SR-07-23-2013-7CCity Council Meeting: July 23, 2013
Agenda Item: %
To: Mayor and City Council
From: Andy Agle, Director of Housing and Economic Development
Subject: Real Property Disposition Procedures
Recommended Action
Staff recommends that the City Council introduce for first reading the attached
ordinance which would update procedures governing the sale of City -owned real
property.
Executive Summary
The proposed ordinance would update the City's property disposition procedures, which
were last updated in 1979. Staff recommends updating Section 2.24.110 of the
Municipal Code to better align policies with current real estate practices and to ensure
the flexibility required to generate disposition outcomes that are in the best interest of
the City, including additional sale proceeds.
Background
The existing policy governing the sale of City -owned real property was last updated
in 1979. It prescribes formal bidding as the only means by which the City may dispose
of property. Such formal approaches may not necessarily generate the highest price for
a property, can be time - consuming for all parties, and are not reflective of many
contemporary public property disposition procedures. In light of the recent elimination
of redevelopment, staff anticipates additional property disposition activity in the near
future and recommends updating the Municipal Code in advance of those actions.
Discussion
Staff recommends updating Section 2.24.110 of the Santa Monica Municipal Code as
proposed in the attached ordinance. The updated policy would require Council to
declare by resolution its intent to sell a City -owned property for a price equal to or
greater than its current appraised value, require public advertising of the opportunity,
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and authorize a specified competitive method of sale. Competitive methods of sale
authorized by Council could include sale by bids or auction, requests for competitive
proposals, and competitive sale by a real estate broker. The City Manager would be
authorized to conduct all preliminary work related to a sale, and Council would be
required to approve all final sales. The proposed changes would also allow the Council
to authorize property sales without advertising if five members of the Council
determined that advertising would be to no avail and would cause unnecessary expense
and delay or would not be in the best interests of the City. Such an approach may be
used, for example, when a small remnant parcel would have little value other than to an
adjacent property owner.
The proposed amendments are consistent with policies used by peer cities.
Staff reviewed property disposition procedures for several cities in northern and
southern California, and found that they provided greater flexibility than Santa Monica's
Municipal Code currently allows. Most policies include various disposition methods that
may be employed given the specific site and context, in order to maximize sale price or
public benefit. Other cities' policies allow staff to negotiate terms of sale, allow the City
to be represented by a brokerage firm if necessary, and generally require Council
approval of all final sales. The ordinances also generally stipulate noticing requirements,
as well as special provisions when noticing would not be required.
The proposed update brings the Municipal Code in line with current public property
disposition practices and grants flexibility to pursue a selection of competitive sale
options that could further the City's interests. Updating property disposition procedures
now would prepare the City for anticipated property dispositions that may be required in
the near future due to the elimination of redevelopment.
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Alternatives
Council may elect to leave Section 2.24.110 of the Santa Monica Municipal Code
unchanged, continuing to operate under the real property disposition procedures
from 1979.
Public Outreach
Notice of the proposed ordinance update and the Council hearing was published in the
Santa Monica Daily Press a minimum of 10 days prior to the hearing.
Financial Impacts & Budget Actions
There is no immediate financial impact or budget action necessary as a result of the
recommended action. Updating the Municipal Code as proposed may provide
opportunities to generate additional revenue for the City due to increased flexibility in
property disposition procedures.
Prepared by: Sarah Johnson, Principal Administrative Analyst
Andy Agle, Director
Housing and Econo
Attachments:
A. Proposed Ordinance
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Forwarded to Council:
Rod Gould
City Manager
City Council Meeting: July 23, 2013
ORDINANCE NUMBER (CCS)
(City Council Series)
Santa Monica, California
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SANTA MONICA
AMENDING SANTA MONICA MUNICIPAL CODE SECTION 2.24.110 TO UPDATE
THE SALE OF REAL PROPERTY PROCEDURES FOR CITY OWNED PROPERTY
WHEREAS, the City's practices pertaining to the sale of real property were
originally codified in 1979 as Santa Monica Municipal Code section 2.24.110 ( "Section
2.24.110 "); and
WHEREAS, Section 2.24.110 outlines the requirements for the sale of City-
owned real property; and
WHEREAS, the existing procedures in Section 2.24.110 are outdated and do not
provide for sufficient flexibility to guarantee that the disposition process will produce a
result that is in the best interest of the City; and
WHEREAS, amending Section 2.24.110 will better align the City's practices with
current property disposition practices and will ensure opportunities to obtain outcomes
that are in the best interest of the City.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SANTA MONICA
DOES HEREBY ORDAIN AS FOLLOWS:
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SECTION 1.Santa Monica Municipal Code Section 2.24.110 is hereby amended
to read as follows:
2.24.110 Sale of real- propertyReal Property.
a. Declaration of Intent to Sell Real Property. The City
Council may declare, by resolution, its intention to sell City -owned real
property if it finds that the property is no longer needed for the purpose
acquired and that said property or title thereto is not needed for any other
public purpose. If Council determines that the property may be sold, it
shall authorize the City Manager to sell the property for a price equal to or
greater than the minimum price established by a current appraisal made
by a qualified real estate appraiser. However, notwithstanding the
foregoing, no appraisal shall be required when the City Manager
reasonably determines that a property's estimated value is less than
$70,000. The resolution of intent to authorize sale shall contain the
following:
(1) the reason for sale of the property;
(2) a description of the property to be sold;
(3)
the findings that the property
is no longer needed for the
purpose
acquired or for any
other
public purpose;
(4) a statement of the value of such property established by
an appraisal made by a qualified real estate appraiser or a
statement that the estimated value is less than $70,000; and
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All(5) designation of the competitive sales of real- process
to be used for sale of the property owned by the City a
b. Notice of Public Sale. Sale shall only be made after
publication in the official newspaper by two or more insertions of notice
the first of which shall be at least ten days before the
time fbF opening said bids at which bids or proposals are due.
C. Requirements for Sale by Bids or Auction. The following
rocedure shall be used when Citv Council authorizes sale of Citv -owned
real property by bids or auction. Such sales shall be awarded to the
highest and best bidder. AfBids shall be accepted until the time specified
in the notice ' .
The PUFGhasiRg Agentof public sale. The City Manager or designee shall
tabulate all bids received pursuant to this section and shall fefer rp esent
them to the City nn.,Rager fe.. e eRtat,e„ to the City Council and the
Council shall make the award. The City Council may reject any and all
bids presented and may re- advertise in its discretion.
d. Requirements for Sale by Competitive Proposals and
Negotiation. The following procedure shall be used when City Council
authorizes sale of City -owned property by a call for competitive proposals
and negotiation. Proposals shall be accepted until the time specified in
the notice of public sale. The City Manager or designee shall review all
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proposals and may negotiate with any parties who submit proposals in
order to increase the final sales price, to reduce proposal contingencies,
and to ensure sufficient financial resources to complete the sale. Such
sales shall be awarded to the best proposer. The City Council may reject
any and all proposals and may re- advertise in its discretion.
e. Requirements for Competitive Sale by a Real Estate
Broker. The following procedure shall be used when City Council
authorizes sale of City -owned property through the use of a duly licensed
real estate broker. The broker must be selected in accordance with the
City's policies for hiring of consultants and applicable state and local laws
pertaining to conflicts of interest, and the broker must comply with notice
of public sale requirements. The broker shall advertise the property for
sale, accept offers for the property, and negotiate with potential buyers in
order to increase the final sales price, to reduce proposal contingencies
and to ensure sufficient financial resources to complete the sale. The City
Council may reject any and all offers and may re- advertise in its discretion.
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f. Sale without Publication. Sales of real property may be
made without advertising —for —bids if the City Council, by a resolution
adopted by at least five affirmative votes, shall determine by such vote
that to advertise f —or- p would be to no avail and would cause
unnecessary expense and delay or would not be in the best interest of the
City. If Council so determines, it maV authorize property to be sold by
direct negotiation, exchange, sale to an adjacent propertV owner,
conveyance to government bodies, public utilities or nonprofit
organizations or other appropriate method, as authorized in the resolution
of intent to sell CitV -owned property_
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A- Approval of Final Sale. City -owned propertV shall be sold in
accordance with this Section. No real property shall be sold except by resolution
Passed by an affirmative vote of five members of the City Council.
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SECTION 2. Any provision of the Santa Monica Municipal Code or
appendices thereto inconsistent with the provisions of this Ordinance, to the extent of
such inconsistencies and no further, is hereby repealed or modified to that extent
necessary to effect the provisions of this Ordinance.
SECTION 3. If any section, subsection, sentence, clause, or phrase of this
Ordinance is for any reason held to be invalid or unconstitutional by a decision of any
court of competent jurisdiction, such decision shall not affect the validity of the
remaining portions of this Ordinance. The City Council hereby declares that it would
have passed this Ordinance and each and every section, subsection, sentence, clause,
or phrase not declared invalid or unconstitutional without regard to whether any portion
of the ordinance would be subsequently declared invalid or unconstitutional.
SECTION 4. The Mayor shall sign and the City Clerk shall attest to the passage
of this Ordinance. The City Clerk shall cause the same to be published once in the
official newspaper within 15 days after its adoption. This Ordinance shall become
effective 30 days from its adoption.
APPROVED AS TO FORM:
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