04-13-11 Council Agenda - Laserfiche WebLink

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Following that agreement we then informed Ms. Ross that before we could recommend approval or denial of her client's claim for these increased mileage expenses, we wanted her to provide us with additional detail as to how her client calculated the increased mileage for each of the routes its drivers will be driving from the Burnsville and New Hope sites. Earlier this week, Ms. Ross provided us with a breakdown on each of these routes. We did an analysis of the mileage for each of these routes and they correspond with the mileage Mr. Ross provided in the initial relocation claim that she submitted to us. 2. Legal Analysis and Recommendation Pursuant to Minnesota Statute § 117.52, Subd. 1(a), as a displaced business, Hostess is entitled to a maximum reimbursement of $50,000 for its eligible reestablishment expenses. However, the increased mileage expenses that Hostess is going to incur as a result of relocating to its new sites are not traditionally considered as reestablishment expenses. Traditionally, reestablishment expenses related to increased operating expenses at the replacement site are for such items as increased rent, utility fees, taxes and insurance. 49 C.F.R. 24.304(a)(6). However, these are actual increased operating expenses Hostess is going to incur as a result of their new sites and there is nothing in the relocation regulations that specifically prohibits these costs from being considered as eligible reestablishment expenses. 49 C.F.R. 24.304(b). Whether it is for these claimed expenses or other possible expenses that Hostess may incur, the City has an obligation to provide Hostess with up to $50,000 as reimbursement for their reestablishment expenses. By getting Ms. Ross to agree that this would be Hostess' final claim, this will limit the City's exposure to any additional relocation claims that Hostess could make in the future. This is important because under 49 C.F.R. 24.207(d), Hostess has 18 months from the date of displacement or the date of the final payment for the acquisition of the real property, whichever is later, to submit its final claim for relocation benefits. Sooner or later Hostess will complete its corporate reorganization and it could select a permanent replacement site for its Little Canada operations at that time. As long as that occurs within Hostess' 18 -month claim period, they would be able to seek reimbursement from the City for any additional eligible moving expenses they would incur. By paying the previously approved moving costs of $12,910.48 and the $50,000 in reestablishment expenses for the increased mileage costs, the City will avoid any potential future liability for moving costs. Therefore, even though there is no absolute requirement that the City pay Hostess' reestablishment claim based upon these increased mileage costs, we would recommend that the City pay both the moving and reestablishment claims in order to avoid any future liability for moving costs that Hostess could incur. 9