Administrative Services, Facilities Construction and Management

Section R23-22-7

Requirements for the Disposition of Real Property by DFCM

Notice of Proposed Rule

(Amendment)

DAR File No.: 34050
Filed: 09/01/2010 12:22:11 PM

RULE ANALYSIS

Purpose of the rule or reason for the change:

The purpose of this rule change to Section R23-22-7 is to eliminate language in Subsections R23-22-7(1)(a) and (iii) and in Subsection R23-22-7(1)(b)(ii) designating the Legislative Management Committee as the legal authority on historically significant real property, as well as property valued at over $500,000.

Summary of the rule or change:

This rule changes Section R23-22-7 by eliminating language designating the Legislative Management Committee as the legal authority to determine the disposition of historically significant real property, as well as property valued at over $500,000. The changes are made to the following subsections: R23-22-7(1)(a) and (iii); and R23-22-7(1)(b)(ii). The changes further state that any real property that is of historical significance shall not be disposed by the Division of Facilities Construction and Management without the appropriate legal authorization.

State statutory or constitutional authorization for this rule:

• Section 63A-5-401
• Section 63A-5-103

Anticipated cost or savings to:

the state budget:

There are no anticipated costs; however, there could be some anticipated savings to the state budget as these changes streamline the process for the disposition of real property. Savings, if any, would be in the form of staff time spent on the sale and would be minimal.

local governments:

There are no anticipated costs; however there could be some anticipated savings to the local governments as these changes streamline the process for the disposition of real property. This could result in minimal savings to other entities including local government involved in real estate transactions with the state.

small businesses:

There are no anticipated costs; however there could be some anticipated savings to small businesses as these changes streamline the process for the disposition of real property. This could result in a minimal savings to small businesses involved in real estate transactions with the state.

persons other than small businesses, businesses, or local governmental entities:

This change to Section R23-22-7 is only procedural to govern the disposition of real property and does not affect persons other than small business, businesses, or local government entities unless they are involved in a real estate transaction with the state. As this change streamlines the process for disposition of real property, if persons were involved in a real property transaction with the state, it would most likely result in a minimal savings.

Compliance costs for affected persons:

The procedural changes to Section R23-22-7 will not require any compliance costs for affected persons as they are only procedural changes that govern the disposition of real property.

Comments by the department head on the fiscal impact the rule may have on businesses:

These changes to Section R23-22-7 are procedural and streamline the process for the disposition of historically significant real property, as well as property valued over $500,000. There are no anticipated costs; however, there may be a minimal fiscal impact on businesses resulting in minimal savings for businesses involved in real property transactions with the state.

Kimberly Hood, Executive Director

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Administrative Services
Facilities Construction and Management
450 N STATE ST
SALT LAKE CITY, UT 84114-1201

Direct questions regarding this rule to:

• Priscilla Anderson at the above address, by phone at 801-538-9595, by FAX at 801-538-3378, or by Internet E-mail at phanderson@utah.gov
• Alan Bachman at the above address, by phone at 801-538-3105, by FAX at 801-538-3313, or by Internet E-mail at abachman@utah.gov
• La Priel Dye at the above address, by phone at 801-538-3240, by FAX at 801-538-3313, or by Internet E-mail at ldye@utah.gov

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

10/15/2010

This rule may become effective on:

10/22/2010

Authorized by:

D. Gregg Buxton, Director

R23. Administrative Services, Facilities Construction and Management.

R23-22. General Procedures for Acquisition and Selling of Real Property.

R23-22-7. Requirements for the Disposition of Real Property by DFCM.

(1) Determination of disposition of real property.

(a) Notwithstanding, any other provision of this Rule R23-22, any real property that is of historical significance to the State of Utah shall not be disposed by the Division, [regardless of the value amount of the property, unless approval has been obtained by the Legislative Management Committee of the Utah Legislature]without appropriate authorization.

(i) "Historical significance" for the purposes of this Rule R23-22 includes real property, including any structures, statues or other improvements on the real property, that is listed on the National Register of Historic Places or the State Register.

(ii) The Division, after consultation with the State Historic Preservation Officer, shall make a recommendation to the Board as to whether a property proposed to be declared as surplus property, is historically significant based on the definition of "historically significant" in this Rule. The Board, after considering the recommendation of the Division as well as any other interested persons or entities, shall determine whether or not the property is historically significant.

(iii) A copy of the determination regarding Historical Significance shall be sent to the State Historic Preservation Officer .[ as well as the Chair and Vice-Chair of the Legislative Management Committee, any of which may within ten (10) working days of the receipt of the determination by the Board, decide that the issue should be considered by the Legislative Management Committee and that the Division shall not proceed with the disposition of the property until the Legislative Management Committee approves the disposition.]

(b) If the Board has not determined that the real property is historically significant, then the Building Board may declare the real property to be surplus under the procedures described in this Rule.[

(i)] Thereafter, if the appraised value of the real property is estimated by the Director to be $500,000 or below, then the Board may authorize the Division to dispose of the real property in accordance with the provisions of this Rule.

[(ii) If the appraised value as estimated by the Director is above $500,000, then the Board shall refer consideration of the sale of the real property to the Legislative Management Committee.

](c) Nothing in the rule shall prohibit the Director from proceeding with easements, lot line and other minor, incidental adjustments with other State entities or other public/private persons or entities, as long as the Director reasonably determines that such property is not historically significant after consultation with the State Historic Preservation Officer, that the adjustment is in the public interest, and that the value of the adjustment as determined by the Director is less than $100,000.

(2) Determination of surplus property. If the real property is determined to not be historically significant under this rule and in addition to the policy of Section R23-22-3, it is the policy of this Board to efficiently and economically dispose of real property that is determined by DFCM or the State to be surplus in accordance with State law. In accordance with State law, DFCM may recommend to the Board that certain real property be declared as surplus. The Board shall consider the following factors in the determination of declaring the property to be surplus:

(a) the input of the Division;

(b) the input of State agencies;

(c) any other input received from concerned persons or entities; and

(d) the appraised value of the property.

(3) Detailed disposition procedures. After the appropriate determination is made that the real property is surplus, and it is determined that the property is not historically significant under this rule, then DFCM shall endeavor to sell the surplus real property on the open market, unless such property is to be conveyed to another State agency or public entity in accordance with Utah law. If there is such a sale, it shall be as follows:

(a) DFCM shall confirm that all necessary approvals have been sought for the declaration of surplus property.

(b) Unless otherwise allowed by State law, DFCM shall obtain at least fair market value for the real property to be sold. This shall be accomplished by the following:

(i) DFCM shall determine a fair market valuation of the property prior to the offer for sale. The fair market value determination used by DFCM in offer for sale shall be based upon an appraisal completed by an appraiser that specializes in the type of the subject real property and is a state-certified general appraiser under Section 61-2B-2, or by a Utah licensed MAI appraiser who also has such a certificate, except as follows:

(A) When this rule is not applicable under its scope;

(B) When State law otherwise provides that DFCM does not have to use fair market value; or

(C) When the Director has determined by a writing filed with DFCM, that the cost of obtaining the appraisal is not justified in the economic interest of the State of Utah.

(c) DFCM shall establish a listing price based on the appraisal obtained under this Rule or, if there is no appraisal based on the above, based upon DFCM's knowledge of prevailing market conditions and other circumstances customarily used in the industry for such sales.

(d) DFCM shall advertise the property for sale in such a manner that is commercially reasonable in the discretion of the Director. DFCM may set a time deadline for the submission of bids for the real property based upon the economic conditions at the time of the sale.

(e) DFCM shall endeavor to enter into a contract for sale to the highest reasonable bidder, unless the DFCM Director files a written justification statement as to why a lower bidder is more advantageous to the State or if there is a sole bidder, that such bid is unreasonable. If after a reasonable timeline set by the Director of public advertisement, no acceptable bid is submitted, then DFCM may sell the property through a private negotiated sale, provided that any sale below the fair market value initially established by DFCM for the subject property is accompanied by a written justification statement filed by the Director and a copy of which is provided to the Board prior to execution of the contract for sale.

(f) DFCM shall, in accordance with DFCM's governing statutes, negotiate, draft and execute the applicable Real Estate Contract, with due consideration to the comments of the affected State agency. The affected State agency may be required by DFCM to be a signatory to the Contract.

(g) DFCM shall review, approve, and execute when appropriate, closing documents as prepared by the selected title company.

(h) DFCM may use boiler plate documents approved as to form by the Utah Attorney General or shall consult with the Utah Attorney General regarding provisions of the sale or significant changes to the boiler plate documents approved as to the form by the Utah Attorney General.

(i) DFCM shall endeavor to monitor the distribution of the closing documents.

 

KEY: real estate, historical significance, property transactions

Date of Enactment or Last Substantive Amendment: [July 8], 2010

Authorizing, and Implemented or Interpreted Law: 63A-5-103; 63A-5-401