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HomeMy WebLinkAbout05/18/2010, B1 - REAL PROPERTY ACQUISITION AND DISPOSAL POLICY UPDATE council n'"'ngD�` 5-18-2010 ac,Enaa nEpoRt �N CITY OF SAN LUIS OBISPO FROM: Bill Statler, Director of Finance& Information Technology Prepared By: Rachel Messner, Administrative Analyst SUBJECT: REAL PROPERTY ACQUISITION AND DISPOSAL POLICY UPDATE RECOMMENDATION Adopt a resolution updating the City's real property acquisition and disposal policy. REPORT-IN-BRIEF The proposed policy updates the real property acquisition and disposal guidelines previously set forth in the Property Management Manual, which was initially adopted by the Council in 1986. Among the updated provisions is renaming the Manual to the "Real Property Acquisition and Disposal Policy" to better reflect its purpose; and incorporating it into the City's Financial Management Manual (Section 475), where all of the City's other "asset management" policies (like the Fleet Management Policy) are located:. The update was developed by a review team composed of representatives from Administration, Community Development, Parks & Recreation, Public Works and Finance & Information Technology. In preparing the update, staff reviewed the approaches that have been used by the City in acquiring and disposing of real property over the past 25 years as well as similar policies in other agencies. Key Changes from the 1986 Manual The following summarizes key changes from the 1986 Manual: 1. Management Strategy. The 1986 Manual took a highly decentralized approach to managing the acquisition and disposal of real property. The proposed update takes a team approach. 2. Records Maintenance. The 1986 Manual relies upon "hard copy" updates of the City's real property inventory. The update more efficiently and effectively relies upon our geographic information system (GIS) for this. 3. Property Disposal Based on our past experience, the update adds two approaches to the disposal of real property: broker services and exclusive negotiations. Along with three other approaches discussed in the 1986 Manual (request.for proposals, competitive sealed bids and auctions), the update describes the circumstances when each one is likely to be the best option. Real Property Acquisition and Disposal Policy Update_ Page 2 4. Leases of City-Owned Buildings. The update guidelines are based on the amendments made by the Council in 2001 (Resolution No. 9926), with minor modifications to reflect changes since then. 5. Improved Organization. The original policy was prepared in a Notebook format, with extensive hard copies of parcel maps of each real property owned at the time. We believe that the proposed update is easier to read and better organized. Because of these changes, a "track change" version comparing the two documents would be distracting and unhelpful. However, a copy of the 1986 Manual (with revisions since then) is available in the Council Office and on t he City's web site at: http://www.slocity.ora/finance/policies.asp. DISCUSSION Background The Property Management Manual was originally approved by Council in 1986 (Resolution No. 5963) based on the 1985-87 Financial Plan recommendation to "develop a coordinated management system for city-owned property" and maximize the productive use of City real property assets." The purpose of the Manual was to "coordinate all matters of real estate management, valuation, acquisition, disposition, and title that involve city-owned or controlled properties(including property leased by the city)." While the Manual has been amended by Council several rimes since its adoption (most notably in 2001 with added provisions for use of City-owned buildings by other entities, such as non-profit organizations), it has not received a comprehensive review since then. With the passage of almost 25 years since its adoption, a comprehensive review is timely. For this reason, one of the key tasks in the "Action Plan" in the 2009-11 Major City Goal for Preservation of Essential Services and Fiscal Health is a comprehensive review and update of the Manual (page B-59 of the 2009-11 Financial Plan). As noted in the "Report-in-Brief' above, this update includes renaming the policy: the focus of the 1986 Manual was on acquisition and disposal of City property; this focus is retained in the update, with a renaming of the policy to "Real Property Acquisition and Disposal" to better describe its purpose. Key Policy Features The following summarizes key policy features, presented as they are organized in the policy: Purpose The purpose of the proposed policy is to set forth responsibilities and general strategies for the acquisition and disposal of real property, whether by sale, lease or via grants, donations, gifts, dedication or exchange. Given this focus, it does not address property maintenance and operations: these are covered in other policy documents. Real Property Acquisition and Disposal Policy Update Page 3 Objectives The goal of this policy is to provide a framework for the acquisition and disposal of City real property that assures these actions: 1. Advance City plans, policies and goals, such as the General Plan (which consists of eight elements: Land Use, Circulation, Housing, Parks & Recreation and Conservation & Open Space, Noise, Safety and Water & Wastewater); Physical Concept Plan for the City's Center (Downtown Plan); Bicycle Plan; Short-Range Transit Plan; Access and Parking Management Plan; and Financial Plan and Budget 2. Provide effective stewardship of City assets. Management Strategy and Responsibilities 1. Management Strategy. The opportunities to acquire or dispose of property, whether initiated by the City or others, are infrequent. Accordingly, it does not make sense to establish a centralized real property management function for this purpose. On the other hand, a highly-decentralized approach is unlikely to be successful in achieving broader City goals and assuring effective stewardship of City assets. For this reason, the policy recommends managing real property acquisition and disposal on a team basis, with the project manager and team members to be determined by the City Manager based on the nature of the sale or lease on a case-by-case basis. Depending on the complexity of the sale or lease, the project manager will be responsible for preparing a formal "Project Plan." The policy also recognizes that along with staff members, the project team may include third party, independent advisors as needed based on the nature and complexity of the sale or lease, such as appraisers, engineers, accountants, legal counsel, economists, brokers and financing consultants. These will be selected in accordance with the City's purchasing policies. 2. Responsibilities. The policy identifies the responsiblies of the following in managing real property acquisitions and disposals: • City Council • Project Manager • Planning Commission • Human Resources (Risk • City Manager Management) • City Attorney • City Clerk • Finance& Information Technology • Operating Departments State and City Requirements The policy outlines key State requirements and City guidelines regarding real property acquisitions and disposals. � l -3 Real Property Acquisition and Disposal Policy Update Page 4 Property Acquisition The policy sets forth guidelines for the purchase of real property, whether in the form of fee title, rights-of-way or easements; and whether purchased with City funds or acquired via grants, donations, gifts, dedications via the development review process or property exchanges. It is organized into two sections: 1. Purchases. Sets guidelines for purchases with City funds as well as acquisition via grants, donations, gifts, dedications and exchanges. 2. Rents, Leases and Management Agreements. Sets guidelines for property rents and leases (including management agreements) where the City will be the tenant. Property Disposal The consideration of selling or leasing City property may arise from the City's initiative to do so or may be in response to interest by others. The guidelines in this chapter of the policy cover short-term leases of City property as well as long-term leases or fee-title sales. This chapter is organized into four major sections: 1. Sales and Long Term Leases. In most cases, the sale or long-term lease of City real property will have a similar practical effect: the use of City property by others for a verylong time. As such, as set forth in the policy, the basic process for the sale or long-term lease of City property will be same. The decision on whether the City goals will be better met through sale or long-term lease will be made by the Council on a case-by-case basis. Key factors to be considered in making this decision are provided in the policy. This includes authorizing leases of up to 99 years depending on the circumstances. 2. Process: Determined on Case-by-Case Basis. The City disposes of property infrequently and as such the most appropriate process will vary in each case depending on the circumstances. The proposed guidelines are intended to provide the City with a framework for assessing the best approach on a case-by-case basis. It is not intended to limit the approaches available to the City: the overarching principle that should always apply is using an approach that will best accomplish the City's objectives given the circumstances at the time. The proposed policy identifies five basic approaches that the City could take in determining the best long-term use of City property by others; and describes when each one is likely to be the best option, which will be determined by the Council on a case-by-case basis depending on the circumstances: • Request for proposals • Broker services • Exclusive negotiations • Competitive sealed bids • Auctions Real Property Acquisition and Disposal Policy Update Page 5 3. Leases of City-Owned Buildings. With minor modifications, these guidelines are largely based on those adopted by the Council in 1989 for the use of City property by non-profit organizations (Resolution No. 6706) and leases of City-owned buildings in 2001 (Resolution No. 9926), and cover the following areas: Long-Term Uses a. Buildings permanently intended for non-residential uses (such as retail or office) and located on land zoned for those uses b. Buildings permanently intended for specific City-approved purposes by others, such as cultural uses Interim Uses c. Buildings on land eventually intended for other purposes, which are available for interim residential use and located on land zoned for that use d. Buildings on land eventually intended for other purposes, which are available for interim uses on land zoned for other than residential uses 4. Right-of-Way. This section includes guidelines for the disposal of right-of-way whether initiated by the City or in response to public requests. Appendix The Appendix provides the full text of City property acquisition and disposal requirements as set forth in the City Charter(Section 906) and Resolution No. 10052 (2009 Series). CONCURRENCES A task force comprised of City staff throughout the organization that engage in property management activities provided recommendations for policy revisions and reviewed the proposed policy. Task force members included: • Shelly Stanwyck, Assistant City Manager • Neil Havlik, Natural Resources Manager • Claire Clark, Economic Development Manager • Doug Davidson, Community Development Deputy Director • Betsy Kiser, Parks & Recreation Director • Jay Walter, Public Works Director • Tim Bochum, Deputy Public Works Director • Dave Smith, Administrative Services Manager • Robert Horch, Parking Manager • Bill Statler, Finance& Information Technology Director • Rachel Messner, Administrative Analyst 8/J5� I Real Property Acquisition and Disposal Policy Update Page 6 FISCAL IMPACT There is no fiscal impact associated with this recommendation. However, the proposed policy provides a strong framework for ensuring effective stewardship of City assets. ALTERNATIVES 1. Do not update the policy. This option is not recommended because the policy has not been updated for almost 25 years and does not currently provide an adequate framework for guidance to the Council or staff in acquiring or disposing of real property. 2. Make changes to the proposed policy. There are a wide range of possible revisions that the Council may wish to consider. However, we believe that proposed policy provides a solid foundation for managing real property acquisition and disposal. ATTACHMENTS 1. Resolution updating the City's real property acquisition and disposal policy 2. Proposed real property acquisition and disposal policy ON FILE IN THE COUNCIL OFFICE AND ON CITY WEB SITE 1986 Property Management Manual http://www.slocity.org/finance/policies.asy. \\chstore4\Team\Council Agenda ReportsTinance&IT CAR\Finance\2010\Real Property Acquisition and Disposal Policy Update,5-18- 10\CAR 5-18-2010.doc 8I '� Attachment RESOLUTION NO. (2010 Series) A RESOLUTION OF THE COUNCIL OF THE CITY OF SAN LUIS OBISPO UPDATING THE CITY'S REAL PROPERTY ACQUISITION AND DISPOSAL POLICY WHEREAS, the Property Management Manual was adopted in 1986 (Resolution No. 5963), and except modifications for leases with non-profit organizations in 1989 (Resolution No. 6706) and leases of City-owned buildings in 2001 (Resolution No. 9226), it has not been comprehensively reviewed since then; and WHEREAS, the given the passage of time since 1986, the City has undertaken a comprehensive review of its real property acquisition and disposal policy. NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo as follows: 1. Resolution Numbers 5963, 6706 and 9226 are hereby rescinded. 2. The attached Real Property Acquisition and Disposal Policy is hereby adopted as Section 475 of the Financial Management Manual. Upon motion of , seconded by and on the following vote: AYES: NOES: ABSENT: The foregoing resolution was adopted on May 18, 2010. Mayor David F. Romero ATTEST: Elaina Cano, City Clerk APPROVED AS TO F RM: stine Dietrick, City AttorneyDietrick, City Attorney R Affachment Section 475 REAL PROPERTY ACQUISITION AND DISPOSAL POLICY TABLE OF CONTENTS A. INTRODUCTION 1 Purpose and Objectives 1 Management Strategy 2 Responsibilities 2 State and City Requirements 4 B. PROPERTY ACQUISITION 6 Purchase 6 Rents, Leases and Management Agreements 6 C. PROPERTY DISPOSAL 8 Sales and Long-Term Leases 8 Leases of City-Owned Buildings 10 Right-of-Way 13 APPENDIX 14 City Charter: Article IX, Section 906: Sale or Lease of City Property 14 Resolution No. 10052: Policies for the Sale or Lease of City Property 15 Adopted by the Council on May 18,2010(Resolution No. ) Attachment Section 475-A INTRODUCTION PURPOSE AND OBJECTIVES Purpose The purpose of this policy is to set forth responsibilities and general strategies for the acquisition and disposal of real property, whether by sale, lease or via grants, donations, gifts, dedication or exchange. This policy does not address maintenance and operations of City real property. These are covered in other policy documents that.are more focused on operations. For example, the City prepares detailed Conservation Plans for each of the City's open space areas, such as Bishop's Peak, Cerro San Luis, Irish Hills Natural Reserve and Johnson Ranch, which include detailed management plans for maintenance and operations. Likewise, the City's Water and Wastewater Management Plans also address maintenance and operations of the real property used in delivering these services such as treatment plants and reservoirs. It also does not address City "personal property," such as vehicles or computers. For example: detailed policies and procedures for the acquisition, disposal, operations and maintenance of the City's fleet are comprehensively set forth in the City's Fleet Management.Policy (Section 405 of the Financial Management Manual); and detailed policies and procedures for the acquisition, disposal, operations and maintenance of the City's information technology assets, such as servers, printers, computer workstations and software, are provided in the City's Information Technology Policies and Procedures Manual. Lastly, this policy supplements provisions regarding the acquisition and disposal of real property that may exist in other City policy documents: unless there are direct conflicts, it does not.replace them. Objectives The goal of this policy is to provide a framework for the acquisition and disposal of City real property that assures these actions: 1. Advance City plans, policies and goals, such as the General Plan (which consists of eight elements: Land Use, Circulation, Housing, Parks & Recreation and Conservation & Open Space, Noise, Safety and Water & Wastewater); Physical Concept Plan for the City's Center (Downtown Plan); Bicycle Plan; Short-Range Transit Plan; Access and Parking Management Plan; and Financial Plan and Budget. 2. Provide effective stewardship of City assets. 475-1 Ar_achmen =- Introduction MANAGEMENT STRATEGY Team-Oriented Rather than Centralized or Decentralized The opportunities to acquire or dispose of property, whether initiated by the City or others, are infrequent. Accordingly, it does not make sense to establish a centralized real property management function for this purpose. On the other hand, a highly-decentralized approach is unlikely to be successful in achieving broader City goals and assuring effective stewardship of City assets. For this reason, real property acquisition and disposal will be managed on a team basis, with the project manager and team members to be determined by the City Manager based on the nature of the sale or lease on a case-by-case basis. Depending on the complexity of the sale or lease, the project manager will be responsible for preparing a formal "Project Plan." Along with staff members, the project team may include third party, independent advisors as needed based on the nature and complexity of the sale or lease, such as appraisers, engineers, accountants, legal counsel, economists, brokers and financing consultants. These will be selected in accordance with the City's purchasing policies. RESPONSIBILITIES 1. City Council a. Adopts Real Property Acquisition and Disposal Policy. b. In accordance with Resolution No. 10052, approves the sale or lease of City-owned property. c. Determines the process that is most appropriate for the sale or lease of City property on a case-by-case basis. 2. Planning Commission a. Reviews the acquisition of City real property via its review of the Capital Improvement Plan (CIP) as part of the City's budget process for General Plan consistency. b. Reviews the sale of all City-owned property for General Plan consistency. 3. City Manager a. Recommends real property management policies to the Council and oversees implementation. b. On a case-by-case basis, designates project manager and team members comprised of staff from various departments to manage real property acquisition and disposal projects. 475-2 -B1 J-10 Introduction Along with the project manager, the project team will typically include representatives from: • Administration • City Attorney • Finance Division • Operating Department responsible for managing the property that will be disposed of or acquired • Other City staff as appropriate c. Makes non-substantive administrative changes to policies and procedures as required to accomplish policy objectives. 4. City Attorney a. Serves as member of project team as set forth in the Project Plan. b. Drafts required legal documents. c. Manages escrow closing and other related technical duties, including review of title reports and insurance requirements to ensure encumbrances on City real property do not cloud title, whether acquired with City funds, grants, donations, gifts, dedications or exchange. 5. Finance & Information Technology Finance Division a. Serves as member of project team as set forth in the Project Plan. b. Manages financing and budgeting activities, as well as processes payment for a property sale or lease. c. Reviews all City-owned properties as part of the two-year Financial Plan development process. Information Technology Division d. Via the City's Geographic Information System (GIS), maintains an on-line inventory of City-owned properties and provides an annual summary report to the City Manager and department heads. 6. Project Manager As designated by the City Manager on a case-by-case basis, provides overall planning, coordination and successful implementation of real property acquisitions and disposals. 475-3 +�� Attachment �— Introduction 7. Human Resources: Risk Management Ensures appropriate insurance coverage for all properties; reports property acquisition and disposals to the City's insurance carrier. 8. City Clerk Maintains central records system for all real property acquisitions and disposals, including deeds and lease documents 9. Operating Departments a. Serve as members of the project team as set forth in the Project Plan. b. Operating department responsible for managing the property that will be disposed of or acquired Ensures compliance with any covenants or restrictions set forth in the deed or lease, including any grant or donor requirements. STATE AND CITY REQUIREMENTS While the City Attorney's Office should always be consulted on real property acquisitions or disposals for compliance with State and City requirements, the following summarizes key guidelines: 1. State Guidelines a. California Government Code Section 37380: Allows City-owned property to be leased for a period not exceeding 99 years; and allows charter cities to set their own procedures for property leases. b. California Government Code Section 54220: Surplus City-owned property must first be offered to: • Housing authorities • Parks, recreations and open space areas • Enterprise zones • Schools While these agencies have the "right of first refusal," the City is not required to accept an offer from these entities if the terms are not acceptable to the City. Property exchanges are exempt from these provisions. c. California Government Code Section 65402: The Planning Commission must review all property acquisition and disposal proposals to determine compliance with the General Plan. 475-4 Introduction d. Abandonment of Parks, Street Right-of-Ways: There are detailed requirements that must be met in each of these cases. As such, the City Attorney must be contacted for direction on a case-by-case basis. 2. City Requirements a. City Charter. Article M, Section 906: Authorizes the Council to adopt policies and procedures applicable to the sale or lease of City property by ordinance or resolution. b. Resolution No. 10052: Sets the policy authorized by the City Charter. Key provisions are that Council approval is required for any:. • Sale of real or personal property in excess of$1,000. • Lease of personal property for more than three years. The full text of these City requirements is provided in the Appendix. 475-5 81 -13 section 475-B � �� PROPERTY ACQUISITION PURCHASE The following guidelines apply to the purchase of real property, whether in the form of fee title, rights-of-way or easements; and whether purchased with City funds or acquired via grants, donations, gifts, dedications via the development review process or property exchanges. 1. Purchase with City Funds a. Property purchase recommendations should normally be presented as part of the City's Financial Plan process via the recommended Capital Improvement Plan (CIP). However, as opportunities arise, the Council may consider property acquisitions at any time. b. Acquisition proposals should be consistent with adopted plans and policies, including the prior Financial Plans and the adopted CIP. c. The Council must authorize negotiations and approve the acquisition of any real property. d. Depending on the complexity of the transaction, market conditions and other circumstances at the time, the City may choose to be represented by a broker or other third party professionals in acquiring real property. These will be selected in accordance with the City's purchasing policies. 2. Acquisition Via Grants, Donations, Gifts, Dedications and Exchanges 1. Acquisition recommendations that will be fully or partially funded from grants, donations, gifts, dedications or exchanges should follow, at a minimum, the same guidelines as acquisitions financed from City funds. Where grant fund requirements for property acquisition are different from these guidelines, the requirement with the greater public disclosure will apply. 2. Council approval of acquisitions via grants will be required in accordance with the City's Grant Management Policy(Section 740 of the Financial Management Manual). 3. In considering property donations and gifts, the City will evaluate and short and long- term maintenance and operating costs, as well as any one-time costs that might be necessary to rehabilitate properties for public use or meet building code requirements. RENTS, LEASES AND MANAGEMENT AGREEMENTS The following guidelines apply to real property rents and leases (including management agreements) where the City will be the tenant. This need may arise for short-term uses, such as rental of interim space during construction; or ongoing operational needs, such as leases for the City's telecommunication and radio needs at the South Street Hills and Tassajara Peak as well.as cooperative use agreements with the school district for recreation programs. 475-6 8 �� Apunruhm grit Property Acquisition 1. These should normally be included as part of the City's Financial Plan process. However, as needed, the City may consider renting or leasing property as required to meet the City's operational needs at any time. 2. The approval authorization required for entering into lease agreements will be in accordance with the City's purchasing policies. 3. Depending on the complexity of the transaction, market conditions and other circumstances at the time, the City may choose to be represented by a broker or other third party professionals in renting or leasing real property. These will be selected in accordance with the City's purchasing policies. 475_7 AttachMflt Section 475-C PROPERTY -O The consideration of selling or leasing City property may arise from the City's initiative to do so or may be in response to interest by others. The guidelines below cover short-term leases of City property as well as long-term leases or fee-title sales. SALES AND LONGTERM LEASES Sales Versus Long-Term Lease In most cases, the sale or long-term lease of City real property will have a similar practical effect: the use of City property by others for a very long time. As such, as set forth below, the basic process for the sale or long-term lease of City property will be same. The decision on whether the City goals will be better met through sale or long-tern lease will be made by the Council on a case-by-case basis. Key factors to be considered include: 1. Which option represents the best financial return to the City? 2. Are the City's fiscal goals at the time best met with one-time proceeds from the sale or from a long-term income stream? For example, if the disposition is directly linked to the funding of another capital project, such as the acquisition or construction of a replacement facility, then sale may make the most sense. 3. Does the City have a long-term policy, project, program or proprietary interest in how the property is used? In this case, a long-term lease may make the most sense. 4. Is the property already fully developed, undeveloped or under-developed? If developed, was it intended to be use as leased space? 5. Are there limiting factors based on how the property was originally acquired or its initial intended use, such as grants, enterprise funds or donations) that would favor long-term leasing over direct sale? 6. What is the appropriate lease term? Depending on the circumstances, the Council is hereby authorized under this policy to enter into a lease for up to 99 years. Terms up to 99 years would be appropriate for leases where the intent, from a use and developer financing perspective, is intended to mirror a sale; but for the reasons outlined above, the City desires to retain fee-title. In most cases, the decision will be a balancing of competing interests that can best be weighed by the Council based on the circumstances at the time. Process: Determined on Case-by-Case Basis The City disposes of property infrequently and the most appropriate process will vary in each case depending on the circumstances. The guidelines below are intended to provide the City with 475-8 /'/t Attach"ant Property Disposal a framework for assessing the best approach on a case-by-case basis. It is not intended to limit the approaches available to the City: the overarching principle that should always apply is using an approach that will best accomplish the City's objectives given the circumstances at the time. As outlined below, there are five basic approaches that the City could take in determining the best long-term use of City property by others; request for proposals, broker services, exclusive negotiations, competitive sealed bids or auction (or a combination of these approaches), which will be determined by the Council on a case-by-case basis depending on the circumstances. 1. Request for Proposals (RFP). This approach makes the most sense when the City is initiating the sale or long-tern lease of City property. It provides an opportunity to clearly articulate the City's policy goals and the general terms and conditions under which it will select the successful proposal. However, even with an RFP process, extensive negotiations are likely to follow the finalist selection. 2. Broker Services This approach makes the most sense for sales when the City is initiating the sale; the goal is primarily a financial one; and the conditions of the sale are straightforward. The sale of the prior Headquarters Fire Station at Pismo and Garden Streets after the construction of the replacement Fire Station No. 1 at Broad and Santa Barbara in the mid-1990's is an example of where listing the property with a broker is likely to be the best option. 3. Exclusive Negotiations This approach makes the most sense when considering the sale or lease in response to a development proposal by others. The following factors support this approach: a. The City receives a written request from a proposer that sets forth its conceptual project and why it believes that exclusive negotiations are in the City's best interest. b. The proposer owns or controls a majority of the privately-held property adjacent to the intended area to be developed that is integral to the proposed development and required for successful implementation of the project. In this case, the project could not occur without the developer's property and no other developer could make a similar proposal. c. The proposal involves an exchange of City-owned property with the developer/property owner. In this case, the project could not occur without the developer's property and no other developer could make a similar proposal. d. There is a clear link to the development proposal and accomplishment of significant City goals, plans or policies. e. The proposer has a demonstrated record of completing highly successful projects in the City or similar communities. f. Other circumstances where it is clearly in the City's best interest in achieving major policy objectives to enter into exclusive negotiations. 475-9 —/� l^\ Property Disposal When this approach is used, the City will enter into a formal Exclusive Negotiating Agreement that clearly sets forth the terms and conditions of the negotiating period. 4. Competitive Sealed Bids. This approach makes the most sense for sales when the City is initiating the sale; the goal is primarily a financial one; the conditions of the sale are straightforward; and the City believes that it can successfully market the sale without outside professional assistance. 5. Auction. This approach is typically used for delinquent tax sales or forfeited assets. Accordingly, it is likely to be rarely used by the City. LEASES OF CITY-OWNED BUILDINGS The following guidelines apply to leases of City-owned buildings to outside parties. Leases with Non-Profit Organizations 1. Requests for the long-term use of City property by non-profit organizations should generally follow the same review procedures as the sale or lease of City property by private for-profit entities. 2. The proposed use should not conflict or preclude any existing or planned City use. 3. Any development or operations directly related to the proposed use should have a clear and measurable community benefit in alignment with City goals, policies and plans. 4. Any lease agreements for the use of City property by non-profit organizations that charge a less than market rate for the City property should include a provision for community access and/or City use, or operate in close partnership in the delivery of City services. 5. Lessees will be responsible for all property related use taxes that may be assessed. Long-Term Uses 1. Buildings permanently intended for non-residential uses (such as retail or office) and located on land zoned for those uses a. The City may use the services of a real estate agent or broker in advertising, locating and managing the leases. This selection will be made in accordance with the City's purchasing policies. The net difference between the manager's fees and the rents collected shall accrue to the City. b. For-profit entities should pay comparable market rents. Below-market rates may be considered for non-profit organizations in accordance with the guidelines above. 475-10 13/-/oV i� ♦� __ ��I! 1����a Cti Y r1 �L'J:i Property Disposal c. Unless otherwise agreed upon, lessees will be responsible for making all tenant improvements and comply with all City zoning and land use requirements, including any special conditions the City may place on the property. d. Lessees will conform with the City's non-discrimination requirements. e. Lessees will be responsible for all property related use taxes that may be assessed. Typical buildings in this category include: Office space located in the Marsh Street Parking Garage Structure.. 2. Buildings permanently intended for specific City-approved purposes by others, such as cultural uses a. The lessee must be a formal, non-profit organization whose stated purpose is a public benefit aligned with the purpose and goals of the City. b. The proposed use must further the Council's intended goals or policies for the specific property, and shall not conflict or preclude any existing or planned City use. c. The proposed use should be consistent with the goals and objectives of the City's General Plan for land use. d. Any development of operations directly related to the proposed use must be in the public interest and supply measurable benefit to the public. e. The lease agreement must include a provision for community and/or City use. f. Lessees will be determined either by a specific organization requesting use of the building or by the City actively seeking out an organization to fulfill the Council approved use for the property. g. Approved lessees must conform to the City's non-discrimination requirements. h. Lessees will be responsible for all general maintenance and upkeep of the property and any expansion or improvement of the building, unless the Council otherwise chooses to help fund that expansion or improvement. i. The long-term lease will be at a rate of $1 per year, unless the Council determines otherwise. Typical buildings in this category include the Children's Museum, Art Center and Railroad Historic Museum. EI-0 475-11 Attachment �— Property Disposal Interim Uses 3. Buildings on land eventually intended for other purposes, which are available for interim residential use and located on land zoned for that use a. Unless there are compelling reasons otherwise, the property will be managed by the San Luis Obispo Housing Authority. Each property will be evaluated on its particular merits and an appropriate agreement will be developed between the City and the Housing Authority. b. For any properties acquired that are already being successfully managed by a property management company, the City may continue this relationship. Typical buildings in this category include: residential units along Bullock Lane that were acquired for eventual demolition for needed right-of-way for the Orcutt Road improvements. 4. Buildings on land eventually intended for other purposes, which are available for interim uses on land zoned for other than residential uses a. The Council will determine the best use of the property on a case-by-case basis. b. Unless there are compelling reasons otherwise, if the interim use is residential in nature even though the property is located on land zoned for non-residential uses, the property will be managed by the San Luis Obispo Housing Authority In this case, each property will be evaluated on its particular merits and an appropriate agreement will be developed between the City and the Housing Authority. For any residential properties acquired that are already being successfully managed by a property management company, the City may continue this relationship. c. For non-residential uses, the City may use the services of a real estate agent or broker to advertise the property, and locate and manage lessees. This selection will be made in accordance with the City's purchasing policies. The net difference between the manager's fees and the rents collected shall accrue to the City. The City will provide direction to the property manager as to the length of the lease term, since business/office users that install tenant improvements generally want lease terms long enough to recover those costs. d. Lessees will pay comparable market rents. Below-market rates may be considered for non-profit organizations in accordance with the guidelines above. e. Lessees must conform with the City's non-discrimination requirements. f. Unless otherwise agreed upon, lessees will be responsible for making all tenant improvements and comply with all City zoning and land use requirements, including any special conditions the City may place on the property. Typical buildings in this category include:properties acquired for the Palm/Nipomo Parking Structure 475-12 �/ �O Property Disposal RIGHT-OF-WAY Right-of-way disposals may be initiated by the City or in response to public requests. Right-of- way will only be abandoned when it has no apparent current or future use. The following guide the disposal of right-of-way: 1. The City will follow requirements of the State of California Streets and Highways Code in acquiring, disposing and abandoning public right-of-way. 2. Right-of-way that has been purchased in fee or easements purchased with City funds will be sold or leased in accordance with the policies above. 3. Easements used for utility transmission and distribution systems will normally be reserved. If the utility previously using the easement declines further use, the City will offer it to other utilities before abandonment. 4. The City may place conditions of approval on abandonments of right-of-way that must be satisfied prior to transfer of ownership of the subject easement or property. 5. The City may reserve an easement for its water and sewer system or may reserve a blanket easement for all utilities. 6. The City will not guarantee the title of right-of-way it abandons. �l-al 475-13 Appendix SECTIONCITY CHARTER ARTICLE IX, 90. 906 Sale or Lease of City Property. The City Council, by ordinance or resolution, shall adopt policies and procedures that shall be applicable to the sale or lease of City property. 475-14 Appendix RESOLUTION NO. 10052 RESOLUTION NO. 1 D053(2009 Sarin) A RESOLU11ON OF THE COUNCIL OF'1'HE CITY OF SMI LUIS OBISPO SE7 n.'vG POLICIES FOR THE SALE OR LEASE OF CITY PROPERVY WHEREAS,ita Noy: nthcr'000, City votm,approyod dm amcndmcm to Semen 906 of the Cin Charter that provides fes Council adopti4m by ordinance or resolution of policies and prxcodeues that dwU be applicable to Use sale or lease of C'aty propmy,and W111FREAS, dx Council desire.% to adapt pulitiss Emcming authhority for the sWc or sewn of Ckv pwperty that are similar to these in that were place in the City Cheater Tinev to Nvycrmbu 2ODS.cAccpt fur an adjusirAmt im d-0 almDUnt to BWjunl fCut LIST,passage of limc. 1OW, THEREFORE, HE Cf RESOLVED by the Council of the City of Sala Luis Obispo as follows_ No sale or lease of real property nos any sale of personal property of a vaDm is cams of otr thousand dollars (31,000.00) rwr any lease of p=tmal property for a period exceedinS du-m(3) ye=s shall be amb,arLwd by the Council excepi by resoh6m posed by the affimiative vote of thrco-fifths(YS)of all Lbc members of the Cuuncil. Upon cwtioa of Vtax Mayot Scithe, uxomded by Council Mcotbe; bfiim, mod on the following Vola: AYES: Co=61 Membm,Carl=and Man,'dioe Ma}nriCMIC and Mayor Rmnuo NOES, lone AEMrtNT: Co=il Member Asbbsugla Thr It;trtt>;ng r elution adopttu3 thus VP day of January 2G09.Zlv layor ATTEST: City Clerk (� APPROVED AS TO FORM: 3ott3�ha , Lmvcll City AtWmc!y R 1905? gi�a3 475-15