February 19, 2008
By: Sandra Norman-Eady, Chief Attorney
You asked for a summary of, and flow chart depicting, the process for disposing of surplus property by the Department of Public Works (DPW). You also asked for information about a Committee on Conservation and Development and whether it has any role in the process. This report has been updated by OLR Report 2018-R-0086.
DPW is responsible for the disposition of most state property that is declared surplus. The Office of Policy and Management (OPM) must approve an agency’s or department’s determination that property is not needed. In addition, the Department of Environmental Protection can sell or transfer property under its control as can the Department of Transportation. As requested, this report focuses solely on the process DPW follows when disposing of state real property.
Generally, after property is declared surplus, the OPM secretary notifies all state agencies of its availability and gives them 90 days to submit a plan for using it. But the commissioner of the Department of Economic and Community Development (DECD) has the right of first refusal to use the property for housing. The town or towns where the property is located are also notified (as are the local legislators) and have an opportunity to purchase the property at its fair market value. When the DECD, other state agencies, and the town are not interested in acquiring the property, DPW must sell, lease, or otherwise convey it on the open market.
There is no state Committee on Conservation and Development. But there is a Continuing Legislative Committee on State Planning and Development that reviews the state plan of conservation and development that state agencies must consider when acquiring, developing, or otherwise improving real property.
According to Patrick O’Brien in OPM’s Bureau of Assets and Management, neither the plan nor the committee has a role in the surplus property disposition process.
PROCESS FOR DISPOSING OF STATE SURPLUS PROPERTY
Unneeded Property Offered to State Agencies
When a state agency, department, or institution determines that it has unneeded real property, it must notify the OPM secretary. The OPM secretary approves the agency’s determination that the property is not needed and notifies all state agencies of its availability. Agencies interested in acquiring the property must submit a plan to the secretary within 90 days showing how they would use the property, a timetable for using it, and a budget. Among these agencies, the DECD commissioner has the right of first refusal if it plans to use the property as an emergency shelter, transitional living facility for the homeless, or low- and moderate-income housing.
Unwanted State Property Offered to Towns
If DECD does not pursue the property for housing development, OPM analyzes any other agency acquisition plan and arranges a conveyance. If no agency submits a proposal to use the property, OPM declares the property surplus and conveys it to DPW, which is responsible for selling, leasing, exchanging, or entering into other agreements to dispose of it.
The DPW commissioner must notify the town where the property is located and the legislators who represent it of the state’s intent to dispose of the property. An independent appraiser determines the property's fair market value and OPM determines the property's environmental condition and its boundaries.
Once these determinations are made, the town has 45 days to notify the state of its interest in purchasing the property at fair market value. OPM and DPW staff work with the town to complete the sale within the statutory timeframe of 60 days.
Disposal of Property on the Open Market
If the town is not interested in the property or fails to express its interest within the 45 days, DPW and OPM can try to dispose of it on the open market. When the parcel is particularly large, OPM sometimes hires real estate consultants to advise the state on potential strategies for optimizing marketing and sales activities. A DPW property agent advertises and sets an opening date for bids. DPW’s bidding office receives all bids, which are publicly opened and read aloud on the bid opening date. The minimum acceptable bid is the appraisal value plus a 10% bid deposit. If the bid terms are different than what was initially contemplated by the town where the property is located (i.e., lower sale price or the proposal is to lease rather than purchase the property), the state must offer the town the opportunity to purchase on the new terms. If the town is not interested, the disposition by bid continues.
The DPW commissioner, OPM secretary, and the State Properties Review Board (SPRB) must review and approve the sales transaction. The state treasurer must also approve the transaction if the property was purchased or improved with state tax-exempt proceeds.
Legislative Approval of Disposition Plans
The Finance, Revenue and Bonding and Government Administration and Elections committees get a copy of the transaction packet, consisting of the appraisal report, the proposed purchase price, and any other related information. The committees have 30 days after receipt to approve or disapprove the transaction. If they do not act within this timeframe, the transaction is considered approved. However, the DPW commissioner may withdraw, alter, amend, or otherwise change a transaction in some way and resubmit it in which case the committees have 30 days from the date of the resubmittal to act.
Once the committees approve the transaction, the DPW property agent notifies the approved bidder by certified mail that its bid has been accepted and the attorney general conducts a final legal review.
The DPW commissioner must restart the process again, beginning with notice to the official and legislative representative of the town where the property is located if it is not sold within three years of the initial notice (CGS §§ 4b-21 and 3-14b).
FLOWCHART OF SURPLUS PROPERTY DISPOSITION PROCESS
STATE PLAN OF CONSERVATION AND DEVELOPMENT
The current approved plan covers the period 2005-2010 and was recommended by the Continuing Legislative Committee on State Planning and Development. By law, OPM must revise the plan on a five-year cycle. State agencies must consider the plan when they prepare plans of their facility needs as required under CGS § 4b-23. The agencies must be consistent with the plan when:
1. acquiring real property that costs in excess of $200,000;
2. developing or improving real property at a cost in excess of $200,000;
3. acquiring public transportation equipment or facilities at that cost; or
4. authorizing a state grant in excess of that amount for the acquisition, development, or improvement of real property or transportation equipment of facilities.
According to Patrick O’Brien, in OPM’s Bureau of Assets and Management, neither the plan nor the committee has a role in the surplus property disposition process. The primary reason for this is that in most transactions the state does not know how the property being conveyed will be used, according to O’Brien. In the past 15 years, the state has disposed of over 60 properties and only had advance notice of how three of the properties (Norwich Hills, Fairfield Hills, and Seaside) were going to be used, O’Brien stated. With respect to the three properties, the state requested developers to disclose the proposed uses because, given the size of the properties, the uses would significantly impact the towns where the properties were located, said O’Brien. The state worked with the towns to come up with acceptable usages.