Salt Lake City Corporation
Adopted August 19, 2015 in accordance with City Code 2.58.020(B)
The purpose of this document is to describe the process for disposing of surplus Real Property assets within the City in an orderly fashion, consistent with established and rational market practices used for selling real property and giving consideration for existing City processes and ordinance requirements. This document also identifies key individuals and departments involved and their respective roles.
Key Parties:
1. Chief Procurement Officer (or other gatekeeper)
2. Department Heads that control surplus property assets
3. Real Property Manager
4. Other Real Estate Services Staff
5. Housing and Neighborhood Development (“HAND”) and Community and Economic Development (“CED”) Directors
Roles:
1. Chief Procurement Officer: Gatekeeper
2. Real Property Manager: Process facilitator (the Real Property Manager is also authorized to develop additional guidelines and procedures related to and consistent with the solicitation processes described herein)
3. Department Directors: Approval entities for initiating the process
Surplus Real Property Initiation: The following procedures will be followed when classifying City owned real property as surplus and making plans to dispose of such property.
1. Identify surplus assets (Department initiated or Real Estate Services initiated as applicable)
2. Real Estate Services works with department(s) controlling the assets to designate applicable assets as surplus
3. Department head controlling the asset (with help as needed from Real Estate Services) writes letter declaring the property surplus
4. This letter, with additional relevant identifying material is sent out by Real Estate Services to all departments via email with a request to provide notice if the surplus property is needed by any other City department, and how the department will fund its use. Notice periods will vary, but will be at least one (1) week.
5. City departments desiring to use the surplus asset will provide justification and funding source
6. If no alternate uses are identified, Real Estate Services moves the surplus asset into the Disposition Process
Real Property Disposition Process:
1. When City owned Real Property is being disposed of, Real Estate Services provides guidance on value and researches property basis information using third party appraisal or in house valuation methods, assesses strategic redevelopment opportunities as applicable, and makes recommendations on disposition strategy.
2. Real Estate Services in conjunction with the Chief Procurement Officer will make a determination as to whether the Real Property being disposed of is classified as Significant based on the criteria outlined in City Ordinance 2.58.
3. Real Estate Services will determine, based on the market information available to it at the time, whether the property should move forward to sale through the sealed competitive bid process, or whether a waiver will be sought. In making this determination, the following may be considered:
a. Assessed value of the property.
b. Appraised value as determined by a sufficient and acceptable appraisal performed by a licensed appraiser using a commercially reasonable method of appraisal or by a market opinion or other commercially reasonable method of valuation from a licensed real estate professional or other qualified person when such a method would be more cost effective depending on the size, nature, estimated value and current market conditions of the property.
c. Whether the property is only usable by abutting owners or is of general marketability.
d. Whether the property can only be put to its highest and best use when aggregated with an abutter’s property because of its size, shape, topography or other restriction, and a recommendation as to whether the Property should be negotiated for sale to the abutter, provided that the abutter is willing to purchase for the appraised value of the Property; or if more than one qualifying abutter expresses interest in purchasing the Property, a recommendation as to whether the City should solicit sealed bids from all abutters; in no case, however shall the property be sold to an abutter without notifying other abutting property owners that may have an interest.
e. Whether special consideration should be given to some other public agency that has a use for the Property.
f. Whether any special covenants or restrictions should be imposed in conjunction with sale of the Property.
g. Whether the property is a key redevelopment site where the City has a vested interest or other reasons for controlling conditions for a sale or transfer.
4. Based on the initial evaluation, Real Estate Services may
A. move forward with an offering process using a Sealed Competitive Bid format (the preferred process) using commercially reasonable real property sales principles and procedures – or –
B. After relevant evaluation has been completed, and it is determined the sealed bid process is not applicable or advantageous, a waiver may be granted by the Chief Procurement Officer and the Finance Director allowing the property to be offered by a Request for Proposals (“RFP”), sold based on a third party appraised value or internal market evaluation, or as otherwise outlined in Chapter 2.58 of the City code regarding disposal of City owned real property assets.
i. As applicable, Real Estate Services will request a waiver of the sealed competitive bid, which will be signed by the Chief Procurement Officer and Finance Director authorizing the implementation of the proposed method to proceed.
5. After waiver or sealed competitive bid determination is complete as detailed above, and if the property is classified as significant, it will also be routed through the significant parcels of real estate process detailed in Chapter 2.58 of the City Code, which requires additional considerations, including holding public hearings.
The process for offering any property through a sealed competitive bid is as follows.
1. A property Offering Memorandum (“OM”) consistent with typical commercial real estate listings and practices and containing relevant property information will be prepared by Real Estate Services. This document may contain only basic information, or may be more extensive based on the relevant characteristics of the particular real property being offered, at the discretion of Real Estate Services. Real Estate Services will be responsible for creating and deploying templates for this purpose, with the discretion to custom design any OM that is deemed necessary and/or advantageous.
2. A scheduled marketing period will be established by Real Estate Services allowing sufficient time for proper market exposure and will range from two weeks to one month or more per Real Estate Services discretion. The offering memorandum will specify the marketing period and the required response date for offer submissions.
3. The offering memorandum will be distributed to prospective buyers through the City’s third-party solicitation publication system (“BidSync”), and one or more of the following methods:
a. Posting on the city's surplus property website
b. Distribution to local real estate brokerage agents or networks
c. Installing “for sale” signs on the property
d. Publishing offering information in the newspaper or through online marketing channels
e. Direct solicitation of known interested buyers
f. Notice to adjacent property owners
g. Local commercial MLS or other listing services
4. Supporting information will be included with the Offering Memorandum, including a City approved standard Purchase and Sale Agreement (“PSA”), site plans and/or other relevant info. The offering materials will also include a Letter of Intent (“LOI”) format to be used by the prospective purchasers for making the offer.
5. If deemed by Real Estate Services as advantageous to the City, a reserve price may be established under which the City will not sell the property. Sources considered for determination of the reserve price could include appraisal, basis information, tax value, or other relevant local market information. This reserve price may be included in the offering. Real Estate Services shall have the discretion to waive the reserve price if the property is in high demand and has a readily discernible market value which could command a premium price, or if in its assessment there is no benefit to the City for including a reserve price.
6. Real Estate Services may conduct a scheduled tour / inspection of the property for interested bidders at a designated time that will be published in the Offering Memorandum.
7. Offers to purchase will be submitted on the City provided LOI form with a statement that the purchasing entity is willing to agree to the general standard terms and conditions of the boilerplate PSA.
8. The LOI will serve as the term sheet that outlines the various terms and conditions that the prospective purchaser is offering.
9. Sealed bids shall be submitted as decribed in the OM.
10. As part of the offer to purchase, prospective purchasers shall be required to submit a Bid Security / Earnest Money deposit along with the bid of 5% of the proposed purchase price in the form of a cashier’s check or letter of credit. The winning bidder’s Earnest Money deposit will be deposited in an Escrow account at a title company by the City within 24 hours of bid acceptance. Deposits submitted by unsuccessful bidders will be returned.
11. The City shall review the bids / offers for disposition and shall provide a final recommendation with respect to the disposition of the subject property or properties. The Committee shall have the right to waive any reserve price or to reject any or all bids if it is determined this is in the best interest of the City.
12. Should the process not yield a acceptable offer, or any offers, Real Estate Services shall have the right to market the property by listing it through local MLS services, and/or placing a sign on the property for a more traditional real estate sales process that is open ended and not based on a defined bid timeframe, and take offers as they come in from the market. Real Estate Services shall determine whether any reasonable offer received in this manner should be accepted. Real Estate Services shall also have the discretion to hire a real estate broker to conduct the marketing or may choose to handle these services in-house.
The process for offering a property with a waiver is as follows:
1. Upon the waiver being issued for offering the Property through an alternate process rather than sealed competitive bid, Real Estate Services shall prepare relevant offering materials for marketing the property under an alternate method.
2. For a value established by a third party appraisal, or commercially reasonable method for establishing value by internal analysis, or ready market value, a memorandum shall be written confirming the transaction and providing the justification for the same. All such proposed transactions shall be reviewed by Real Estate Services either virtually or at a designated time, and upon approval, the applicable PSA may be prepared and executed with the Purchaser in accordance with Chapter 2.58 of the City Code.
3. For an RFP process or a two-phase RFQ (Request for Qualifications) / RFP process, Real Estate Services or other relevant department will prepare the offering documents, establish the parameters of the offer, and establish the timeline for response. Since each property is expected to have different characteristics and different goals driving marketability and sales or investment strategy by the City, these documents may vary from property to property.
(a). Offering documents shall be distributed through commercially reasonably channels similar to those specified for the sealed competitive bid process. It is a requirement that all prospective respondents to this process have access to the same information.
(b). Responses to these processes shall be on a designated schedule as outlined in the offering.
(c). The selection process shall be outlined in the offering and administered by Real Estate Services. Proposals and offers may be rejected and the offering cancelled at the discretion of Real Estate Services.
(d). After selection, Real Estate Services, shall work with the selected offerors to prepare and execute relevant agreements, and bring such agreements to closing.
4. For significant parcels of real estate, the additional requirements detailed in City Ordinance 2.58 will also be required, which involve public hearings.
Completing the Disposition Process: As part of completing any disposition transaction the following will also need to be completed by the relevant internal departments:
1. Determine the account receiving proceeds of the sale and coordinate this with accounting
2. Address transactional expenses and which account they will be paid from
3. Real Estate Services will work with accounting to transmit all relevant transactional data, revenue and expenses in order to correctly classify the revenue and expenses and complete the fixed asset system update to reflect the disposition of the property or any relevant adjustments to property basis.
4. Real Estate Services will ensure that proper documentation and recording of documents / contracts is achieved, including recording of all relevant legal documents related to the transaction in the City and County Recorders offices, as appropriate, and maintaining paper and electronic files on the transaction.
EFFECTIVE: AUGUST 2015