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Business owner shares eminent domain experience

Jill Schramm/MDN Dave Lebrun and Megan Lebrun carry a chair into the back of a truck Saturday as family members and other helpers moved items from the Souris River Design building on Railway Avenue. The City of Minot purchased the building to make way for the flood protection project.

Dave Lebrun has established a new location for his design and construction company, but he says the five years spent working through a flood buyout process taught him many valuable lessons. He wants to share those lessons with others facing property acquisitions as construction continues on the Mouse River Enhanced Flood Protection Project.

Souris River Design, formerly at 405 Railway Ave., has been relocated to the Cal-Dak Cabinets building at 2410 30th Ave. Lebrun is launching a website with information and tips for others in the path of the flood protection project. The website at edtips.info is in its infancy and will be further developed over time.

Having completed the buyout process, which included eminent domain action, Lebrun said he learned the importance of fully understanding from the start how the process works and how to approach it.

“Basically, all you’re doing is putting your house up for sale, and the city is the only buyer. So you have to make sure that you get the best dollar you can from the city,” he said.

Lebrun said his business didn’t make improvements to the property after learning about the proposed buyout because the building was destined to be torn down once purchased.

Jill Schramm/MDN Items for sale or giveaway sit at the curb in front of the Souris River Design building on moving day Saturday.

“That’s the biggest mistake you can make, because they’re going to treat it as if you’re selling the property on the open market. So if you’re selling it on the open market, you would fix it up, dress it up, fix anything that needs to be fixed, because that’s going to increase the value,” he said.

He said the business had been making improvements each year, but the work wasn’t finished at the time of the appraisal by the city. Many of those potential improvements, had they continued, would have cost less than the value recovered in a sale, he said. The removal of an old structure in the parking lot also would have added value had they known to demolish it. Those combined deficiencies resulted in a lower appraisal.

Even if the opportunity to make improvements before the initial appraisal is missed, it isn’t too late to keep fixing up the property, Lebrun said. Many property owners aren’t aware that they can request a new appraisal if the city’s original appraisal becomes more than a year old, he said. When market prices are rising or if property improvements continue to be made, it makes sense to request a new appraisal, he said.

A second common mistake is neglecting to indicate items within the building that the owner plans to keep. Lebrun said his building had built-in furnishings that were included in the fine print of the purchase agreement as part of the building.

“The appraiser assumed that they were staying with the property,” Lebrun said. “We assumed we were taking them with us.”

The option was for Souris River Design to buy back the furnishings and fixtures as salvage.

“Then they are no longer considered personal property so they don’t pay you to move,” Lebrun said. “People need to make sure that when they’re going through, whether it’s their house or a business, you specify everything that you are going to take out of that property up front so they don’t include that in their appraisal.”

In the end, the city updated its appraisal and took furnishings out of the purchase agreement. The only burden on Souris River Design was to make sure wall holes were filled and repainted where fixtures were removed.

Lebrun notes that negotiations can continue even if eminent domain is filed.

While he doesn’t necessarily recommend people hire attorneys for the negotiation process, he does advise working with a real estate agent and appraiser to ensure appropriate decisions are made in the marketing of the property. Lebrun recommends utilizing those experts in compiling data to support your case because expert information is essential for data to be considered, he said.

He recommends having a local appraiser review the city’s appraisal for any omissions and to ensure comparable properties were used in the appraisal.

He doesn’t recommend having a separate appraisal done. The city’s appraisal will carry more weight because the burden of proof is on the property owner. Thus, a separate appraisal would need to be flawless, despite standards that are so particular that there is high potential for error, he said.

Lebrun said his wisest move came when acquiring the property in 2006. At that time he had set up a separate entity to own the building and lease it to Souris River Design. By having two separate entities, he was eligible for separate reimbursements to each entity to cover expenses each had to make in the move.

Lebrun said the business’s new location is adequate for likely the next year or two. Eventually, he expects he and his wife will have to make longer term decisions regarding the business.

Buyouts are subject to the rules of the Uniform Relocation Assistance and Real Property Acquisition for Federal and Federally-Assisted Programs. Lebrun said it is worth property owners’ time to familiarize themselves with those rules, which address topics such as displacement compensation, appraisals, waiver values, the negotiation process, conflicts of interest, relocation payments, transfer of property and notice requirements.

A Frequently Asked Questions document regarding the Uniform Act can be found at https://www.fhwa.dot.gov/real_estate/policy_guidance/uafaqs.cfm.

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