[Code of Federal Regulations]
[Title 23, Volume 1]
[Revised as of April 1, 2002]
From the U.S. Government Printing Office via GPO Access
[CITE: 23CFR710.509]

[Page 344-345]
 
                           TITLE 23--HIGHWAYS
 
 CHAPTER I--FEDERAL HIGHWAY ADMINISTRATION, DEPARTMENT OF TRANSPORTATION
 
PART 710--RIGHT-OF-WAY AND REAL ESTATE--Table of Contents
 
              Subpart E--Property Acquisition Alternatives
 
Sec. 710.509  Functional replacement of real property in public ownership.

    (a) General. When publicly owned real property, including land and/
or facilities, is to be acquired for a Federal-aid highway project, in 
lieu of paying the fair market value for the real property, the State 
may provide compensation by functionally replacing the publicly

[[Page 345]]

owned real property with another facility which will provide equivalent 
utility.
    (b) Federal participation. Federal-aid funds may participate in 
functional replacement costs only if:
    (1) Functional replacement is permitted under State law and the STD 
elects to provide it.
    (2) The property in question is in public ownership and use.
    (3) The replacement facility will be in public ownership and will 
continue the public use function of the acquired facility.
    (4) The State has informed the agency owning the property of its 
right to an estimate of just compensation based on an appraisal of fair 
market value and of the option to choose either just compensation or 
functional replacement.
    (5) The FHWA concurs in the STD determination that functional 
replacement is in the public interest.
    (6) The real property is not owned by a utility or railroad.
    (c) Federal land transfers. Use of this section for functional 
replacement of real property in Federal ownership shall be in accordance 
with Federal land transfer provisions in subpart F of this part.
    (d) Limits upon participation. Federal-aid participation in the 
costs of functional replacement are limited to costs which are actually 
incurred in the replacement of the acquired land and/or facility and 
are:
    (1) Costs for facilities which do not represent increases in 
capacity or betterments, except for those necessary to replace 
utilities, to meet legal, regulatory, or similar requirements, or to 
meet reasonable prevailing standards; and
    (2) Costs for land to provide a site for the replacement facility.
    (e) Procedures. When a State determines that payments providing for 
functional replacement of public facilities are allowable under State 
law, the State will incorporate within the State's ROW operating manual 
full procedures covering review and oversight that will be applied to 
such cases.