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OFFICE OF
SOLID WASTE AMD EMERGENCY
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OSWF.R 9360.3-24
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINPTON, D.C. 20460
JUL 30 2004
MEMORANDUM
SUBJECT:
FROM:
TO:
Analyzing Compensation Alternatives for Partially or
Completely Demolished Structures
k, Dir
fund Remediation and'Technology I
Michael B. Cook,
Office of Supcrfund Remediation and'TcchnologV Innovation (OSRT1)
Deborah Y. Dietrich, Director
Office oi Emergency Prevention, PrcparcdnCSs and Response (OliPPR)
Superfund National Policy Managers, Regions I-X
Offices of Regional Counsel, Regions 1-X
Purpose
This memorandum serves three purposes: first, to provide revised consultation and
approval procedures for regional requests to restore or rebuild partially or completely demolished
structures; second, to clarify the term "major restoration;" and third, to transmit guidance on how
to analyze the various compensation alternatives. Revised consultation and approval procedures
are necessary because of a determination by the Assistant Administrator of the Office of Solid
Waste and Emergency Response (OSWER) thai the Directors of the Office of Superfund
Remediation and Technology Innovation (OSRTI) and the Office of Emergency Prevention,
Preparedness and Response (OEPPR) may make the final decision on these issues.' That
determination is documented in "OSWER's Decision to Transfer Authority to Approve Regional
Requests to Rebuild Structures Using Government Contractors." OSWER Directive 9360.3-25,
October 21, 2003.
1 This policy does not alter any other consultation and approval procedures that may
apply (e.g., nationally significant or precedent setting removal actions).
1
Internet Address (URL) • http://www.epa.gov
Recycled/Recyclable "Printed wHfi Vegetable Oil Based Inks on Recycled Paper (Minimum 25% Postconsumer)

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This memorandum supersedes OSWER Directive 9360.3-20, "Response Actions that
Affect Residential or Commercial Structures," May 29, 1998. That memorandum set in place a
requirement that Regions consult with Headquarters for assistance in analyzing alternatives for
compensating the property owner(s), and receive approval from OSWHR before making any final
decisions regarding this aspect of a removal or remedial site response. Lessons learned suggest
that these types of projects have ihe potential of being very complicated as well as costly.
Therefore, to assure national consistency, the requirement that Regions receive approval from
Headquarters before reaching an agreement with property owner(s) on rebuilding a demolished
structure or before agreeing with owners to use government contractors to restore a partially
demolished structure will continue.
This memorandum also serves to clarify the term "major restoration." Because of the
variability in Superfund projects, it is difficult to be precise in defining major restoration. In
many cases, the number of structures involved, the extent of restoration, the complexity of the
restoiation and the requirements or limitations of the relevant response authority could be factors
in k ( ntifying the best option for compensating the owncr(s). For the purpose of this
memorandum, major restoration is generally defined as work necessary to restore parti l>
demolished residential or commercial structures when such work may include replacement of all
or a significant portion of a room or other key components that are part of a larger structure (as
opposed to a detached garage or shed).2 These factors are important because wc have learned
that major restoration may result in unexpected, significant cost overruns and project delays.
In the May 1998 memorandum, OSWHR committed to developing a final policy based in
part on implementation of the May 1998 memorandum. Today's memorandum fulfills that
commitment. "Analyzing Compensation Mternatives for Partially or Completely Demolished
Structures" presents OSWER policy reccmn ndations regarding compensation of the owner(s)
of partially or completely demolished structures. Interested parties are free to raise questions on
and objections to the substance of this memorandum and the appropriateness of the application of
this document to a particular situation. EPA will consider whether or not the recommendations
or interpretations in this memorandum are appropriate to specific situations. This memorandum
does not impose any requirements or obligations on EPA, States, other Federal agencies, or the
regulated community. The sources of authority and requirements in this matter are relevant
statutes and regulations including the Comprehensive Environmental Response, Compensation
and Liability Act (CERCLA), the National Oil and Hazardous Substances Pollution Contingency-
Plan (NCP), the Uniform Relocation Assistance and Real Property Acquisition Policies Act of
1970 (URA). as amended and the Uniform Relocation Assistance and Real Property Acquisition
Regulations for Federal and Federally-assisted programs. (This policy does not apply to lessees,
who may nevertheless be entitled to relief under other laws such as the URA.)
2 Restoration of real property or construction of a building may be considered part of
EPA's general response authorities.
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The memorandum is intended to provide Regions wilh tools for making difficult
dcci ons on how best to provide compensation to these owners. The guidance includes an
emphitsis on the following:
Earb planning even before the decision to demolish or partially demolish the structure is
essential. This includes evaluating options for designing response actions thai avoid
partially or completely demolishing structures.
•	Unanticipated cost overruns, project delays and community frustration are common with
rebuild and relocation projects. Finding the best option for compensating property-
owners may be difficult and thus worthy of very careful analysis.
•	If a structure must be partially demolished, the preference is to provide the owner with
funds to manage the restoration themselves. If a structure must be completely
demolished, the preference under remedial authority is to permanently relocate owners
where possible; the preference under removal authority is to provide the owner with funds
to manage the rebuild themselves.
It also provides a decision framework that will ensure consistency in the fair and
equitable treatment of property owners.
Background
The Headquarters approval requirement established by the May 1998 memorandum was
p it i p ace, in part, because of questions raised by several Regions in carrying out these types of
r< sponges, coupled with two Office of Inspector General (OIG) reports: "Results of Assessment
of Controls over Emergency Removal Actions at Methyl Parathion Sites," (E1SFB7-06-0020-
7400069). and fin Region 3) "Replacement Housing at the Austin Avenue Radiation site,"
(El SFF7-03-0017-8100090). Both OIG reports were critical of the lack of appropriate cost
overrun controls, and the Austin Avenue report concluded that EPA should not rebuild homes
due to its lack of expertise.
Today's memorandum applies to fund-lead National Priorities List (NPL) or non-NPL
Supcrfund removal and remedial actions,1 where a structure, either residential or commercial, is
¦ For residential property owners, OSWER Directive 9834.6. "Policy Towards Owners of
Residential Property at Superl'und Sites," and "Interim Enforcement Discretion Guidance
Regarding Contiguous Property Owners," may be applicable. If potentially responsible parties
(PRPs) are identified, the Agency will seek to recover, among other things, its costs for
compensating the owner(s) under this policy.
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partially or completely demolished as a result of the implementation of a response action.1'
EPA's experience since then has taught us that each site situation is different, and analysis needs
to be conducted on a site-specific basis, balanced with a need for national consistency.
Mobile or manufactured homes that require restoration and serve as the ownerfs)" primary
residence are also subject to this policy. Regions should keep in mind that, in ieral. restoring
mobile or manufactured homes is rarely cost effective unless the repairs are minor. Regions
should work with Headquarters to determine which option for addressing major restoration is
best and whether approval from OSRTI or OEPPR is necessary.
Alternatives for compensating the owner(s) of partially or completely demolished
structures using CERCLA funds include the following: property acquisition and permanent
relocation (except at non-NPL sites under removal authority),-"' providing the owner(s) a financial
settlement for the replacement value of the structure or demolished components, where the
owncr(s) restore or rebuild.6 and restoring or rebuilding the structure using government
contractors.
F.PA Headquarters has been working closely with the Regions for several years to
develon guidance on compensating the owner(s) of partially or completely demolished structures.
'1 ii i; clearly no single compensation mechanism that works best for every situation. It is
often complicated by issues such as the fack of readily available building contractors, local
p< 'mitting and zoning requirements, and the difficulty of satisfying the property owner(s) while
limiting cost overruns.
Other OSWER policies and guidance address issues related to the decision to take
response action that may damage or demolish a structure. To summarize. Regions should, where
possible, design response actions that avoid a need to partially or completely demolish a
structure. Remedial Project Managers (RPM) should refer to OSWER Directive, 9355.0-71 P,
"'Interim Policy on the Use of Permanent Relocations as Part of Super fund Remedial Actions,"
for additional guidance. If there is any reason to suspect that a structure may be affected by a
4	CERCLA funds should not be used to restore or rebuild structures that collapse as a
result of conditions unrelated to the CERCLA response action.
5	As stated in the Preamble to the 1985 National Oil and Hazardous Substance
Contingency Plan (NCP), "[t]here are certain situations where EPA's removal authority does not
extend, e.g., permanent relocation cannot be performed as part of a removal response."
Authority to acquire an interest in real property to conduct a remedial action is provided by
CERCLA section 104(j).
6	If the ownerfs) would prefer to receive the appraised value of the structure or the
demolished components, and not rebuild but retain the land, the owner(s) should receive the
appraised value of the property but not the estimated cost to restore or rebuild.

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response action, OSWER recommends that Regions develop site-specific criteria to assist them
in making the decision to demolish a structure. The criteria may include technical information
on how far to go in attempting to save a structure and when it is no longer technically or
imancially optimal. Regions should also have a strategy for working with the affected owner(s).
The owner(s) need to know as early as possible of the potential for partial or complete demolition
of their property and have a basic understanding of how and when EPA might know if the action
will impact their property.
Implementation
Rebuilding or conducting major restoration of residential or commercial structures using
government contractors is the least preferred alternative method of compensating the owner(s)
and should be done only in the rarest of circumstances. The "rarest of circumstances" standard
establishes a very high threshold for decisions to restore or rebuild structures for several reasons
including the potential for unforeseen cost overruns, potential liability, and projec t f ia>s.
Furthci !.'PA is experienced in the decontamination and disposal rather than the rt turaiion or
const j uction of residential or commercial structures. While EPA strives to include consideration
of the owner(sY preference in the final decision, the owner(.s)" preferences should be balanced
with the Agency's responsibility to manage public funds appropriately and within its expertise.
The determination should be made on a casc-bv-casc basis and is at the discretion of the Agency.
As soon as it becomes apparent that residential or commercial structures will be partially
or completely demolished by a response action, the On-Scene Coordinator (OSC) or RPM should
consult with the appropriate OEPPR (for removal actions) or OSRTI Regional Coordinator at
Headquarters (for non-time critical actions and remedial actions) on the alternatives for
compensating the o\vner{s). When there is a removal action at an NPL site. Regional
Coordinators from both Headquarters offices will coordinate within OSWER.
Headquarters" preference is to reach a financial settlement with the owner(s) of partially
demolished structures to allow them to restore their property. In the case of a completely
demolished structure under removal authority. Headquarters prefers that a financial settlement be
reached with the owncr(s) to allow them to rebuild {sec footnote 5 for more information); for
sites where action is being taken under remedial authority, Headquarters' preference is to acquire
the property and arrange for permanent relocation of the owner(s) and/or tenant(s).7 If the
Region decides that the best alternative is properly acquisition and permanent relocation, the
Region should prepare a formal memorandum including support documentation and request
7 OSWER Directive, 9355.0-71P, documents OSWER's policy that in instances where
owners are expected to be temporarily relocated for more than one year (tenants six months).
Regions should evaluate the appropriateness of offering permanent relocation.
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approval according to Super fund delegation 14-30, "Acquisition of Real Property."8
If the Region believes, based on site-specific factors, that property acquisition and
permanent relocation is not the best option, the OSC or RPM should, with tin. Regional
Coordinator's help, evaluate the appropriate alternatives. The atta> rr"ntnt lo this memorandum,
"Key Factors to Consider When Analyzing Alternatives for Comp* lMtni^ the Owner(s) of
Partially or Completely Demolished Structures." identifies issues to consider in 'his process.1' An
analysis that includes these and other relevant factors should be conducted foi endi option,
including permanent relocation where applicable. The analysis should be detailed md provide
enough information to lead to a decision based on comprehensive research rather than
assumptions or conjecture. If. after consultation with Headquarters, the Region believes that
major restoration should be addressed through a financial settlement with the owner(s), allowing
the owner(s) to restore the property, approval from Headquarters is not necessary. If the Region
concludes that rebuilding a demolished structure can best be achieved through a financial
settlement with the owner(s), approval from the appropriate Headquarters offices is necessary. If
the Region concludes that the best approach to restoring or rebuilding a demolished structure is
to use government contractors, approval from Headquarters is also necessary.
IS HEADQUARTERS APPROVAL NECESSARY*?
Scope of Work
With Financial Settlement
By Government Contractors
Major Restoration
no
yes
Rebuild a Demolished Structure
yes
yes
In all situations where Headquarters' approval is necessary, the Region should prepare the
analysis and a memorandum to request approval from the Director of OSRTI or OEPPR as
appropriate. See below for more information on preparing this memorandum.
If the property is to be restored or rebuilt, using either method, the Region should obtain a
written agreement with the owner(s) to document the understanding. The agreement should be
tailed enough so that both the owner(s) and EPA clearly understand what is expected of each
parly. The agreement is also intended to document that Constitutional (Fifth Amendment) and
URA waivers protecting the United States from subsequent claims by the property o\vncr(s) are
secured. The significance of a carefully written agreement cannot be overstated. Headquarters
8 Consistent with CERCLA Section 104(j), EPA and the appropriate state must reach
agreement that the state will accept title to any acquired real property.
r> Rebuilding demolished structures with manufactured housing constructed off-site and
delivered whole or in sections for assembly on site is also within the scope of this policy.
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has examples of documents like these for the various alternatives. Regions are encouraged to
contact their Regional Coordinator and/or OGC/Finance and Operations Law Office (FOLO) for
assistance in developing a site specific agreement. The appropriate Headquarters Regional
Coordinator should be sent a copy of the written agreement.
Regions should keep in mind that replacing a partially or completely demolished structure
is intended to compensate the owner(s) for the structure: it is not intended to totally compensate
individuals for expenses or losses associated with actual contamination or the effects thereof, or
other components of the Superfund response action (e.g., the owner(s) may feel that have been
inconvenienced by the Superfund action or have suffered health affects as a result of exposure to
the contaminant and want compensation for the inconvenience or health effects). EPA is not
responsible for providing an exact replica of the original structure, essentially 'like for like/""
Rather, appropriate replacement housing should be consistent with the URA: decent, safe, and
sanitary; meet applicable housing and occupancy codes; be functionally equivalent to the
previous house; be adequate in size to accommodate the occupants; and he within the financial
means of the displaced persons.11
Memorandum Requesting Headquarters Approval
A request for approval should be prepared for either the Director of the OSRTI or the
Director of OF.PPR as appropriate. The memorandum should include a background section that
provides a description of the overall response action, an explanation of why the structurc(s) must
be or has been partially or completely demolished and the number of households and businesses
affected. Regions should include a detailed cost analysis for all relevant options as well as a
reasonable time line for each of them. A table that lists the relevant options across the top and
the individual expenses along the side is one way to display the costs analysis. Along with the
detailed analysis, a narrative that discusses the non-quantitative factors (pros and cons) for all
Lvant options should be included. An analysis that shows good cau e for the structure to be
rebuilt instead of acquired is not enough; in situations where the govu< merit would rebuild the
structures, the analysis should show why the government, not the 0Ai.~r(s), should manage the
rebuilding. The Region should demonstrate why the site circumstances clearly meet the very
high threshold of "rarest of circumstances." Regions should incorporate all relevant information
discussed in the attachment to this memorandum, l*Key Factors to Consider When Analyzing
Alternatives for Compensating the Owner(s) of Partially or Completely Demolished Structures."
10	Office of Inspector General's Audit, '"Replacement Housing at the Austin Avenue
Radiation site," (EISFF7-03-0017-8100090).
11	Functionally equivalent as defined by the Uniform Relocation Assistance and Real
Property Acquisition Policies Regulations, 49 CFR Part 24.
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Communication with the Owner(s)
People's homes are likely to he their most valuable asset. Whenever F.PA's > >pon
actions will directly affect a home, EPA should treat the owner(s) with a great deal oi care and
sensitivity. In communicating with the owner(s), it is critical that EPA be clear about what we
know and don't know about the impact of the response action on their homes at each stage of the
cleanup. EPA should tell the owner(s) what information EPA needs to get. in order to better
inform them of the potential impact on their property and give them some idea when EPA may
have the information. The Regions should avoid creating false expectations. Regions should
inform the owner(s) that it is EPA's policy to avoid demolishing structures whenever possible
but also inform them if there is any possibility that part or all of the structure may be affected by
EPA"s response action. In conversations with the property owner(s), Regions should not promise
or state a preference for one option or another before they have fully coordinated with
Headquarters and received any necessary approvals. Whatever course of action, EPA should
keep the owner(s) updated on EPA's progress and any changes in the plans. EPA's responsibility
is always to treat the owner(s) fairly, equitably and with respect.
Conclusion
Response actions that affect residential and commercial structures should always be
carefully managed to minimize their impact on communities. Regions should have a goal of
designing response actions lo allow communities to remain whole wiiere possible. In situations
where structures must be partially or completely demolished under removal authority,
Headquarters' preference is to reach a financial agreement with the owner(s). For actions taken
under remedial authority. Headquarters' preference is to reach a financial agreement to restore
partially demolished structures and permanently relocate the owner(s) of completely demolished
structures. Only in the rarest of circumstances should EPA consider using government
contractors lo restore or rebuild structures.
If you have any question about this memorandum or the attachment contact Terri Johnson
of OSRTI at (703) 603-8718, or Kevin Mould of OEPPR at (703) 603- 8728.
Attachment
cc: Dana Tulis. OEPPR, 5104A
OEPPR Managers, 5104A
Mark Mjoness, OEPPR, 5204G
Nancy Riveland, Superfund Lead Region Coordinator, USEPA Region 9
NARPM Co-Chairs
Susan Bromm, OS RE
Robert Springer. Senior Advisor to AA/OSWER
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Removal Managers, Regions 1-10
OSRTI Managers
OSRTI Records Manager, IMC 5202G
Joanna Gibson, OSRTI Documents Coordinator, 5202G
Earl Salo. OGC, 2366A
Lee Tyner, OGC. 2366A
Charles Openchowski, OGC, 2366A
Stephen Hess, OGC, 2377A
Patricia Sigur. USACE, CERE-R-PD
Chris MilSigan, USACE
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OSWER Directive 9360.3-24
ATTACHMENT
KEY FACTORS TO CON SI OKU WHEN ANALYZING ALTERNATIVES FOR
COMPENSATING THE OVVNER(S) OF PARTIALLY OR COMPLETELY
I)EMOI iSHED STRUCT!IRES
ANALYSIS OF ALTERNATIVES
This supplements OSWER Directive 9360.3-24.k"Analyzing Compensation Alternatives
for Partially or Completely Demolished Structures." Regions should refer to both this attachment
and the above Directive when analyzing the alternatives for compensating the owner(s) of
partially or completely demolished structures. Most of this attachment applies only to residential
structures. Commercial structures may have unique enforcement issues that should he
considered separately. Additionally, commercial structures will have factors to consider that
are unique to the type of commercial operation. Regions should work with their Headquarters
Regional Coordinators and Regional enforcement experts to identify both enforcement issues and
other issues that will impact the selection of a compensation method if compensation is
determined to be appropriate.
The following is a list of some of the key factors to consider when determining the best
method for compensating the owner(s) of partially or completely demolished structures.
Additional site-specific factors may be identified as relevant for the analysis. Regions should
work with their Regional Coordinators at Headquarters to determine the best options. Regions
are encouraged to work with other Federal Agencies such as the U.S. Army Corp of Engineers
(USAGE) who have real estate experience, particularly in developing property appraisals,
1. Factors Common to AH Options
An appraisal of the existing structure is necessary. A licensed appraiser should be able to
provide the appraised value of the structure without consideration of the fact that the structure
may be partially or completely demolished or contaminated. An appraiser should also provide an
estimate of the cost of replacing or restoring the structure. The Office of General Counsel
(O(jC), Finance and Operations Law Office (FOLO) can offer advice on requirements for
appraisals. The Uniform Relocation Assistance and Real Property Acquisition Policies Act, as
well as the Uniform Relocation Assistance and Real Property Acquisition Policies for Federal
and Federally Assisted Programs. 49 CFR Part 24 (ERA), also provide information on the
appraisal process.
The LIRA also has a definition of what is considered comparable replacement housing.
The comparable replacement housing definition provides relevant guidance on what features and
attributes should be available in a replacement home. The ERA makes it very clear that the
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government is not required to provide housing that exactly replicates the demolished structure.
1 i_ I.JRA can be found at http://www.fhwa. dot.gov/realestate/index. htm. If the owner(s)
requests improvements beyond this standard, they may, based on a case-by-case analysis and in
apmopriate circumstances, pay for the improvements themselves. One example of when this
ma.y not he appropriate is if the Region determines that construction of the improvements would
unreasonably delay the response action.
The ownerfs) should receive payment for the appraised value of their property once
agreement on that amount is reached and the owner(s) and EPA have executed an agreement (see
Section V below). The owner(s) should not receive the additional amount it would cost to
replace the structure (replacement value is generally higher in cost than the appraised value)
unless and unlil the funds are actually spent to restore or rebuild the structure. Other factors you
should consider include the following:
•	What are the owner's concerns?
•	Will a delay in complelin the construction and restoration, or in completing u
permanent relocation delay the overall response or increase the project costs ( such as an
increase in temporary relocation costs)?
Can the ownership of the property be determined with certainty? Are there any
complexities regarding the title?
•	there is a lien on the property, will ihe lien holder(s) agree with the recommended
ilternative?
Cost should not be the sole determining factor in selecting the appropriate option even if
estimated cost of rebuilding is less than the estimated cost of permanent relocation. Keep in
mind that it is often easier lo predict the cost of property acquisition and permanent relocation
more accurately than it is to anticipate all the potential factors that may drive the cost of restoring
or constructing housing beyond the originally estimate. In nearly all situations where permanent
relocation is a viable alternative, rebuilding should not be selected if the initial cost estimate for
rebuilding a demolished structure is greater than the estimated cost of permanent relocation.
II. Partially Demolished Structures
In most cases, the Office of Superfund Remediation and Technology Innovation (OSRTI)
and the Office of Emergency Prevention, Preparedness and Response (OEPPR) prefer that
owners of partially demolished structures be compensated for the cost to restore the damaged
structure, thereby allowing the owncr(s) to make the arrangements and oversee the restoration.
Regions should perform a comparative analysis of the options, to support the final
recommendation. Enough information should be available to support a detailed cost analysis for
each of the two alternatives (financial settlement or using government contractors lo rebuild) for
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all property owners as a group and for each property's owner(s) separately. The following tvvo
alternatives apply when major restoration of a structure is needed:
A. Financial settlement - the owner Of) arranue tl restoration - The analysis shouf I include but
not be limited to consideration of the following:
•	Are contractors immediately available to start work without delays?
•	Are a few properties involved or are there many properties that would all need restoration
contractors concurrently?
How will Federal liability lor the restoration be limited? (The Government has an
interest in seeing that the structure is restored in a timely maimer to limit temporary
relocation costs, but the EPA should not play a management role in the restoration or
approve the final work).
•	What are the projected costs of temporary relocation of all affected owners and how will
these costs be controlled especially if the restoration is delayed?
•	Are there any issues associated with zoning and acquiring necessary permits? What are
the potential solutions to these issues?
If financial settlement, allowing the owner(s) to arrange the restoration, is selected, the
Region should execute an agreement with the ovvncr(s). On Scene Coordinators (OSC) and
Remedial Project Managers (RPM) should work with their Office of Regional Counsel and the
Office of General Counsel to develop the agreement. The importance of developing a thorough
carefully written agreement cannot be overstated. That agreement should include a notice to the
owner(s) that temporary relocation assistance will be terminated once the restoration is complete
or after a period of time, as determined by EPA, in which the restoration should have been
completed (sec Section V below for additional details). The financial settlement could take two
forms depending on the type and scope of the restoration. For large or complicated restorations
or restorations where delays can be anticipated. Regions could distribute funds at key points in
the restoration to ensure that the restoration is completed in a timely manner. For this option,
distribution of the funds may be handled by a third party such as an escrow manager. EPA would
provide the funds to the cscnyw manager who would distribute the funds at key milestones.
Reimbursement of reasonable escrow management fees is an appropriate expense and should be
included in the cost analysis. Where restoration is not expected to be costly, complicated, or time
consuming. Regions may authorize a check to be issued to the owner(s) for the agreed-upon
amount. EPA should encourage owner(s) to start working with contractors to plan for the
restoration as soon as possible to allow them to start once the cleanup work is completed on their
property. Regions should contact their Headquarters Regional Coordinator, ORC representative
and/or OGC/FOLO for examples of agreements for this type of financial settlement to use as
templates.
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D. Go\ o:; .merit contract rg ^rrv oul a major restoration - In general this alternative is
discouraged, la rare cii^umbimces, HP A may determine that it is more appropriate and/or cosl-
effectivc to make some or an of a major restoration using government contractors. This
alternative will require approval from the appropriate Headquarters ofiice(s). Headquarters will
need the Region to support the selection of this alternative with an analysis that evaluates the
pros and cons of the two alternatives. The analysis should include consideration of the
following:
¦ What arc the projected costs of temporary relocation of all affected owners and how will
i si costs be controlled especially if the restoration is delayed?
I low will EPA limit the time period the owner(s) or ten an t( si need to be temporarily-
relocated? (If tenani(s) are expected to be temporary relocation for more than six months.
Region should consider providing the tenant(s) permanent alternative housing. See
OSWER Directive 9230.0-97, April 2002. ""Supcrfund Response Actions: Temporary
Relocations Implementation Guidance.")
•	Is there a detailed plan for containing costs? (Include the plan with information, submitted
to Headquarters.)
•	How will Federal liability for the restoration be limited?
•	How will the owners be involved in decisions about the selection of options such as room
designs, carpet quality and color, and paint without costly delays to the project?
¦ How will the project managers oversee the restoration without neglecting the cleanup
operations?
Are there any issues associated with zoning? What are the potential solutions to these
issues? (Local authorities should be contacted for this information before submitting a
request to Headquarters for approval.)
Are there local contractors available to start the restoration work without delay?
What is unique about this nc. that warrants an exception to EPA's preference of financial
settlement with the ov\ isi Why is this the "rarest of circumstances?"
Of. Completely Demolished Structures
There are three alternatives available to compensate the owncr(s) using CERCLA funds
when a response action completely demolishes a structure. For sites on the National Priorities
List (NPL) where action is being taken under remedial authority. EPA's preference is to acquire
property and permanently relocate the owner(s). If the property is to be acquired, a comparative
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analysis of the rebuilding options is not necessary. To properly evaluate other options. Regions
should analyze and document the strengths and weakness of each of the relevant alicrnaliv b
property acquisition (a buyout), a financial settlement that would allow the owiitr(i>) to rebuild
or EPA rebuilding the structure using government contractors. An analysis shouia include a
detailed breakdown of the costs associated with each alternative as well as a statement describing
how costs will be contained.
A.	Property acquisition - EPA has determined that fund-lead property acquisition is not an
alternative at non-NPL sites where action is being taken under removal authority. Regions
ould look to other authorities, such as state or local governments, or potentially responsible
parties for funding. In lieu of other authorities, Regions should work with their Headquarters
Regional Coordinators to decide on the best of the two remaining alternatives. There are specific
procedures for seeking approval from OSRTI to acquire real property for sites where action is
being taken under remedial authority. The Office of Regional Counsel can help you with these
procedures. Information on conducting permanent relocations, including appraisals, is also
available at hitpi/Avww.fhw'a.dot.aov/realestate/index.htm.
B.	"Rebuild by the own erf s) or the government - Although some factors may support using
government contractors, it should be a rare circumstance where those factors outweigh the factors
that favor property acquisition or a financial settlement with the ovvner(s) who will arrange and
oversee the rebuilding of the structure. The OSC or RPM should work closely with the owner(s)
to understand their preferences and concerns and also to gather the information necessary in areas
such as their finances, the status of any liens, and the owner(s)7 ability to handle the complexities
of t,unir icting for building a structure. Controlling costs and time delays is critical. Although
n buii mg the structure using government contractors may appear to give maximum control to
EPA over time delays, the costs may be much higher because EPA must pay Davis-Bacon rates
for work done on site and contract management fees. Also, whenever the government rebuilds a
structure, the OSC or RPM will necessarily be closely involved, taking their time and attention
away from other site cleanup activities.
If the Region believes site specific factors warrant an analysis of options other than
permanent relocation, they should coordinate with their Headquarters Regional Coordinators and
the Offices of Regional and General Counsel to get help in analyzing the options available to
rebuild the structures. Below are some additional factors that may be applicable:
It can be difficult for EPA to control the length of time it takes the owner! s) to rebuild the
structure. What controls will be put in place to assure that the rebuilding progresses in a
timely fashion?
• Are there design factors that may make rebuilding difficult, such as in the case of
replacing duplex homes, where two owners must agree on the design?
What would the impact of each alternative be on nearby property and the community?

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Are iocal builders immediately available?
Can the owner(s) afford the potential increase in property tax ol ach alternative?
Are there obstacles that may hinder the owner(s) from arranging and overseeing the
construction project?
Is there any reason why the property owner(s) may not be able handle the complexity,
stress, and time commitment necessary to rebuild their home?
A financial settlement based on the replacement value of the structure would likely give
the owner(s) maximum control over the rebuilding of their structure. Do the owner(s)
want to make changes to the design of the home, or have very specific plans for the
interior decor?
If the Government rebuilds the structure how will decisions be made in the selection of
options such as room designs, carpet quality and color, and paint in such a way as to
involve the owner(s) without costly delays to the project?
If the Government rebuilds the structure how will the project managers oversee ihe
rebuilding of the structure without neglecting the cleanup operations?
If modular housing is being considered, arc there zoning limitations?
What is the most efficient way to manage a large project with many structures involved?
Have local zoning rules changed since the construction of the original structure such that
it would be difficult to rebuild on the same property (e.g., set bai-' rules have changed
and the buildablc property is no longer large enough to accommoda e the same size
structure)? (Check with local authorities before requesting approval from Headquarters.)
Is it expected that the local government and community will support the compensation
methods under consideration?
If rebuilding is selected, is there available housing for the temporary relocation of the
owner(s) while the rebuild is done? IIow will the duration of the temporary relocation be
controlled?
If a financial settlement is recommended, who will assure that the funds arc used to
rebuild a structure that meets the requirement of being decent, safe and sanitary?
Who will inspect the builder's work as the rebuild proceeds?
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• If government contractors rebuild the structure, how will EPA's liability be limited?
What is unique about this site that warrants an exception to EPA's preference to acquire
property? Why is this the "rarest of circumstances?"
A cost analysis that compares the options is an important part of making the best
decision. Below is a limited list of some of the potential costs you may need to factor into your
anai_. sis. Keep in mind that some of these costs apply to all three options and you will need to
look al site specific factors for additional potential expenses. This list is intended to capture
timtial costs of rebuilding residential structures. Rebuilding commercial structures will have
additional expenses associated with the particular commercial operation. There are many other
factors or expenses to consider and most will not be apparent until information is gathered from
each property owner(s).
Estimated Acquisition/Relocation Costs:
Appraised value of the structure and land (You will need both costs to compare the cost of
rebuilding to the cost of permanent relocation.)
Housing of last resort payment
Closing costs
Moving costs
Temporary relocation
Other relocation costs
sbmated Demolition and Restoration Costs:
Demolition costs
Restoration of yards/driveways
Estimated Rebuilding Costs:
Appropriate permits (relevant when the owner(s) restores or rebuilds only)
Other City fees
Architect costs
Project manager's fees
Cost of managing funds (for example, escrow account management)
Construction costs
Builders7 insurance
Cost of an extended wan U for new construction
Thei l nay be additional ccstj associated with manufactured housing (for example, the cost of
delr.ery)
Estimated Administrative Costs:
Appraisals cost and review
Title costs (contract)
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Title costs (attorney)
Mapping/legal description cost
Negotiations (USAGE or contractor costs)
Closings (USAGE costs)
Relocation A tance (USAGE or contracts costs)
Travel costs (USAGE)
Other USAGE or contractor administrative costs
IV Agreement Between Property Owoer(s) and EPA
If the decision is made to restore or rebuild a structure either through a financial
settlement or using government contractors, the Region should document the agreement with the
owner. The agreement should be as detailed as possible to minimize confusion or disagreements
later. The agreements may include but would not be limited to the following:
A description of the Superfund site history;
Identification of the owner(s) and the parcel oiTand and structure affected;
•	Agreement to provide EPA access to partially or completely demolish the
structure;
Documentation that the owner(s) were offered permanent relocation (if relevant)
and that the owner(s) rejected the Government's offer;
Defining the obligations of the Government including the appraised value of the
demolished structure and the amount that the Government will provide for
restoration or construction of the replacement dwelling;
» The period of time that temporary relocation assistance will be provided and how
the owner(s) will be notified of the termination of assistance;
•	Agreement that the Government will inspect the replacement dwelling to
determine whether it is decent, safe and sanitary as required by the URA;
•	The Government's expectation regarding its role in coordination with local zoning
officials, insurance companies, construction permitting and real property taxing
and assessment entities;
The Government's expectation regarding the condition of the property at the time
it is made available to the owner(s) for reconstruction (i.e., grading and
compaction of the soil ); *
•	Notification to the owner(s) of their responsibility to have an agreement for
construction in place within a specific period of time and to secure all permits and
zoning approvals;*
•	Notification to the owner(s) of their responsibilities for any increase in property
taxes that may result;
•	Notification to the owner(s) of their responsibility to provide the Government a
copy of the construction contractor's final invoice(s) and their canceled check(s)
evidencing the total cost of construction;*
•	A notification to the owner(s) that any excess of the depreciated replacement cost,
which is not expended in the restoration or construction of the replacement

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dwelling shall be returned to the government by Certified Mail within a specified
period of time after the issuance of the Certificate of Occupancy;*
A statement about the release of claims against the government:
•	A statement to inform the owner(s) that Government shall not be responsible for
any structural, mechanical, legal, or other problems discovered during or after
construction;
Addresses where the Government and the owner(s) will send correspondence.
*	May not apply to situations where the Government is rebuilding the structure.
This guidance cannot anticipate all details that may need to be included in a financial
agreement. Coordination with ORC and OGC/FOLO for additional recommendations is critical.
The agreement should be signed by EPA and the property owner(s) with a copy to the site file
and to the owner(s).
V. Conclusion
Hxpcct each situation to be unique. It is important to work closely with the owner(s) and
answer their questions, but be very careful not to commit to a specific alternative until the
analysis is complete and approval is received. OSCs and RPMs will find themselves working
with bankers, builders, the local zoning board, and local social service agencies. Keep in mind
that replacing a partially or completely demolished structure is intended to compensate owner(s)
for the structure; it is not intended to totally compensate individuals for expenses or losses
associated with contamination or other components of the Superfund response action. OSRTI,
OEPPR and OGC are available to help you develop an analysis of the alternatives available.
If you have any question about this memorandum or attachment, contact Terri Johnson of
OSRTI at "(703) 603-8718. or Kevin Mould of OEPPR at (703) 603-8728.
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