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HomeMy WebLinkAbout19E - REAL PROPRETY DISP POLICYREQUEST FOR COUNCIL ACTION CITY COUNCIL MEETING DATE: OCTOBER 16, 2018 TITLE: RECEIVE AND FILE THE REAL PROPERTY DISPOSITION ADMINISTRATIVE POLICY {STRATEGIC PLAN NO. 3,5A) J CIT MANAGER RECOMMENDED ACTION CLERK OF COUNCIL USE ONLY: APPROVED ❑ As Recommended ❑ As Amended ❑ Ordinance on 151 Reading ❑ Ordinance on 2nd Reading ❑ Implementing Resolution ❑ Set Public Hearing For CONTINUED TO FILE NUMBER Receive and File Real Property Disposition Administrative Policy. The City is an owner of substantial real property assets and interests. Over time, the need for these assets and interests can change, thereby creating an opportunity for their use for other purposes. By allowing remnant, unneeded, and marginally used City -owned real property assets to be employed for other purposes, the City and its residents can benefit from private improvements which provide property tax revenue and economic development opportunities, support non -City public uses such as schools, or support uses that provide substantial community benefits or opportunities for neighborhood beautification improvements. A Policy has been under development for the past year and has been presented to the City Council in various iterations. During the September 18th City Council Meeting, the City Council directed staff to bring back the policy for consideration. Staff has revised the policy so that it: Provides -clarity on the types of city owned properties covered Provides for three members of the public (Chairs of 3 City Commissions) to sit on the Real Property Disposition Committee (RPDC) Excludes leasing activities of the City. The purpose of the policy is to establish procedures whereby remnant, and marginally used City - owned real property assets and interests are identified and recommended for disposition through sale, easement, license, or agreement for use to public, private, and non-profit organizations, individuals, or other entities for economic development, public use, community use, community benefit uses, community beautification, or assemblage with adjacent real property. 19E-1 Real Property Disposition Policy October 16, 2018 Page 2 The administrative policy will conform to the existing authority and procedures under the Santa Ana Municipal Code (SAMC) Section 2-706, "Sale of real property—Procedure" which delegates to the Public Works Director after authorization by the City Council, the responsibility to schedule a sale. The administrative policy will not include a review of the disposition of properties acquired as part of capital projects that are subject to disposition terms of the funding used in their acquisition, which in those cases the types of real property will follow SAMC Section 2-706, "Sale of real property— Procedure" without the review procedures in the recommended Administrative Policy. It is also important to note that this policy does not cover real property assets and interests of the City of Santa Ana Successor Housing Agency, real property assets of the Successor Agency to the former Community Redevelopment Agency, real property assets of the City of Santa Ana held for affordable housing purposes, and real property assets that were acquired as part of capital projects that are subject to the disposition terms of the funding used in the acquisition. Approximately 15% (18 properties) of the 120 total city owned remnant parcels would be covered by this policy because of these restrictions on their future disposition. The intent of this policy is to provide an orderly, transparent, open, and fair process for public, private and non-profit organizations, individuals, and other entities to acquire remnant, and marginally used real property assets and interests from the City while assuring that the City receives the best overall value for the real property interests conveyed. The Policy is comprised of seven (5) sections • Designation of Custodian of List of Real Properties Available for Disposition: This section designates the Clerk of the Council to function as the official custodian of the City's real property list that will be available for disposition and subject to this policy. This list will be made available to the public. Process to Determine Real Property Interests Potentially Available for Disposition: This section establishes a Real Property Disposition Committee (RPDC), comprised of the following seven (7) representatives: o Executive Director for the Public Works Agency (Chair) o Executive Director for the Planning and Building Agency o Executive Director for Community Development Agency o Executive Director for the Parks, Recreation and Community Services Agency o Chair of the City Planning Commission o Chair of the Community Redevelopment and Housing Commission o Chair of the Board of Recreation and Parks The RPDC will guide the process to review and recommend available City property for inclusion on the disposition list. The properties identified for disposition will need to satisfy several criteria as outlined in pages 2-3 of the Policy. The meetings and deliberations of this 19E-2 Real Property Disposition Policy October 16, 2018 Page 3 Committee will be noticed and conducted publicly. The agenda will also allow for public comment. Classification of Real Property Interests for Disposition: During the process, the RPDC will include its recommendation to City Council a classification of the property into one or more categories (economic development potential; housing development potential; public use potential for parks, recreation and open space; community use/benefit potential; neighborhood beautification potential; or adjacent owner assemblage). These classifications will inform the preparation of disposition solicitations. Provisions Related to Disposition to Non -Profit and Community Organizations and Entities: This section provides a process for non-profit and community organizations to formally affirm their interest in acquiring city property for community use, benefit or beautification projects. The purpose of this provision is to assist the City in determining the organizational capacity of these organizations to carry out their desired use of the property. • Requirements/Procedures for Sale of Real Property Assets and Interests: This section provides the disposition procedures and details on any special requirements before disposition such as the use of brokers, appraisal of the property and soliciting community input before the sale of the property. This administrative policy will be reviewed by staff on an annual basis. STRATEGIC PLAN ALIGNMENT This item allows the City to meet Goal #3 (Economic Development), Objective 5 (Leverage private investment that results in tax base expansion and job creation citywide), Strategy A (Identify and market underutilized properties {city and non -city owned) for new development that will create new jobs and expand the City's tax base). FISCAL IMPACT There is no fiscal impact associated with this action. Steven A. Mendoza Executive Director Community Development Agency Exhibit: 1. Draft Real Property Disposition Policy 19E-3 19E-4 EXHIBIT 1 City of Santa Ana - a� 5' Administrative Policies and Procedures Executive Director,Community Development Agency Authorization Subject Date I Number October 2018 REAL PROPERTY DISPOSITION POLICY Purpose and Intent The purpose of this policy is to establish procedures whereby remnant, unneeded, and marginally used City -owned real property assets and interests are identified and recommended for disposition through sale, easement, license, or agreement for use to public, private, and non-profit organizations, individuals, or other entities for economic development, public use, community use, community benefit uses, community beautification, or assemblage with adjacent real property. The City is an owner of real property assets and interests. Over time, the need for certain of these assets and interests can change, thereby creating an opportunity for their use for other purposes. By allowing remnant, unneeded, and marginally used City -owned real property assets to be employed for other purposes, the City and its residents can benefit from public and private improvements which provide property tax revenue and economic development opportunities, support non -City public uses such as schools, or support uses that provide substantial community benefits, positively impact the health, well-being, and livelihoods of City residents, or opportunities for neighborhood beautification improvements. It is important to note that this Real Property Disposition Policy covers real property assets and interests of the City of Santa Ana, but does not cover: • The real property assets and interests of the City of Santa Ana Successor Housing Agency; • The real property assets of the Successor Agency to the former Community Redevelopment Agency of Santa Ana. Disposition of these properties are covered by the Long Term Property Management Plan as approved by the Department of Finance; • The real property assets of the City of Santa Ana held for affordable housing development purposes ("Housing Properties"). Disposition of Housing Properties is instead covered by the Affordable Housing Funds Policies and Procedures, published by the Housing Division of the Community Development Agency of the City, approved by the Santa Ana City Council on March 20, 2018; • Properties acquired as part of capital projects that are subject to the disposition terms of the funding used in the acquisition. The City's basic guiding policy is to optimize the sale price from disposition of City -owned real estate assets and interests. Optimized sale price or lease/rental income shall be based upon a current appraisal with a date of valuation not more than one (1) year prior to the date of City 19E-5 EXHIBIT 1 Council approval of any agreement to dispose of the real property. 1. DESIGNATION OF CUSTODIAN OF LIST OF REAL PROPERTIES AVAILABLE FOR DISPOSITION Following adoption of this policy, the Clerk of the Council will function as the official custodian of the list of City real properties available for disposition and subject to this policy and make the list available to the public. As properties are disposed of, or added to the City's real property portfolio, the Clerk will be provided timely updates by the City Agency disposing of the real property, or adding property to the portfolio. 2. PROCESS TO DETERMINE REAL PROPERTY INTERESTS POTENTIALLY AVAILABLE FOR DISPOSITION Several City Agencies possess expertise related to valuation and disposition of real property. This Disposition Policy establishes a Real Property Disposition Committee (RPDC) chaired by the Executive Director of the Public Works Agency (or his or her designee) and is comprised of the following six (6) representatives: • Executive Director for the Planning and Building Agency • Executive Director for Community Development Agency • Executive Director for the Parks, Recreation and Community Services Agency • Chair of the City Planning Commission • Chair of the Community Redevelopment and Housing Commission • Chair of the Board of Recreation and Parks The function of the RPDC is to review and recommend City -owned real property assets and interests for inclusion on the list of properties available for disposition held by the Clerk of the Council. Meetings and deliberations of the RPDC will be noticed and conducted publicly. The agenda of the RPDC will allow for public comment. Real properties may be made available for disposition subject to the below described review criteria. As part of its charge, the RPDC will review the City's real property inventory to determine which properties are remnant, unneeded, and marginally used and therefore potentially available for disposition. A City owned property may be recommended for disposition by the RPDC 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 the City. • The property is a non-performing or under -performing asset and greater value may be generated by its sale or lease. • Significant economic development opportunities may be generated by selling or leasing the property. 19E-6 EXHIBIT 1 • Disposition facilitates acquisition of real property required for a City project, or acquisition of other real property required for a City project. • In the opinion of the Executive Director of Parks, Recreation, and Community Services, the property does not provide significant park, recreation, or open space use opportunities, or if it does, no means of financing the development of the real property for park, recreation, or open space use is reasonably foreseeable. Disposition has potential to support development of affordable housing, parks and open space, community benefit uses, or neighborhood beautification. Nothing in the foregoing shall preclude the ability of the City to dispose of or exchange real property acquired in connection with a specific project if the disposal or exchange facilitates acquisition of another real property or real property interest needed for the same, or a closely related project. Factors to be considered by the RPDC in determining whether a property should be recommended for disposition may include: • Will the City be relieved of potential liabilities? • Will the City reduce the cost of maintaining a property that does not generate income or provide public benefit? • Will new property tax be generated by the sale? • Will disposition stimulate the local economy by providing opportunities for private sector investment? • Does the property have greater public benefit potential if retained than if sold or leased? • Will sale of the property generate greater economic value than a ground lease, if a ground lease is a feasible option? Recommendations from the RDPC will be submitted to the City Council for approval. 3. CLASSIFICATION OF REAL PROPERTY INTERESTS FOR DISPOSITION In addition to reviewing and recommending City -owned real property for disposition, the RPDC will also include in its recommendation to the City Council a classification of the property into one or more of the following categories (A thru F): A) Significant economic development potential An example of significant economic development potential would be a disposition that results in a development providing new employment, municipal income or tax M 19E-7 EXHIBIT 1 revenue(s). 8) Significant housing development potential An example of significant housing development potential would be a disposition that results in a development which helps the city meet its Regional Housing Needs Assessment (RHNA) targets. C) Significant public use potential, including for parks, recreation, or open space An example of significant public use potential would be a disposition that results in development of usable, publicly accessible parks or open space. D) Significant community use/benefit potential An example of significant community use/benefit potential would be a disposition that results in development of a community garden, farmer's market, or other community uses benefitting residents. Community benefits may be achieved through developing or increasing access to the following: 1. Affordable housing, with a focus on community -controlled, permanently affordable housing, for example a community land trust; 2. Affordable, healthy food retail; 3. Community health clinics; 4. Renewable energy infrastructure; 5. Public transportation; 6. Green space, parks and recreation centers; 7. Affordable childcare; 8. Youth and senior facilities and services; 9. Community agriculture; 10. Development of land by a community land trust E) Significant neighborhood beautification potential An example of significant neighborhood beautification potential would be a disposition that allows a property to be landscaped, resulting in visual enhancement of the location and neighborhood. F) Assemblage potential with adjacent owner An example of assemblage potential with an adjacent owner would be a disposition that conveys an otherwise unusable remnant property for use by an adjacent owner and back on the property tax roll. 4. PROVISIONS RELATED TO DISPOSITIONS TO NON-PROFIT AND COMMUNITY ORGANIZATIONS AND ENTITIES 19E-8 EXHIBIT 1 The City values and supports the many community-based non-profit organizations, entities and neighborhood groups that work to make Santa Ana a better place. These groups represent potential City partners for community use, benefit, and beautification projects requiring real property. The purpose of the provisions described in this section is to identify those organizations, entities, and groups that may be interested in acquiring or otherwise obtaining use of City real property for community use, benefit, and beautification projects. The City will create and maintain a list of interested organizations through a Solicitation of Interest (SOI) process. The purpose of the SOI application process is to determine the organizational capacity of applying community-based non-profit organizations, entities, and groups to own, lease, maintain, manage and operate real property for the desired program, project, or use. The list will be used to notify organizations, entities, and neighborhood groups of the availability of City real property approved for disposition that has been designated as having significant community benefit/community use potential. The City recognizes that the number of community organizations changes over time so the SOI solicitation will be conducted as an 'open recruitment' so that the list of organizations and entities may be continuously refreshed over time. An application form will be developed. Information requested may include, but is not limited to the following: • Property sought, for what purpose • Name of organization • Type of organization • Age of organization • Organizational financial capacity • Experience with controlling and managing real property • Description of how the organization will handle property management • Description of how property will be operated and maintained (Operations and Maintenance Plan) 5. REQUIREMENTS/PROCEDURES FOR SALE OF REAL PROPERTY ASSETS AND INTERESTS Conformance with Provisions of the Municipal Code: Sections 2-706, 2-706.1, 2- 706.2,2-707,2-708,2-709, - 706.2,2-707,2-708,2-709, and 2-710 of the Santa Ana, CA Code of Ordinances govern sale of real property by the City (copy attached). Notably, Section 2-706 provides for sale to the highest bidder unless another method of sale is authorized by the City Council by not less than a 2/3 vote (See Sec. 2-709). Provisions contained in this Real Estate Disposition Policy provide additional guidance in the disposition of real property assets, but in the case of conflict, the Municipal code and its provisions govern. Conformance with Provisions of Government Code Sections 54220 thru 54233: California Government Code Sections 54220 thru 54233 requires that a local agency proposing to dispose of surplus property must first notify all governmental agencies operating within the City as to the availability of the property. The agencies are given 60 days to respond with an intent to acquire, if not, the property may be deemed cleared for public sale. (note: Government Code Sections 54220 thru 54233 requirements do 19E-9 EXHIBIT 1 not apply to disposition of real property that has not been used by the City and acquired or held for purposes of exchange or sale as a remnant in connection with implementation of a City project). • Community Comment Required Prior to Issuance of Solicitation: Prior to the City Council approving properties for inclusion on the list of properties available for disposition, or authorizing issuance of solicitations for disposition (e.g. Requests for Proposal, listing for sale or lease, etc.), the City shall conduct a noticed neighborhood meeting pursuant to Section 2-153 of the Santa Ana Municipal Code (relevant portions of Ordinance NS -2838 "Sunshine Ordinance") in order to obtain neighborhood comment on the proposed disposition and future use(s) of the real property in question. • Special Requirements Related to Disposition of Park Land: Real property designated as park land often have special restrictions related to the source of funds used for the original acquisition or site development. Such restrictions can arise from covenants restricting use to park purposes and the source of funds used to acquire the real property. • Appraisal and Authorization of sale by City Council. Upon approval by the City Council that a property may be sold, the City Manager is authorized to sell the property for a price equal to or greater than a minimum price established by a current (less than one (1) year old) appraisal. Method of Sale: Properties may be sold by any method allowed by the Municipal Code and this Policy. This includes direct negotiation, request for proposal, listing with a broker, sealed bid, auction or other appropriate method as recommended by the City Manager and approved by the City Council. As appropriate, disposition agreements shall include reasonable 'olawback" provisions that provide the City the ability to regain ownership of a property as one remedy for non-performance by purchaser or lessee under a disposition agreement or lease. • Marketing: Properties offered for sale shall receive the widest possible exposure to the market. This may be accomplished through direct marketing techniques, such as requests for proposals (RFPs), advertising, exposure through the real estate media, posting the property on the multiple listing service or any other appropriate method. • Use of Proceeds: For transactions where the City retains disposition proceeds, the City Manager may recommend use of proceeds; however, the City Council retains approval discretion on use. Application of disposition proceeds toward 'one time" expenditures, such as deferred maintenance for city owned assets (parks, community centers), and other possible one time uses, should be prioritized. • Use of Real Estate Brokers: Real estate brokers may be used to represent the City in the sale of its properties. Brokers will be selected for individual assignments through Requests for Proposals (RFP) or Requests for Qualifications (RFQ) and a subsequent bid or other methods that result in the City receiving the services of a qualified broker at the best value to the City. If the property is listed with a broker, the City reserves the right to exclude from the listing agreement potential buyers whose interest in purchasing 6 WMIC EXHIBIT 1 a property has been made a part of the record prior to the execution of the listing agreement. All brokerage arrangements shall conform to Section 2-707 of the Municipal Code. • Easements: The City will receive current fair market value for the removal of restrictive easements or access rights previously paid for by the City or other governmental agency or reserved in a sale of City property. Negotiated Sales: Negotiated sales are permitted as provided in the Municipal Code and this Disposition Policy, and may be approved under one of the following conditions: o When a parcel is landlocked. o When the sale to a contiguous owner would correct a site deficiency. o When a fee interest in a pipeline or other right-of-way is no longer required, it may be sold to a contiguous owner. A restrictive pipeline easement of adequate width or other required easements will be reserved from said sale. o When other governmental, public and quasi -public agencies submit acquisition proposals, or any sale is authorized by a two-thirds (2/3) vote of the City Council after a noticed public hearing per Municipal Code Section 2-709. 19E-11 19E-12