BILL ANALYSIS �
Bill No: AB
1421
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Roderick D. Wright, Chair
2013-2014 Regular Session
Staff Analysis
AB 1421 Author: Committee on Accountability and
Administrative Review
As Amended: May 8, 2013
Hearing Date: June 11, 2013
Consultant: Paul Donahue
SUBJECT
Surplus state property: realtors and landlocked properties
DESCRIPTION
Provides for the selection of local real estate brokers to
sell state surplus property and adds landlocked, remainder,
and remnant parcels of land to the types of properties that
the Director of the Department of General Services (DGS)
may sell, convey, or exchange at fair market value under
specified circumstances. Specifically, this bill :
1)Authorizes DGS, to employ a licensed real estate broker,
with regard to the sale of a surplus property, who is
located within the vicinity of the surplus property.
2)Requires DGS to select a local licensed real estate
broker based on the location of the property, the
broker's knowledge of the local real estate market and
success in selling real property in the local market, and
the broker's demonstrated competence and professional
qualifications.
3)Requires DGS to adopt specific criteria relating to
competence, qualifications, and customary commission
rates in implementing the selection method specified
above.
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4)Adds the following types of properties that the Director
DGS may sell, convey or exchange at fair market value:
a) Property, not to exceed fifty acres, that is
landlocked, or without legal access from a public
road, street, or highway, if the sale, conveyance, or
exchange is with the owner of an adjoining property;
b) Property, not to exceed fifteen acres, that is a
remainder or remnant parcel having a diminished
economic utility or value due to its size, shape,
location, or other detrimental characteristics if the
sale, conveyance, or exchange is with the owner of an
adjoining property; <1> and
c) Property that is a remainder or remnant parcel of
property acquired as part of a capital outlay project
if the request to sell is made by the jurisdictional
agency within 1-year of its purchase date. <2>
5)Repeals existing laws that require lands acquired through
foreclosure, seizure, or court order, and lands valued at
less than $25,000 to be formally declared surplus prior
to sale.
EXISTING LAW
1)Authorizes DGS to employ a licensed real estate broker to
sell surplus property if DGS determines that the
employment of a broker would result in a cost savings to
the state.
2)Authorizes the Director of DGS to sell, convey, or
exchange properties that are not needed by any state
agency at fair market value following 30-day notice to
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<1> As amended on May 8, 2013, this bill additionally
provides that the "fifteen acre limitation shall not apply
to property acquired for public purposes if the written
request for the sale, conveyance, or exchange of the
remainder or remnant parcel is made within one year of the
acquisition of the property." The author intends to strike
this provision from the bill in author's amendments.
<2> This provision does not appear in the current version
of the bill, as amended on May 8, 2013, but will be offered
as author's amendments at today's hearing.
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the Joint Legislative Budget Committee (JLBC) and the
applicable members of the Senate and Assembly who
represent the district in which the properties are
located. This applies under any of the following
circumstances:
a) Property of no more than five acres to a local
governmental agency for the purpose of local public
works projects;
b) Property received by the state as the result of a
foreclosure, seizure, or court action;
c) Property that is being encroached on by an adjacent
landowner, and the Attorney General, state agency, and
adjacent landowner agree that the best way to resolve
the matter is through a sale of the property or an
exchange of property of equal value; and,
d) Property with a fair market value of less than
$25,000.
3)Requires properties acquired through foreclosure,
seizure, or court action, and properties worth less than
$25,000 pursuant to the above provisions to be declared
surplus prior to sale.
BACKGROUND
1)Author's Amendment : The author and the sponsor, DGS,
propose to add amendments to the bill that add an
additional circumstance under which the Director DGS may
sell, convey or exchange at fair market value. As noted
above, the Director of DGS would also be able to convey
"property that is a remainder or remnant parcel of
property acquired as part of a capital outlay project if
the request to sell is made by the jurisdictional agency
within 1-year of its purchase date."
2)Purpose : DGS is sponsoring this bill to streamline
current real property management practices and provide
savings to the state by adding landlocked, remainder and
remnant parcels to the types of atypical properties that
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the state is not required to use a sealed bid process. In
addition, DGS states that the bill removes a conflicting
and unnecessary requirement that state lands acquired
through foreclosure, seizure, court order, and lands
worth less than $25,000 in value be declared "surplus"
prior to sale. Finally, the bill is intended to provide
DGS with a less costly method of selecting local real
estate brokers to sell surplus property when it serves
the state's best interests.
3)Real estate brokers : Under current law, DGS exercises its
authority to employ a real estate broker in instances in
which the circumstances concerning the sale of a subject
property does not warrant expenditure of the time and
money for DGS to market the property through the
traditional public bid process.
Examples of such properties include land in a remote
location; land that is low-valued; a property that DGS
previously put out to public bid without success; or, an
unusual property that is not typical of properties that
DGS sells.
The current contract solicitation method requires DGS to
post a lengthy and formal Request for Proposal (RFP) in
the State Contracts Register, a process that, according
to DGS, can take several months without producing a
desirable result. This bill expedites the solicitation
process by allowing DGS to forgo statewide advertising
and target only real estate brokers who are located in
the vicinity of the surplus property and familiar with
local market trends, land values, and commission rates in
the area.
4)Atypical properties : DGS is authorized to sell certain
types of state land that are not characteristic of
properties that DGS routinely acquires, or that DGS
typically disposes of through a public bid process. State
law authorizes this expedited process if DGS provides a
30-day notice to the Joint Legislative Budget Committee
(JLBC) and the Members of the Senate and Assembly who
represent the district in which the land is located.
This bill adds landlocked, remainder, and remnant parcels
to the types of properties DGS may sell, convey, or
exchange, because, in most cases, the only logical buyer
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for these properties is an adjoining landowner. This is
particularly true for landlocked parcels where only an
adjoining owner has access to the property.
5)Declaration of surplus property : This bill also
eliminates a requirement in current law for lands
acquired through government loan default, seizure, or
court order, and lands valued at less than $25,000 to be
declared surplus prior to sale. DGS states that this
requirement is unnecessary because the costs to sell
these types of properties through the traditional public
bid process often exceed the value of the property.
According to DGS, low value lands and properties seized
through court actions or foreclosure are often difficult
to sell, and sit vacant, unprotected and exposed to
vandalism and vagrancy. Removing the requirement to
declare these properties surplus prior to sale will
enable DGS to dispose of them in a more timely and
cost-efficient manner.
PRIOR/RELATED LEGISLATION
SB 1645 (Mountjoy), Chapter 731, Statutes of 1998.
Authorizes the Director of DGS to sell, convey, or exchange
properties that are not needed by any state agency at fair
market value under specified circumstances if 30-day notice
is provided to the JLBC and the applicable Members of the
Senate and Assembly who represent the district in which the
properties are located.
SUPPORT:
Department of General Services
OPPOSE:
None on file
FISCAL COMMITTEE: Senate Appropriations Committee
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