Council committee looks to regulate city property sales

A Mobile City Council committee will not act to regulate public property sales until Mayor Sandy Stimpson’s office releases a completed policy guide.

The three-member ad-hoc committee, chaired by Councilman Joel Daves, made the decision after hearing from administration officials and concerned citizens at a meeting at 2 p.m. Tuesday.

Stimpson said the city has a need to sell unused or surplus property because it currently owns more than 1,600 vacant lots and buildings.

“We found out we own a lot of buildings and vacant property,” he told councilors. “We occupy a lot of buildings given to the city as a deal.”

The city owning a large amount of property leads to a large amount of deferred maintenance. Stimpson said the city is able to budget around $3 million per year for property maintenance, but owns about 3.6 million square feet of building space.

While there has to be a remedy for this problem, Stimpson said there is no appetite for a tax increase to do it, so the next option is to sell off the property.

Brad Christensen, director of asset management and real estate, told councilors the city is about a month away from releasing a policy guide on selling property to help avoid inconsistencies. The administration is also working on a master list of properties it would like to sell.

Councilors initially asked for the policy to begin with a vote to surplus a property before a sale price and buyer are known. Deputy City Attorney Flo Kessler told them that would be tricky, as state law puts limits on the amount that can be spent by a public entity on a non-public property. If the city needed to pay money to update a property in order to make a sale, deeming the property “not now needed for municipal purposes” could hamper those efforts.

“Once properties are in the marketplace, ideas for it can change,” she said. “We don’t think it’s wise to deem it first.”

Councilwoman Bess Rich said her main concern was with the lack of public exposure for recent deals. She and Councilman Fred Richardson both expressed an interest in allowing the council to be briefed on properties before a deal is brokered and possibly before the properties are even marketed.

“The process Brad is working on is a way to do that,” Kessler said. “There are other ways to interact with the council without deeming (a property) not now needed for municipal purposes.”

The administration offered to release a list of properties it would consider selling to the public to ease some of these concerns from the council.

While state law does regulate what a city is allowed to do to a private property, there is very little guidance on the sale of public property. For instance, a city, or county is not required to get bids on a property it intends to sell, according to council attorney Wanda Cochran.

“There is no prohibition against it,” she said.

Although a bid is not required, a property cannot be sold for “less than adequate consideration,” Cochran said. That doesn’t mean it has to be sold for the appraised value, as there is no legal value in an appraisal, she added.

In New Orleans, Cochran said, the city’s real estate office is tasked with making regular recommendations on properties to sell. In Charleston, she said, city officials sell property through a sealed bid process. The City Council can then impose restrictions on the project, or reject the bid. In Portland, Oregon, the city requires a minimum 60-day notice period for sale of municipal property, according to Cochran.

Cochran requested a copy of Mobile’s draft policy to work from in crafting an ordinance.

“If there’s a policy in the works it would be good if the ordinance were to dovetail the policy,” she said.

While the official policy has not been completed, city attorney Ricardo Woods said there are currently three ways in which the city can sell, or dispose of property.

One is through the request for proposal process, which is how the city disposed of Ashland Fire Station. Properties can go through the Neighborhood Renewal Program, which is used in many cases involving blight. A third way allows potential buyers to contact the city and make an offer on a property the city hadn’t planned to sell, Woods said.

During a public comment portion of the meeting, residents of the Chateauguay neighborhood recommended councilors look at a policy to help protect property in a floodplain. As Lagniappe has previously reported, a developer has shown interest in buying property in the Chateauguay area that had previously been restricted due to potential flood risks.

City officials said some of the lots in Chateauguay can’t be built upon. The others are in a 100-year floodplain, but can be developed due to new mitigation techniques employed by developers.

North Levert Drive resident Mitchell Harder said ignoring the flood risk on this property could impact neighbors, as more and more greenspace is developed. He also asked councilors to consider a requirement that all future sales be at least 85 percent of the nearby property value.

A number of commercial brokers asked councilors to make the information on possible sale properties more accessible and possibly allow agents to seek a commission on sales of the property to help move it more quickly on the city’s behalf.