Operations Property Procedures

This procedure explains how the City buys property for its use.

Governing policy: Acquisition Policy

Department: Finance & Property Services, Public Works

Last revised: January 4, 2010

Real estate acquisitions process

Operations properties

1. Facilities, Space and Asset Management Committee (FSAM) review

For all operational leasing transactions that require Council/Mayor approval, Property Services must send a recommendation with an overview of the lease to FSAM for evaluation within the space needs of the City. 

2. Council approval

City Council/Mayor must approve the real estate acquisition, either through approving the public improvement project budget (with the specific property identified) or by a separate Council action.   The project funds must also be appropriated. 

3. Coordination of transaction

Public Works Property Services Director determines who will be the Property Transaction Coordinator (PTC) for each acquisition.  The negotiations and Council approval process take 1-2 months if a willing seller is involved.  Eminent Domain procedures add at least 6 months to the total timeline for acquisitions.

4. Planning Commission review

PTC contacts the CPED Planning Staff to initiate City Planning Commission Review for conformance with the comprehensive plan, unless waived through Minnesota Statutes Section 462.356, subd. 2. 

5. Information gathering

PTC gathers the following information about the property to be purchased.

  1. Street address
  2. Property Identification Number
  3. Legal Description
  4. Lot dimensions and building dimensions
  5. Aerial map and property map or survey
  6. Digital photos of the property
  7. Current property use and characteristics (conduct field inspection)
  8. Preliminary investigation of ownership
  9. Zoning designation
  10. Taxes, including pending or levied special assessments
  11. Estimate of market value

6. Permanent Review Committee (PRC) review

PTC or City Property Services sends a recommendation regarding the proposed deal points for the purchase to the PRC for comment or discussion.

7. Create Acquisition Team

PTC meets with the Project Manager to review the preliminary cost estimates and timeline. PTC requests an attorney be assigned to the project by sending an e-mail to the Deputy City Attorney, Civil Division. If the acquisition will involve relocation of the occupants, request that the CPED Relocation Specialist also be assigned to the acquisition team.

8. Council Member notification

PTC notifies the affected Council Member of the proposed acquisition.

9. Due diligence research

  1. Appraisal – use CPED’s panel of independent appraisers by submitting the a Request for Appraisal form to the City Appraiser.   PTC mails a preliminary acquisition notice to owners, giving them an opportunity to accompany the Appraiser.
  2. Title insurance commitment -  use any title company
  3. Environmental Phase I Report – order through PW’s  Consulting Pool .
  4. Demolition, if needed.  Demolition must be bid through City Procurement.  As an option, PTC may request that CPED staff coordinate the demolition procurement and the demolition contract.  The PTC sends the property information including a digital photo of the building to the City Planner in charge of historic preservation reviews for demolition permits.  Obtain a written statement that there are no historic preservation barriers to demolition.

10. Council approval for transaction

  1. Authorization to acquire the property through negotiations or condemnation (If condemnation is used, then go to Eminent Domain procedures in this document)
  2. Finding(s) that the property is needed for a public purpose
  3. Authorization to sign purchase agreement and any other documents required for the purchase
  4. Authorization to issue a check to the property owner as long as the purchase price is reasonable as determined by the City Director of Property Services & Equipment and as supported by an independent appraisal from the CPED panel as validated by the CPED City Appraiser. The Council action should also authorize paying for any closing fees or other costs related to the acquisition.
  5. The funding string for the purchase price, closing costs and relocation costs, if applicable.

11. Negotiation

PTC negotiates purchase price and terms and, in cooperation with the assigned City Attorney, drafts purchase agreement and right of entry form. The PTC must provide the owner with a copy of the appraisal at the time the first offer is made. The City must reimburse the owner up to $1,500 (single-family and duplex residential properties)/ or $5,000 (all other types of properties) for their appraisal. Reimbursement to owner for owner’s appraisal costs must be made within thirty (30) days of receipt of a copy of owner’s appraisal and other necessary reimbursement information. The PTC obtains the owner’s signature on the purchase agreement.

If state or federal funds are expected to be used in the project, the owner is entitled to uniform relocation benefits. If owner is required to relocate, a relocation coordinator should be consulted to determine whether purchase offer is sufficient for owner to purchase a comparable property in their existing community. If not, offer must be adjusted to be sufficient.

12. Contracting and closing

PTC requests the assigned City Attorney to draft the remaining legal documents for the closing. PTC coordinates contract execution and obtains a City check for purchase price and closing costs. Always bring at least two duplicate deeds with original signatures to the closing. PTC attends the closing and verifies the proper documents have been filed in the County’s real estate records.

13. Post-closing activities

  1. PTC sends a memo to the City assessor in charge of tax exempt properties, requesting that future year taxes be abated. The memo should provide property information and date of acquisition (the closing date or the date of “quick take” condemnation.) In some cases, the taxes due in the year following acquisition cannot be abated and will have to be paid by the City if an escrow account was not set up at the closing.
  2. PTC notifies Property Services to add the parcel to the maintenance list and notes any special needs of the property, if applicable.
  3. PTC sends a copy of the recorded deed to PW Right-of-Way Office in City of Lakes Building.
  4. PTC terminates public utility services and/or changes ownership on the accounts, if applicable.
  5. PTC sends a notification of the acquisition to the Finance Department Controller for inclusion as an asset in the City’s Comprehensive Annual Financial Report (CAFR). The notification can be sent as each property is acquired, or a summary report can be sent that summarizes all of the acquisitions completed in the prior year.
  6. Public Works Right of Way maintains the final records which consist of, at a minimum, the following:
    • title commitment
    • appraisal
    • purchase agreement
    • closing documents
    • check requests
    • final policy
    • all correspondence

Eminent domain process

  1. PTC prepares letter to  Ways and Means Committee/ City Council requesting authorization for Condemnation Proceedings with attached Resolution finding that the property is needed for a statutorily authorized public use or public purpose and approving appraisal (if condemnation and appraisal were not already authorized in a prior Council action.)
  2. PTC requests a City attorney or external law firm be assigned to represent City.
  3. PTC packages the following documentation to send to law firm:
    1. Title Commitment (there is almost always a “gap” between the date of the title work used to determine owners and the date the notice of lis pendens is recorded.  To ensure you get good title (particularly if you are acquiring fee title and not just an easement), instruct outside attorney to request updated title work through the date of recording of lis pendens. 
    2. Appraisal
    3. Certified copy of Resolution
    4. All correspondence
  4. PTC reviews pleadings from outside Counsel (Real Estate and Staff Attorney).
  5. PTC consults with Counsel throughout entire condemnation process.
  6. If a settlement has been reached, PTC prepares Report to City Engineer to receive authorization to pay settlement.  OR if required, PTC submits letter to T&PW Committee to get authorization for payment.  PTC requests funds to pay seller or deposit into Court as recommended by condemnation counsel deducting, as appropriate, taxes and water bills due or delinquent.
  7. If no settlement, then upon signed Order authorizing the transfer of title, PTC prepares a check request for deposit amount.
  8. PTC does a tax search to obtain amount of taxes due or delinquent.
  9. PTC obtains any current or delinquent water bills.
  10. PTC deposits funds into Court, directs Court to pay any taxes and water bills currently due or delinquent out of deposit and obtains receipt of deposit and files Receipt of Deposit in the Hennepin County Recorders or Registrar of Titles office OR completes closing under normal procedures as recommended by condemnation counsel.
  11. PTC notifies PW Property Services to begin property management.
  12. PTC sends out notices to utility companies.
  13. PTC requests the abatement of taxes through the City Assessor’s office.
  14. Upon receipt of bills from Court-appointed Commissioners, PTC prepares check requests for payments.
  15. If “quick take,” PTC requests a check for the balance due to seller, if any, when award is granted.
  16. Upon receipt of Final Certificate from outside Counsel, PTC requests owner’s policy from Title Company.