Excess Operational Property Disposition Procedures

This procedure is for selling real estate that the City no longer needs.

Governing policy: Real Estate Disposition Policy

Department: Community Planning & Economic Development (CPED)

Last revised: October 6, 2004

Procedures

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

For all operational facilities, space and asset management transactions pertaining to buildable property that require Council/Mayor approval, Property Services must send a recommendation with an overview of the transaction to FSAM for evaluation within the space needs of the City. 

2. Transaction coordination

Property Services shall designate which PS Project Manager will serve as the liaison between PS and CPED for potential sales of municipal operations property. This PW Project Manager shall compile information on the property characteristics listed in Step 2 below. The Property Services Director determines who will be the Property Transaction Coordinator (PTC) for the sale of municipal operations property. In many cases, the PTC will be a CPED real estate staff person. Note that the sale and Council approval process will take approximately 3-4 months if it is a private sale (i.e., the buyer is already known); 4-6 months if it will be a public sale. PTC request an attorney be assigned to the disposition by sending a Request for Legal Services form to the Lead City Attorney for CPED.

3. Information gathering

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

  • Street address
  • Property Identification Number
  • Legal Description
  • Lot dimensions and building dimensions
  • Aerial map and property map or survey
  • Digital photos of the property
  • Current property use and characteristics
  • Proof of City ownership
  • Zoning designation
  • Pending or levied assessments
  • Estimate of market value
  • Contact the Finance Department’s Director of Capital & Debt Management to determine whether the property was acquired or improved using tax-exempt bond proceeds and what federal tax rules might apply

4. Assignment of disposition contact

If the title evidence shows that the City only has an easement on the parcel, the task of disposing of this land (by vacation or otherwise) remains with the Public Works Right of Way Office. If the title evidence shows that the City has marketable title, then the PW Property Services Director may request that CPED staff serve as the PTC for the disposition of the property. In such cases, the CPED PTC shall start the disposition process upon receiving all of the information listed in Step 3 above from the PW Project Manager.

5. Excess land notification

PTC sends notice of potential excess land to designated local government staff using the “Excess Real Estate Notifications” email list. See Attachment A. The PTC’s communication shall state that if the reviewing agencies do not respond within thirty (30) calendar days, it will be assumed that they know of no public purpose reason for the City to continue owning the property.

One of the notifications goes to CPED Director who assigns staff to determine whether CPED wants to request the Excess Property for development purposes. CPED has 30 days from notification to make a written request to the Property Services Director outlining CPED’s cost and profit sharing proposal. A parcel may be transferred from the Property Services inventory to the CPED inventory when CPED indicates either 1) that the property is needed for development purposes or 2) that CPED does not want the property sold without development restrictions. A memo agreeing to such transfer and the use of the net sale proceeds is signed by both the Finance Officer and the CPED Director. If Property Services and CPED cannot agree, the transfer and the distribution of the net sale proceeds are decided by the City Council.

Also notified through the email list is the Finance Department’s Director of Capital & Debt Management. This person determines whether the property was acquired or improved using tax-exempt bond proceeds and what federal tax rules might apply.

At the end of the 30 day review period, Property Services Director makes a recommendation to Finance Officer regarding whether property should be retained for municipal purposes. Finance Officer may declare any unneeded property “excess property,” a designation which allows the parcel to be sold.

See Attachment B for the City Ordinance sections 14.120 and 14.125 as a reference for Excess Property Declarations process.

Planning Commission review

PTC requests that Planning staff present the proposed sale to the City Planning Commission for its review, unless waived through Minnesota Statutes Section 462.356 Subd 2. One existing waiver is if the Property is a “non-buildable” parcel as determined by the zoning staff.

Council approval

The Project Manager brings proposed sale to Project Manager’s home Council Committee for public hearing and approval. The Committee letter requesting approval of the sale must contain an estimate of the property’s value and the staff-recommended sale method (private sale, RFP process or public sale to highest bidder.) Include a summary of CPED’s reasons for requesting the property for development purposes, if applicable, or attach CPED memo of request.

The related Council Resolution(s) should contain the following components:

  1. Finance Officer’s designation of the parcel as “excess property”
  2. Approval of sale method (if not previously approved)
  3. A finding that the proposed sale has no relationship to the comprehensive municipal plan (requires a Council Resolution with two-thirds vote of the City Council to be effective.) OR a statement of the Planning Commission’s findings, if any.
  4. Authorization to sell the property to the highest bidder (or to the proposed purchaser, if the transaction is a direct sale) so long as the designated minimum purchase price of $___ is met or exceeded.  This authority needs to also authorize the proper City Officers to sign any documents needed to complete the sale transaction.
  5. The fund destination for the sale proceeds, including whether holding costs and selling expenses will be reimbursed to the appropriate fund(s).  (Any funds realized by sale shall be credited to reimburse holding costs and selling expenses with the remainder deposited into the appropriate permanent improvement fund or operating expenses fund related to the public lands or buildings being sold, except to the extent that other city ordinances, grant requirements, or state or federal laws require a different method for allocating the revenue from sales.) 
  6. The name of the proposed purchaser, if already known.
  7. Send a letter to the home Committee requesting that a time certain be set for the public hearing.  Note that this letter needs to be submitted approximately one month before the desired public hearing date. OR
  8. Obtain the commitment of the home Committee Chair to directly set the public hearing date during the Committee meeting (no letter of request needed.)

8. Public bid process

  • PTC requests that the Communications Dept create a separate Web page on the City’s Web site for these documents and include on the CPED web site along with other properties for sale.
  • PTC contacts City Procurement to have a buyer assigned to the project.  Reserve a date with the buyer for the official bid opening.

Document execution

PTC requests that the assigned City Attorney draft the legal documents for the closing. PTC coordinates the contract execution. PTC attends closing, signs closing statement and seller’s affidavit and verifies the proper documents have been filed in the County’s real estate records.

Post-closing

  • PTC notifies Property Services to remove the parcel from the City’s maintenance list.
  • PTC sends a notification of the sale to Finance Department Controller for deletion from the City’s Comprehensive Annual Financial Report (CAFR).  Notification can be sent as each property is sold, or a summary report can be sent that summarizes all sales completed in the prior year.
  • PTC sends notification of the sale to the City assessor in charge of tax-exempt properties in one of the following ways:
  • By filing a Certificate of Real Estate Value (CRV) as part of the closing.
  • By sending a notification of the sale via a MINS Property Report
  • By sending an e-mail notification as each property is closed

Attachment A

Distribution List – Sales of Excess “Municipal Operations” Real Estate

Public Works Contacts
  • Director of Property & Equipment Services
  • Director of Engineering Services
  • Director of Water Works
  • Director of Solid Waste & Recycling
  • Director of Management Services
  • Director of Transportation
  • Facilities Manager
  • Right-of-Way Specialist
  • Senior Project Coordinator, Property & Construction Management
Finance Department Contacts
  • Accountant, Net Debt Bonds
CPED Department Contacts
  • Deputy Director***
  • Coordinator of Economic Development
  • Director, Planning & Strategic Partnerships
  • Manager of Multifamily Housing Development
  • Manager of Housing Policy & Development Support
  • Manager of Business Finance
  • Supervisor, Development Controls
  • Supervisor, Planning – Community Plans
  • Project Manager

***Denotes the lead person for the department.  The lead person will receive the comments from others in the same department and is responsible for creating a consolidated response on behalf of that department.  That consolidated response is due to the PTC within 30 calendar days.

Courtesy copies may also be sent to these contacts
  • Minneapolis Park & Recreation Board
  • Hennepin County Property Services
  • Hennepin County Library Board

Attachment B

“Excess Property” Declarations

Minneapolis Ordinances related to dispositions of municipal operations property

Section 14.120.  Sale of city lands and buildings used for municipal operations. 
If lands and buildings owned by the city for any municipal operation or service are no longer needed for such purpose, they shall be sold, if possible. The city engineer shall determine whether the real estate is needed for municipal operations.

The sale shall be for an adequate consideration and upon such other terms and conditions as the city council may prescribe. Notice of the proposed sale shall be published at least ten (10) days before the public hearing date.

The valuation of the real estate as determined by the city assessor or by an independent appraisal shall be reported to the city council, prior to approval of the sale. Any funds realized by sale shall be credited to reimburse holding costs and selling expenses with the remainder deposited into the appropriate permanent improvement fund or operating expenses fund related to the public lands or buildings being sold, except to the extent that other city ordinances, grant requirements, or state or federal laws require a different method for allocating the revenue from sales. This section shall not apply to city-owned real estate acquired, held, or sold for development purposes.

Section 14.125.  Fund designations for certain types of real estate dispositions. 
When city-owned real estate formerly held for municipal operations is disposed of for development purposes or city-owned real estate formerly held as development property is transferred for use in municipal operations, the city council shall determine the fund allocations of net sale proceeds or interfund transfers at the time of the disposition or use approval.

This process does not apply to vacations of public right-of-way easements or to development property.  However, this process does apply to City-owned right-of-way if the City owns the underlying fee title to the parcel.