has not satisfied section 104(d) just by building or acquiring a replacement unit. It has to keep that unit as lower-income housing for ten years after someone first moves in, which means the obligation is still open long after the replacement unit itself is finished and occupied, and often long after the underlying CDBG grant has otherwise closed out.

The Residential Antidisplacement and Relocation Assistance Plan

A recipient must certify that it has adopted, and follows, a Residential Antidisplacement and Relocation Assistance Plan (a unit of local government funded by the State certifies to the State, 42.325). That plan has to set out how the recipient will minimize displacement, provide relocation assistance under 42.350, and supply the replacement units section 104(d) requires. This certification is not a formality signed once and filed away. It is the document a grantee is supposed to actually be following at the moment a demolition or conversion decision gets made, and the plan has to already address relocation and replacement before the displacement happens, not after.

The choice belongs to the displaced person

Where both the URA and section 104(d) apply to the same displaced person, that person has a choice to make, and it is their choice, not the grantee's. A displaced lower-income person may elect either URA assistance under 49 CFR Part 24, or section 104(d) benefits: advisory services, moving expenses, security deposits, interim housing costs, and replacement housing assistance delivered as either rental assistance or cooperative purchase assistance. A grantee cannot decide on the person's behalf which package is better for them, and cannot steer someone toward the package that happens to be cheaper or easier for the grantee to administer. The grantee's job is to explain both options accurately and let the displaced person pick.

What this means in practice for GCHS

Most single-family rehabilitation at GCHS does not involve demolition, so section 104(d) will not be triggered on the majority of projects. But the moment a project does involve demolishing or converting an occupied or vacant occupiable lower-income unit, even a single unit, the one-for-one replacement obligation attaches, and it attaches at unit count one, not at some minimum project size. That makes the first practical step on any demolition-involved project the same one every time: determine, and document, whether the structure being demolished is a lower-income dwelling unit under the Fair Market Rent test, before any demolition decision is made. If it is, the replacement window and the ten-year affordability period both key off events tied to that decision, and a Residential Antidisplacement and Relocation Assistance Plan needs to already be in place, not drafted afterward.

Temporary relocation deserves the same attention even on projects that never touch demolition. A tenant who has to move out for the duration of rehab work can become a displaced person under 570.606(b)(2) if no one offers to pay the reasonable out-of-pocket costs of the move and the tenant does not return, so a rehab program that quietly expects people to find their own temporary housing during construction, without covering the cost, can create displaced persons under the URA without realizing it. Plan and budget for temporary relocation costs on every such project. And on any project where a displaced person qualifies for both URA and section 104(d) benefits, GCHS staff should present both options clearly and let the person choose, keeping the choice, and the explanation given, documented in the file. That single habit, letting the person choose and writing down that they did, is what turns a decade-long compliance obligation into a manageable one.