Annette M. Hattemer, Relator, vs. Pepin Manufacturing, Inc., Respondent, Commissioner of Economic Security, Respondent.

 STATE OF MINNESOTA
 IN COURT OF APPEALS
 CX-99-648

In the Matter of:
Wiseway Motor Freight, Inc.

 Filed September 28, 1999
Affirmed
Halbrooks, Judge

Minneapolis Community Development Agency

Joan M. Quade, 400 Northtown Financial Plaza, 200 Coon Rapids Boulevard, Coon Rapids, MN 55433 (for relator Wiseway Motor Freight, Inc.)

Fred Burstein, Dylan J. McFarland, Burstein, Hertogs & McFarland, P.A., 510 First Avenue North, Suite 610, Minneapolis, MN 55402; and

Michael L. Schwab, Crown Roller Mill, Suite 600, 105 Fifth Avenue South, Minneapolis, MN 55401-2538 (for respondent Minneapolis Community Development Agency)

Considered and decided by Klaphake, Presiding Judge, Anderson, Judge, and Halbrooks, Judge.

 U N P U B L I S H E D   O P I N I O N

 HALBROOKS, Judge

Relator Wiseway Motor Freight, Inc., appeals the decision of the Minneapolis Community Development Agency (MCDA) not to reimburse it, pursuant to the Minnesota Uniform Relocation Act, for costs associated with an unused relocation site. Because we conclude the MCDA's decision was not arbitrary or capricious and is supported by substantial evidence in the record, we affirm.

 FACTS

On March 31, 1995, respondent Minneapolis Community Development Agency (MCDA) adopted a resolution to acquire 42 acres of land in Northeast Minneapolis for redevelopment into a retail shopping center (the northeast retail project). Relator Wiseway Motor Freight leased a portion of the condemned property that consisted of a truck freight terminal and distribution center. Wiseway's lease was scheduled to terminate in November 1996.

On January 30, 1996, the MCDA commenced a condemnation proceeding to acquire the northeast retail project site and sent Wiseway a notice of its intent to acquire the site as of May 1, 1996. On February 7, 1996, Wiseway was served with a copy of the MCDA's condemnation petition and its "quick-take" motion to acquire the site. Wiseway did not object to the MCDA's motion to acquire the site.

On April 26, 1996, a hearing on the MCDA's petition and quick-take motion was held. At the hearing, Wiseway's counsel explained to the court its concerns about relocating multiple times and indicated Wiseway was constructing a new facility that might take 120 days to complete. Nevertheless, Wiseway's counsel advised the court it had no objection to the taking if the MCDA would allow Wiseway to remain on the premises until August 1, 1996.

On April 30, 1996, the court granted the MCDA's quick-take motion, and the MCDA acquired title and right to possession of the site the following day.

To permit Wiseway to remain on the site until August 1, 1996, the MCDA and Wiseway entered into a license agreement dated May 1, 1996. Under the agreement, Wiseway was required to deliver possession of the property to the MCDA by August 1, 1996.

Shortly after Wiseway entered into the license agreement with the MCDA, it requested an extension of the license until October 1. But the MCDA did not agree to the extension. Representatives of the MCDA told Wiseway they could revisit the issue closer to August 1, and suggested Wiseway contact the developer to see if there was some flexibility in the lease date.

The MCDA had a "drop-dead" date of January 1, 1997, for turning the property over to the developer. But, as the MCDA project manager later testified at the appeal hearing, the developer needed the parcel occupied by Wiseway no later than August 1 in order to begin soil pollution remediation and construction for one of the development's anchor tenants. If the MCDA failed to deliver the site in a timely manner, it would have been exposed to financial losses of $134,000 per month beginning in January 1997.

Due to a number of factors involved in the development of its Lakeville relocation site, Wiseway knew that the new site would not be finished before the August 1, 1996 displacement date, even if construction began immediately in May. As a result, Wiseway, with the help of the MCDA, attempted to locate suitable temporary space in which it could continue its business operations until the Lakeville site was ready. In July 1996, Wiseway realized it would be unable to obtain a short-term lease and continued to attempt to obtain an extension of the August 1 displacement date. When the MCDA would not extend the license, Wiseway abandoned its plans to relocate to the Lakeville site. It eventually found a site in Hudson, Wisconsin, and moved there on July 27, 1996.

The MCDA reimbursed the costs of Wiseway's move to Hudson as follows:

actual moving expenses       $232,394.14
search expenses                       1,000.00
reestablishment expenses         10,000.00
Total                                   $243,394.14

But the MCDA declined to pay $130,724.74 of expenses Wiseway incurred in connection with its aborted development of the Lakeville site. These expenses included $82,147.69 charged by APPRO Development, Inc., for permits, architectural and engineering services, and preliminary site preparation; $45,000 for earnest money paid to Airlake Development, Inc.; and $12,000 to an environmental engineering firm for a phase 1 study. The expenses were all incurred between February 29, 1996, and August 19, 1996.

Wiseway appealed the MCDA's partial denial of its request for relocation benefits and a hearing was conducted. Both parties were represented by counsel and afforded the opportunity to present witnesses, exhibits, and written submissions. On March 30, 1999, the hearing officer issued a written decision denying Wiseway's claim for the expenses it incurred in connection with the Lakeville site. On April 19, 1999, Wiseway obtained a writ of certiorari from this court to obtain review of the MCDA's decision.

D E C I S I O N

On certiorari review of an agency decision, this court is limited to considering whether: (1) the agency had jurisdiction, (2) the proceedings were "fair and regular," and (3) "the [agency's] decision was unreasonable, oppressive, arbitrary, fraudulent, without evidentiary support, or based on an incorrect theory of law." Radke v. St. Louis County Bd., 558 N.W.2d 282, 284 (Minn. App. 1997). The decision is to be upheld if the agency provided "any legal and substantial basis" for its action. Senior v. City of Edina, 547 N.W.2d 411, 416 (Minn. App. 1996).

Wiseway brought its claim for relocation expenses under the Minnesota Uniform Relocation Act (Minnesota URA). Minn. Stat. §§ 117.50 - 117.56 (1998). The Minnesota URA requires payment of relocation benefits to any displaced person or business whose property is acquired by a public body which has the power of eminent domain. Minn. Stat. § 117.52, subd. 1. The relocation benefits are to be provided in accordance with the federal Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, 42 U.S.C. §§ 4601 - 4655 (1988) (the federal URA), and the regulations implementing the federal URA. 49 C.F.R. §§ 24.101-24.308 (1998).

An acquiring authority, such as the MCDA, is required to pay three types of expenses incurred by a dislocated business: (1) actual moving expenses that the agency determines to be reasonable and necessary; (2) reasonable search expenses up to $1,000; and (2) reasonable and necessary reestablishment expenses up to $10,000. 42 U.S.C. § 4622(a); 49 C.F.R. §§ 24.303, 24.304 (1998).

The expressed purpose of the federal URA is to establish:

a uniform policy for the fair and equitable treatment of persons displaced as a direct result of programs or projects undertaken by a Federal agency or with Federal financial assistance. The primary purpose of this subchapter is to ensure that such person shall not suffer disproportionate injuries as a result of programs and projects designed for the benefit of the public as a whole and to minimize the hardship of displacement on such persons.

42 U.S.C. § 4621(b).

The statute has been liberally interpreted to effectuate its "generous" purposes. See Pou Pacheco v. Soler Aquino, 833 F.2d 392, 399 (1st Cir. 1987) (affirming the jury verdict awarding reimbursement for relocation expenses beyond the monetary limits established in the federal regulations); Mississippi Dept. of Transp. v. B & G Outdoor, 722 So. 2d 1273, 1275 (Miss. Ct. App. 1998) (citing Pou Pacheco with approval and emphasizing the statute's purpose to provide fair and equitable treatment to those displaced by federal projects).

In the present case, the MCDA hearing officer denied Wiseway's expenses incurred in developing the Lakeville site, finding that the expenses did not qualify as reasonable and necessary "search expenses," "actual moving expenses," or "reestablishment expenses" under the federal regulations. He also found the MCDA had already paid Wiseway the statutory maximum for search and reestablishment expenses.

On appeal, Wiseway contends its expenses are not expressly prohibited by the federal URA, and pursuant to the statute's stated policy of minimizing hardship to displaced persons, the MCDA should pay the expenses. Wiseway also emphasizes its specialized site needs and the unavailability of these sites in the Twin Cities area.

In support of its argument, Wiseway relies on the First Circuit Court of Appeals' decision in Pou Pacheco. In Pou Pacheco, the court upheld a jury verdict requiring the Commonwealth of Puerto Rico to compensate a coffee business which was forced to relocate due to Puerto Rico's acquisition of its property. Pou Pacheco, 833 F.2d at 394. The compensation approved by the court included search costs above the limits set by the federal URA, and the cost of two relocations. Id.

 We conclude that Pou Pacheco is inapposite in the present case because the Pou Pacheco court was reviewing a jury verdict, not an agency decision. In the instant case, we are required to determine whether there is substantial evidence supporting the hearing officer's decision that the expenses incurred in pursuing the Lakeville site were not reasonable and necessary. The hearing officer's decision "enjoys a presumption of correctness" and "deference should be shown by the courts to the agencies' expertise." Reserve Mining Co. v. Herbst, 256 N.W.2d 808, 824 (Minn. 1977). In light of this standard of review and the particular facts in the present case, we conclude there is a substantial legal and factual basis in the record for the hearing officer's decision and it is not arbitrary or capricious.

We recognize the moving expenses listed in the regulations are not exclusive; they include catchall provisions for other moving-related expenses, 49 C.F.R. § 24.303(a)(14), and reestablishment expenses, 49 C.F.R. § 24.304(a)(12). There is, nonetheless, a substantial basis from which the hearing officer could conclude Wiseway's expenses were not reasonable and necessary expenses under these sections.

The MCDA already paid Wiseway the full $10,000 in reestablishment expenses and $1,000 in search expenses permitted by the statute and regulations. Additionally, if Wiseway had occupied the Lakeville site, the expenses it incurred in its development would be considered capital expenditures and prohibited under 49 C.F.R. § 23.304(b)(1).

Wiseway also knew of the MCDA's impending acquisition of the property in January 1996, but made the choice to continue incurring expenses for the development of the Lakeville site. Even after Wiseway recognized it would be unable to complete the site by August 1, the date it agreed to turn over the property to the MCDA, it continued to make expenditures related to that site.

Moreover, the MCDA was unable to extend the deadline for its acquisition of Wiseway's location. Under its contract with the developer of the northeast retail project, it risked penalties of $134,000 per month beginning in January 1997 if it did not turn the property over to the developer. It was necessary for the developer to perform pollution remediation and begin construction on one of the anchor stores by August 1996 in order to complete the project by the October 1997 deadline. Accordingly, we affirm the hearing officer's decision.

Affirmed.