Chapter 3.44
DISPOSITION OF SURPLUS PROPERTY – LONG-TERM LEASES
Sections:
3.44.010 Purpose – Decision-making process.
3.44.040 Procedures for determining that property is surplus – Real and utility property.
3.44.050 Process for disposition of surplus property.
3.44.010 Purpose – Decision-making process.
The city of Port Townsend owns and operates real and personal property needed for the effective provision and management of municipal services, including but not limited to parks, recreation and utility services. The city council recognizes that unlike private enterprises, the city owns and manages public property for many purposes, including many activities which do not produce revenues or profits for the city. It is the policy of the city of Port Townsend to provide the best possible stewardship and management of municipal assets in the best interests of the citizens of Port Townsend and for the enhancement and protection of the natural and built environment.
Furthermore, the city council recognizes and supports the public benefits derived from the provision of affordable housing. Affordable housing needs and opportunities shall be considered before surplusing public lands, and consideration shall be given to disposing property for affordable housing needs or retaining properties in order to meet affordable housing needs. Pursuant to RCW 35.21.687, it is the city’s intent to identify and catalog real property owned by the city that is no longer required for its purposes and is or may be suitable for the development of affordable housing for very low-income, low-income, and moderate-income households as defined in RCW 43.63A.510. The identification and cataloging of such properties would be considered a preliminary identification and cataloging pending completion of the processes outlined in this chapter.
A. City Council Decisions. The city council shall make all decisions that real property is surplus to the city’s needs in accordance with Chapters 35.94 and 39.33 RCW, or whether property should be designated to meet affordable housing needs and surplused or retained for that purpose. Decisions should be based upon established criteria, and only after seeking public review and comment regarding all proposed determinations that property which is subject to this chapter is surplus to city needs, or whether property should be designated to meet affordable housing needs and surplused or retained for that purpose. This chapter requires that, with the exception of leases of city-owned real property of less than one year (including property management agreements), the city council shall hold a public hearing prior to disposing of real property or designating that the property may meet affordable housing needs and be surplused or retained for that purpose.
B. City Manager Decisions. The city manager shall be authorized to make all decisions that personal property is surplus to the city’s needs, based upon the criteria established in this chapter. Items which cannot be used or re-assigned to another department shall be recommended to the city manager for disposal in accordance with this chapter. If the surplus personal property exceeds $10,000 in value or the personal property was acquired by the city for utility purposes, the city manager shall hold an administrative hearing prior to disposal pursuant to RCW 39.33.020 and this chapter. The city manager shall be authorized to make decisions to lease real property and to negotiate property management agreements for lease terms not to exceed one year, without holding an administrative hearing. (Ord. 3174 § 1 (Exh. A), 2017; Ord. 3055 § 1 (Exh. A), 2011; Ord. 2741 § 2, 2000; Ord. 2682 § 1, 1999).
3.44.020 Definitions.
A. “Commercially reasonable sale” means a sale or other conveyance that is an “arms length” arrangement, for the fair market value of the property. A commercially reasonable sale or conveyance may be by auction, private sale, trade-in as a component of replacement of obsolete property for new property, sealed bids, or by broker or agent listing. City employees and elected officials shall be prohibited from purchasing or otherwise acquiring any interest in any city surplus property.
B. “Disposition” means the lease or sale of property or other disposition as defined in this chapter.
C. “Housing, affordable,” “housing, very low-income,” “housing, low-income” and “housing, moderate-income,” as used in this chapter, shall be as defined in RCW 43.63A.510 as stated herein, or as hereafter amended by the state legislature:
1. “Affordable housing” means residential housing that is rented or owned by a person who qualifies as a very low-income, low-income, or moderate-income household or who is from a special needs population, and whose monthly housing costs, including utilities other than telephone, do not exceed 30 percent of the household’s monthly income.
2. “Very low-income household” means a single person, family, or unrelated persons living together whose income is at or below 50 percent of the median income, adjusted for household size, for the county where the affordable housing is located.
3. “Low-income household” means a single person, family, or unrelated persons living together whose income is more than 50 percent but is at or below 80 percent of the median income where the affordable housing is located.
4. “Moderate-income household” means a single person, family, or unrelated persons living together whose income is more than 80 percent but is at or below 115 percent of the median income where the affordable housing is located.
D. “Nonprofit corporation, qualified” as used in this chapter means private or public corporations duly organized according to the laws of the state of Washington, which non-profit corporations are exempt from taxation under USC 501(c) as amended, and which have a proven ability to provide affordable housing or can otherwise show an ability to do so and meet obligations that may be imposed in a conveyance of property to meet affordable housing needs. For purposes of donation of surplus personal property, this term shall also mean a nonprofit corporation that serves or benefits low-income or very low-income persons or persons with disabilities.
E. “Property” as defined by this chapter means all real property (real estate) owned in fee simple title by the city of Port Townsend, located both within the city’s incorporated municipal boundaries and outside city limits. “Property” shall also mean all personal property (non-real estate) and all real and personal property originally acquired for public utility purposes. “Property” shall not include public streets, alleys and rights-of-way which are subject to vacation and disposition in accordance with Chapter 12.20 PTMC. “Property” shall not include any equity interest in real or personal property held or owned by the city except for real estate security interests taken or released to secure the installation of development improvements. (Ord. 3174 § 1 (Exh. A), 2017; Ord. 3055 § 1 (Exh. A), 2011; Ord. 2741 § 2, 2000; Ord. 2682 § 1, 1999).
3.44.030 Policies for determining that property is surplus or should be designated for affordable housing purposes.
A. Real Property. The city council shall review, every three years, or on another regular basis, the city ownership of real property. The intent of this review shall be to ensure the optimum utilization of the capital assets of the city of Port Townsend. All determinations by the city council in accordance with this chapter shall be within the discretion of the city council, acting within its legislative, proprietary authority as provided in Chapter 35A.11 RCW. With the exception of leases not to exceed one year, and the negotiation of property management agreements, determinations that real property is surplus to city needs or whether property should be designated to meet affordable housing needs and surplused or retained for that purpose shall be made after holding a duly noticed public hearing, and shall be based, at a minimum, upon the city council’s consideration of the following criteria:
1. Real property should perform a valuable public function. In making this determination, the council should consider both current use and any foreseeable future use. Property may serve a valuable public function if the property provides both tangible and intangible returns to the city, including but not limited to preservation of sensitive natural habitat, stormwater or flood management and control, current or future utility-related needs, passive or active open space and recreation enjoyment, implementation of comprehensive plan goals and policies, and future investment potential.
2. If the property is determined to serve a valuable public function, the city council should determine if this function could be served more effectively, and/or more appropriately, by another property in current city ownership.
3. If the property is determined not to serve a valuable public function, the city council should determine if a potential future use, or other compelling reason exists to retain this property, based upon the following nonexclusive criteria:
a. The council should determine if the property has been identified in the Port Townsend comprehensive plan or any functional or subarea plans, as having potential future value to the city;
b. The council should request that the city manager and/or department heads review and identify whether there are any previously unidentified potential future uses of the property;
c. The council should determine whether there are contractual or other restraints on the title to the property which would limit or preclude sale. If such restraints exist, upon consultation with the city attorney, the council should determine the difficulty in removing such restraints;
d. The council should determine whether the net future value of the property, based upon current appreciation, is greater than what would be reasonably expected through fund returns;
e. The council should determine whether the return on investment would be greater through management of the property, and/or property development for city use, rather than through sale; and
f. The council should determine all tax consequences of the decision to retain the property versus a decision to declare the property to be surplus and dispose of the property.
4. The city council should determine if the property may be suitable for affordable housing and, if so, whether it should be designated to meet affordable housing needs. “Suitable for affordable housing” means the property is located within the city’s urban growth area (UGA), is generally suitable for development, and housing development is compatible with the neighborhood.
If the property may be suitable for affordable housing, the city council shall hold a hearing on whether the property should be designated to meet affordable housing needs and surplused or retained for that purpose, or whether the property should be retained for some other public purpose, or surplused without making provision for affordable housing. If the property is designated to meet affordable housing needs, then the city would follow the disposition process in PTMC 3.44.050.
B. Personal Property – Interdepartmental Transfers. If a department head or authorized city representative has city personal property under his or her control or supervision which is deemed surplus to the department’s use, the employee shall notify the city manager, who shall in turn notify interested department heads, supervisors or other city representatives, and give them an opportunity to review their need for the property. If any of such persons desire to acquire and use the proposed surplus property for their department, unless the manager disagrees, the property may be transferred to the requesting department head, or other authorized representative, for use by that department, for city business. Personal property originally acquired with utility funds may be transferred to and used by a non-utility department if the property is of de minimis monetary value. If no request for use of proposed surplus property is received, the city manager shall consider whether to declare the property surplus to the city’s needs under the criteria stated in this section. Upon finding that the property is surplus to the city’s needs, the city manager may then proceed to direct the disposal of the same by a commercially reasonable sale (including live or electronic auction), or as otherwise provided for in this chapter.
C. Personal Property – Criteria for Declaring Surplus. Upon recommendation of the department head, and after determining that there is no need for the use of the property by another department, the city manager shall hold a duly noticed administrative hearing, as required by this chapter. The city manager may declare property surplus based upon one or more of the following criteria:
1. The city has or soon will have no practical, efficient, or appropriate use for the property, nor will it have such a use for the property in the near future;
2. The purpose served by the property can be accomplished by use of a better, less costly, or more efficient alternative;
3. The purpose served by the property or its use no longer exists as determined by a change of policy evidenced by an ordinance or resolution of the city council;
4. The property is damaged, worn out, or otherwise inoperable and the cost of repairing the same is unwise or impractical.
D. Personal Property – Public Utility Property. In addition to the general criteria for finding that personal property is surplus to the city’s needs, upon the recommendation of the public works director or designee, and after conclusion of a duly noticed administrative hearing, the city manager shall consider whether personal property owned by the city and originally acquired for utility purposes is obsolete or not required for providing continued utility service. (Ord. 3174 § 1 (Exh. A), 2017; Ord. 3055 § 1 (Exh. A), 2011; Ord. 2741 § 2, 2000; Ord. 2682 § 1, 1999).
3.44.040 Procedures for determining that property is surplus – Real and utility property.
All final determinations of the city to declare real property, real and personal property acquired for utility purposes, and personal property with an estimated value in excess of $10,000 as surplus to the city’s needs, or whether real property should be designated to meet affordable housing needs and surplused or retained for that purpose, and whether the sale of surplus property shall be undertaken, are made only after conclusion of the public process as provided in this section; provided, however, this chapter shall not be construed as limiting the authority of the city council to conduct executive sessions as authorized by Washington law:
A. Prior to making any final determinations that property owned by the city is surplus to the city’s needs, or whether real property should be designated to meet affordable housing needs and surplused or retained for that purpose, and prior to negotiating any conveyance, the city shall hold a public hearing. The public hearing shall be held prior to undertaking any brokerage or real estate agent listing arrangements. The city manager is authorized to hold administrative hearings;
B. At least 10 days and not more than 25 days before the hearing, the city shall publish a public notice in display advertising form, setting forth the date, time and place of the public hearing, published at least once, in the official newspaper. Notice should also be mailed to the Peninsula Housing Authority and other housing providers serving the community. The city shall also circulate a news release;
C. The public hearing notices shall identify the property by an easily understood description (i.e., not exclusively by metes and bounds legal description), and shall describe any proposed use of the land involved, if any is contemplated;
D. After the public hearing, if the city council determines that the property is surplus to the city’s needs, the city council or city manager shall adopt a resolution (or administrative decision) making findings that the property is surplus to the city’s needs, and finding conformity with the adopted policies of the city which govern disposition of surplus property. The resolution or administrative decision shall state the estimated fair market value of the property; and
E. The resolution or administrative decision should state the terms and conditions for the actual disposition of the property which the council finds to be in the best public interest. With real property, the resolution shall state the property shall not be sold for less than the property’s appraised value; provided, the city council may approve an exchange of property without an appraisal based on a determination that the value of property received will be of equal or greater value than the property being surplused, and may approve a sale without an appraisal if it determines an appraisal is not necessary because there is other reliable indication of value (for example, assessed value, or other market transactions). The value received in a property exchange may include intangible values or benefits received by the city through implementation of comprehensive plan goals and policies (including goals and policies of the city’s functional and subarea plans) and provision of other public health, safety and welfare benefits to the city. (Ord. 3174 § 1 (Exh. A), 2017; Ord. 3055 § 1 (Exh. A), 2011; Ord. 2741 § 2, 2000; Ord. 2682 § 1, 1999).
3.44.050 Process for disposition of surplus property.
A. Commercially Reasonable Sale or Conveyance. Unless otherwise excepted in subsection B of this section, the actual sale or other conveyance of property shall be commercially reasonable. Real property will require an independent appraisal, except as provided in PTMC 3.44.040(E) and this section.
B. Special Disposition. If the council finds, following a hearing, that property should be designated to meet affordable housing needs and surplused or retained for that purpose, the council may direct the city manager to proceed with special disposition (which may include disposition at less than market or appraised value, and without appraisal), under any one of the following conditions:
1. Intergovernmental transfers (see subsection D of this section);
2. Transfer to qualified public or private nonprofit entities;
3. Transfer to the Port Townsend Public Development Authority or other public development authority created to develop or manage affordable housing.
Conveyance by special disposition may include (without limitation) sale, lease, options to purchase, lease purchase transactions, or public-private partnership, and may occur by use of negotiations or bidding, as the council deems desirable, fair and appropriate. The council may direct publishing or other distribution of a request for proposal (“RFP”) and/or request for qualifications (“RFQ”). Following review and recommendation by the city manager concerning a proposed special disposition, the council shall determine whether the proposed special disposition should be approved, not approved, or approved with conditions. The council reserves the right to reject any and all proposals. If a disposition for affordable housing is not approved, the council may determine whether to request other proposals or solicitations, retain the property for affordable housing in order to consider a disposition in the future, or (following a hearing) determine to designate the property for another public use (other than affordable housing) and/or to surplus the property.
The city manager may determine that personal property has little or no commercial value, or that the cost to sell or dispose of the property exceeds the estimate net proceeds. In that case, surplus personal property may be disposed of by salvage contract, donation to a qualified nonprofit, or safely disposed of as trash.
C. Lease of Public Property. The city may authorize the lease or sublease of any property, including real property, under such terms and conditions as the city may deem desirable, fair and appropriate, either by use of negotiations or bidding in the best interest of the city. Generally, leases of real property shall not be granted for a period of more than five years, although leases of longer terms may be appropriate. Leases of real property may be granted for a period of more than five years when appraisal or economic data demonstrate a sufficient assurance that the city will receive fair market rental value, including through monetary payment and in-kind services, and the lease arrangement will allow rental adjustments in the future as market conditions change.
D. Intergovernmental Transfers of Property. For all intergovernmental transfers of property, the council shall make its determination that the property is surplus to the city’s needs in accordance with this chapter, and all transfers shall be made pursuant to Chapter 39.44 RCW, or such other state statute as may be applicable. With all intergovernmental transfers of property, the city council shall consider conveying the property subject to a restrictive covenant which describes the allowed intended use of the property and prohibits the acquiring municipality from conveying the property to nongovernmental parties or entities.
E. Utility Property. In the event property declared surplus was originally acquired for public utility purposes, the revenues must be used for utility-related purposes, related to the utility which funded the original purchase, or in the event there shall remain no such utility, said funds shall be otherwise distributed as allowed by state law. All revenues from the sale of utility property shall be deposited in the appropriate utility account or fund. Proceeds from the sale of capital property shall be used for capital purposes.
F. Disposition of Proceeds – Nonutility Property. Proceeds from the sale of nonutility property shall be deposited and appropriated as determined by the city council. Proceeds from the sale of capital property shall be used for capital purposes.
G. Restrictive Covenants. Prior to disposing of real property, the city council shall consider the need to impose restrictive covenants for the purpose of protecting important public interests, including but not limited to provision of affordable housing, preservation and protection of environmentally sensitive areas identified on properties, stormwater control, open space protection, shoreline development use, and other restrictions controlling land use to implement city policy or to ensure that the property is used and developed in a manner which is compatible with the neighborhood character.
H. Release and Hold Harmless Agreement. Prior to disposing of any personal property, the city shall require the transferee to execute an acknowledgment of risks, release and waiver and hold harmless agreement, including a provision that the property is accepted “as is,” without express or implied warranties as to merchantability or fitness for any particular purpose. This agreement shall be made on a form approved by the city attorney. (Ord. 3174 § 1 (Exh. A), 2017; Ord. 3055 § 1 (Exh. A), 2011; Ord. 2741 § 2, 2000; Ord. 2682 § 1, 1999).
3.44.060 Exceptions.
This chapter does not apply where other city code provisions apply, or provisions of the Revised Code of Washington (RCW) impose special conditions for the disposition of municipal property. Exceptions include, but are not limited to, the following: disposition of public art, disposition of library material, equipment rentals, and disposition of abandoned or junk vehicles. (Ord. 3174 § 1 (Exh. A), 2017; Ord. 3055 § 1 (Exh. A), 2011).