TO: Mayor and City Council
THROUGH: Steve Powers, City Manager
FROM: Dan Atchison, City Attorney
SUBJECT:
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Creating a new chapter for the Salem Revised Code governing City real estate transactions (Ordinance No. 6-21).
Ward(s): All Wards
Councilor(s): All Councilors
Neighborhood(s): All Neighborhoods
Result Area(s): Good Governance.
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SUMMARY:
summary
Ordinance Bill No. 6-21 establishes procedures for the City’s acquisition and disposition land through the creation of Salem Revised Code (SRC) chapter 20K (Attachment 1, 2, and 3). The new SRC chapter will replace the City’s 1987 surplus real estate disposition policy (Attachment 4), and, consistent with the City Charter and state law, establish procedures for the City to buy and sell interests in land, including easement and fee simple ownership. First reading of the ordinance bill took place on June 28, 2021. Public notice of the public hearing was provided through the City’s website and social media outlets and to the City’s neighborhood associations.
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ISSUE:
Shall the City Council advance Ordinance Bill No. 6-21, establishing procedures for City’s acquisition and disposition of interests in land, to second reading for enactment?
RECOMMENDATION:
recommendation
Advance Ordinance Bill No. 6-21, establishing procedures for the City’s acquisition and disposition of interests in land to second reading for enactment.
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FACTS AND FINDINGS:
Oregon law establishes requirements and procedures for the sale, purchase, and transfer of land by public entities. These procedures apply unless the City has an established policy and procedures in place. The City’s policy was established in 1987 and needs to be updated and modified to comply with state law.
Ordinance No. 6-21 updates the City’s policy as follows:
1. Requires a public hearing before the City’s acquisition or disposal of real property prior to City Council approval, unless the transaction meets exceptions set forth below;
• The following transactions may be approved by the City Manager without City Council approval;
o Acquisition of land for streets, trails and utilities, if already approved through the City’s budget;
o Acceptance of donations of land;
o Release of City-held interest in land if not needed for public use;
o Grant of easements if the use will not unreasonably disrupt public use;
o Leases of City-owned land if the form of the lease has been approved by City Council, the rent is at market rate, and there are no substantial modifications to the form of the council-approved lease;
o Issuance of licenses and permits of entry of City-owned land not to exceed one year; and
o Subordination and reconveyance of City security interests in real property.
• Leases involving the City, including those that require City Council approval, do not require a public hearing.
With one variation, these exceptions to City Council approval are already allowed under SRC 2.200. The ordinance will modify and move these from SRC 2.200 to the new SRC real estate chapter. The one variation from existing code broadens the City Manager’s authority to execute leases if the rent is at market rate; current code requires City Council to approve the lease if the lease rate was not preapproved by City Council. Market rate will be determined by City professional real estate staff.
2. Establishes clear classes of property transactions that are exempt from public hearing requirements. State law requires a public hearing but allows for an exception for certain classes of transactions. The City’s current policy ambiguously establishes a broad class of transactions exempt from the hearing requirement. The proposed ordinance provides more clarity on the classes of transactions and ensures compliance with state requirements.
3. Disposition method. The current policy requires certain methods of listing a property for sale, such as “fixed-price competition,” and “sealed bids.” The proposed ordinance leaves the determination of the method of disposition to the City Manager and professional real estate staff.
Upon City Council approval of the ordinance, administrative policies and procedures for real property transactions will be adopted to administer the new chapter.
Next Steps.
If City Council elect to advance the ordinance bill, second reading will occur at tonight’s meeting later in the agenda. City Council may amend the proposed ordinance during deliberations at the public hearing. Depending upon the nature of the amendments, City Council may elect to defer second reading to a later date to allow the engrossments to be written into the ordinance bill.
BACKGROUND:
Oregon law requires the City to have a policy regarding the disposition of real property. The City’s policy was adopted in 1987. Ordinance Bill 6-21 replaces the City’s current policy.
Dan Atchison
City Attorney
Attachments:
1. Ordinance Bill No. 6-21
2. Exhibit A - proposed SRC chapter 20K
3. Exhibit B - amendments to SRC 2.200
4. City’s current real property disposition policy