surplus property disposition : how to win the game for your agency . . . and stay out of jail

www.murphyevertz.com

650 Town Center Drive, Ste. 550, Costa Mesa, CA 92626 (714) 277-1700

Surplus Property Disposition: How to Win the Game for Your Agency . . .

And Stay Out of Jail

John C. Murphy, Esq.Emily L. Madueno, Esq.Murphy & Evertz LLP

June 13, 2011



EMINENT DOMAIN IN THE MOVIES

● Eminent Domain (December, 1991)

● The Hitchhiker’s Guide To The Galaxy (April, 2005)



The Bells of St. Mary’s(1945)



Blazing Saddles (1974)



American Outlaws (2001)



UP(May, 2009)



GOALS 1. What is Surplus Property?

2. What Policies Govern Surplus Property Disposition?

3. What are the Costs and Benefits of Such Disposition?



“Surplus Property” Defined

“The term ‘excess property’ means property under the control of a federal agency that the head of the agency determines is not required to meet the agency’s needs or responsibilities.”

(40 U.S.C. § 102(3).)




“Excess land is real property, title to which is vested in the State of California, Department of Transportation, and which is determined and certified to be not required for rights of way or other operational purposes of the Department.”

(California Department of Transportation Right-of-Way Manual, § 16.01.03.01.)




“The Board will adopt a resolution with respect to each parcel of surplus property declaring: (a) That the property is no longer needed by the district.”

**“Open and inclusive public input process”

(Portland Public Schools, Board Policy, 8.70.040-P)



“Surplus Property” Defined“A City owned property may become available for sale

if:– The property is not currently used by a City

department or does not support a municipal function.– The property is vacant and has no foreseeable use by

City.– The property is a non-performing or under-

performing asset and greater value can be generated by its sale.

– Significant economic development opportunities can be generated by selling the property.”

** Presented to City Council for approval

(City of San Diego, California, Council Policy)



Surplus Property

2 Common Elements:

● Property no longer necessary for agency’s purposes or use

● Requires determination by agency’s governing body to designate as surplus



How Property Becomes Surplus

• Uneconomic Remnant

• Downsized Projects

• Vacated Buildings and Land

• Tax Delinquencies

• Donation

• Abandoned Right-of-Way



Methods of Disposal

• Internal transfer within the agency

• Sale to other agency

• Public sale (auction; sealed bid; etc.)

• Direct sale to private entity/individual

• Lease

• Exchange



Risks of Holding Onto Surplus Property

• Public Discontent



“Along the way, Caltrans used eminent domain to buy thousands of homes and businesses it didn’t

need, holding onto them for decades.”



Risks of Holding Onto Surplus Property


• Management Headaches

• Quick Disposal Required



Risks of Disposing Of Surplus Property




“Three men were arrested this morning in San

Bernardino County in a $102 million bribery scheme. A fourth, former Supervisor

Paul Biane, remains a fugitive from justice.”



Risks of Disposing Of Surplus Property


• Changed Circumstances

• Required Procedures



Benefits of Disposing Of Surplus Property

• Funds to use on other projects• Facilitate a deal with the owner of property to

be acquired - - exchange• Urban renewal; Facilitate Development• Reduce headache of property management• Reduce cost of maintaining properties• Return property to the tax rolls



Adopting Surplus Property Regulations Where None

Exist● Streamlined Process For Disposition

● Uniformity & Efficiency in Agency Disposition

● Creating a Safe Harbor Against Charges of Corruption?



CONCLUSION

surplus property disposition : how to win the game for your agency . . . and stay out of jail

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