No. 38890 (Amendment): Rule R23-22. General Procedures for Acquisition and Selling of Real Property

(Amendment)

DAR File No.: 38890
Filed: 09/30/2014 02:46:24 PM

RULE ANALYSIS

Purpose of the rule or reason for the change:

The reason for the amendments is to add a definitions section to the rule, update rule references, revise title report and insurance requirements, and to clarify other sections of the rule in order to make it easier to read and understand.

Summary of the rule or change:

The summary of the amendments to this rule are as follows: 1) DFCM is adding a definitions section to the rule; 2) for all real estate transactions, DFCM shall obtain a preliminary title report and an Owner's Policy of Title Insurance, and the director may waive the policy of title insurance with an estimated value of under $50,000 if the director finds that circumstances indicate that there is no potential risk or if the transaction is between public entities; 3) DFCM shall sell the surplus real property if it is directed to do so by the Utah State Legislature, and may use a real estate professional in accordance with state law, the Procurement Code, and applicable laws; 4) a study of available services to the subject property shall be conducted; 5) a geotechnical analysis shall be obtained; 6) a flood plain analysis shall be accomplished; 7) drainage issues shall be studied; and 8) adding general clarification and rule reference updates to the rule to make the rule more clear and easier to understand.

State statutory or constitutional authorization for this rule:

• Subsection 63A-5-103(1)(e)
• Section 63A-5-401
• Subsection 63A-5-103(1)(e)(iii)

Anticipated cost or savings to:

the state budget:

The state budget will not be affected, because the change is simply adding a definitions section to the rule, providing better title protections, and clarifying other sections of the rule in order to make it more clear and easier to understand.

local governments:

Local government budgets will not be affected, because the change is simply adding a definitions section to the rule, providing better title protections, and clarifying other sections of the rule in order to make it more clear and easier to understand.

small businesses:

The budgets of small businesses will not be affected, because the change is simply adding a definitions section to the rule, and clarifying other sections of the rule in order to make it easier to read and understand.

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

No other person's budgets will be affected, because the change is simply adding a definitions section to the rule, providing better title protections, and clarifying other sections of the rule in order to make it more clear and easier to understand.

Compliance costs for affected persons:

There are no compliance costs for any persons, because the change is simply adding a definitions section to the rule, providing better title protections, and clarifying other sections of the rule in order to make it more clear and easier to understand.

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

There is no fiscal impact on businesses.

Kimberly K. 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
Room 4110 STATE OFFICE BLDG
450 N STATE ST
SALT LAKE CITY, UT 84114-1201

Direct questions regarding this rule to:

• Alan Bachman at the above address, by phone at 801-538-3105, by FAX at 801-538-3313, or by Internet E-mail at [e-mail]
• Cecilia Niederhauser at the above address, by phone at 801-538-3261, by FAX at 801-538-9694, or by Internet E-mail at [e-mail]

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:

11/14/2014

This rule may become effective on:

11/21/2014

Authorized by:

Joshua Haines, Director

RULE TEXT

R23. Administrative Services, Facilities Construction and Management.

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

R23-22-1. Purpose.

This rule defines the procedures of the Division of Facilities Construction and Management for acquisition and selling of real property.

 

R23-22-2. Authority.

(1) This rule is authorized under Subsection 63A-5-103(1)(e), which directs the Utah State Building Board to make rules necessary for the discharge of the duties of the Division of Facilities Construction and Management[ (hereinafter referred to as "DFCM")]. All actions under this rule that refer to the DFCM shall be undertaken by the Director of the Division of Facilities Construction and Management[DFCM] or the Director's duly authorized designee.

(2) This rule is also authorized and intended to implement the requirements of Section 63A-5-401, as well as Subsection 63A-5-103(1)(e)(iii).

 

R23-22-3. Definitions.

(1) Except as otherwise stated in this rule, the following definitions shall apply throughout this Rule as follows:

(a) "Board" means the Utah State Building Board established pursuant to Section 63A-5-101.

(b) "Director" means the Director of the Division or the Director's duly authorized designee.

(c) "Division" means the Division of Facilities Construction and Management established pursuant to Section 63A-5-201.

(d) "State Agency" means any agency of the State of Utah that the Division is legally responsible for assisting with real estate transactions under this Rule. It may also include other public agencies when agreeable to the Director and consistent with applicable law.

 

R23-22-[3]4. Policy.

It is the general policy of the Board that, except as otherwise allowed by the Utah Code, [the ]DFCM shall buy, sell or exchange real property in accordance with this Rule to ensure that the transaction is in the best interest of the State and that the value of the real property is congruent with the proposed price and other terms of the purchase, sale or exchange.

 

R23-22-[4]5. Scope of This Rule.

(1) This Rule shall apply to all purchases, sales, donations and exchanges of DFCM except as otherwise allowed by the Utah Code. The requirements of this Rule shall also not apply to a contract or other written agreement prior to May 5, 2008.

(2) This Rule contains a waiver provision in Rule R23-22-9[8] that is consistent with Section 63A-5-401.

(3) Nothing in the rule shall prohibit DFCM 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 DFCM reasonably determines that such property is not historically significant after consultation with the State Historic Preservation Officer, that the transaction is in the public interest, and that the value of the transaction, as reasonably determined by DFCM, is less than $100,000.

 

R23-22-[5]6. Requirements for Purchase, Accepting a Donation, or Exchanges of Real Property.

Unless waived under Rule R23-22-[8]9, DFCM shall comply with the following in regard to the purchase, accepting a donation, or exchange of real property that is subject to this Rule:

(1) Selection Process. In accordance with State law, DFCM shall either perform the selection process or assist the [s]State agency with the selection process. The selection process must comply with applicable State laws and rules.  DFCM may use the services of a real estate professional in accordance with State law and selected pursuant to the Utah Procurement Code and applicable rules.

(2) Financing Requirements. As authorized by the Utah Legislature, DFCM shall assist, as appropriate with financing requirements, including, but not limited to, coordinating financing requirements through the State Building Ownership Authority, or other authorized bonding authority.

(3) Document Preparation and Approvals. In accordance with State law, DFCM shall negotiate, draft and execute the applicable Real Estate Contract and transaction documents with due consideration to the State agency's comments. The State agency may be required by DFCM to be a signatory to the Contract. Legal documents shall either be on a form approved by the Utah Attorney General or submitted for approval to the Utah Attorney General. The same requirements shall apply to closing documents prepared by the title company.

(4) Substantive Requirements. Unless a provision below is waived under Rule R23-22-[8]9, DFCM shall obtain and review the following:

(a) Title Insurance. [DFCM shall obtain an Owner's Policy of Title Insurance for real property with an estimated value by DFCM at $200,000 or above. ]For all real estate transactions [property with an estimated value by DFCM of less than $200,000], DFCM shall obtain a preliminary title report[title report] and [may obtain ]an Owner's Policy of Title Insurance.[if, in the judgment of DFCM, title insurance is advantageous to the State.] The Director may waive the obtaining of the Policy of Title Insurance for real estate transactions with an estimated value by DFCM of under $50,000 if the Director finds that the circumstances indicate that there is no potential title risk or if the transaction is between public entities.

(b) Environmental Assessment. A Phase I environmental Assessment or higher level environmental assessment is required.

(c) Engineering Assessment. DFCM shall obtain an engineering assessment of mechanical systems and structural integrity of improvements located on the property.

(d) A study of available services to the subject property shall be conducted. This includes an analysis of any required utilities, including water, sewer, gas, electricity and the like.

(e) A geotechnical analysis shall be obtained.

(f) A flood plain analysis shall be accomplished.

(g) Drainage issues shall be studied.

([d]h) Code Review. DFCM shall review the real property to ascertain its suitability under all applicable codes, including but not limited to, the Americans with Disabilities Act, laws, regulations and requirements.

( i[e]) Appraisal. Except for transactions where State law does not require a certain value to be established, the value used by DFCM in the negotiation shall be based upon an appraisal completed by an appraiser that is a state-certified general appraiser under Section 61-2B-2 and when determined by the Director that it is in the interest of the State, the Director may require that the appraiser be[and] a State of Utah licensed MAI appraiser.

([f]j) Maintenance and Operation History. DFCM shall obtain, if reasonably available, an analysis of past maintenance and operational expenses.

([g]k) Land Use Information. DFCM shall obtain, if reasonably available, the plat map, zoning and planning information.

([h]l) Survey. DFCM shall obtain an ALTA/ACSM Land Title Survey, current revision, of the subject property. An ALTA survey shall not be required if an ALTA survey has already been performed within the past 12 months unless otherwise determined by DFCM;

([i]m) Historic Assessment. DFCM shall undertake an historic property assessment under Section 9-8-404; and

([j]n) Other. DFCM shall also comply with other requirements determined necessary by law, rule, regulation or by DFCM.

 

R23-22-[6]7. Determination of Surplus Real Property.

(1) In accordance with State law, DFCM may recommend that certain real property be declared as surplus.

(2) If DFCM estimates that the value of the real property is less than $100,000, then DFCM need only notify the Executive Director of the Department of Administrative Services prior to any declaration of surplus or disposition of the real property. DFCM shall also consult with the State Historic Preservation Office prior to any such declaration or disposition if the property is historically significant.

(3) If DFCM estimates that the value of the real property is $100,000 or more, then the DFCM shall notify the Director of the Department of Administrative Services as well as the staff of the [Building ]Board, as well as receive approval from the [Building ]Board prior to any declaration of surplus or disposition of the real property. The Board[Utah State Building] may declare the property surplus after considering the following:

(a) the recommendation and any comments by the Division;

(b) the input from state agencies and institutions, including, but not limited to, whether any [s]State agency or institution has a need for the subject property;

(c) any input from concerned persons or entities;

(d) the appraised value of the property; and

(e) whether the property is historically significant. The property shall be considered historically significant if the real property, structures, statues or other improvements on the real property, is listed on the National Register of Historic Places or the State Register, or if the Board determines that it is historically significant after considering input from the State Historic Preservation Officer and others that have relevant input at the Board meeting.

(4) If the Utah Legislature directs that the DFCM sell the property, then it shall be deemed as declared surplus under this Rule without the need for any Board approval.

 

R23-22-[7]8.  Detailed Disposition Procedures.

After the appropriate determination is made that the real property is surplus, 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 applicable law or if DFCM is otherwise directed by the Utah State Legislature. DFCM may use the services of a real estate professional in accordance with State law and selected pursuant to the Utah Procurement Code and applicable rules.  The sale shall be processed as follows:

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

(2) Appraisal. Except for transaction where State law does not require a certain value be established or when the Director of DFCM estimates that the value of the property is less than $100,000, the value used by DFCM in the sale shall be based upon an appraisal completed by an appraiser that is a State of Utah certified general appraiser under Title 61, Chapter 2g, of the Utah Code and when determined by the Director that it is in the interest of the State, the Director may require that the appraiser be[is] a State of Utah licensed MAI appraiser.

(3) Listing Price. DFCM shall establish a listing price based on the appraisal or, if no appraisal is required, based upon DFCM's knowledge of prevailing market conditions and other circumstances customarily used in the industry for such sales.

(4) Advertise.

(a) When not using a real estate agent, the property shall be reasonably identified and placed in a newspaper of general circulation throughout the State of Utah, including the area of the subject property, for a period of no less than ninety (90) calendar days. At the discretion of the Director, publication may also occur on the DFCM website and in a local or regional publication. [DFCM shall advertise the property for sale in such a manner that is commercially reasonable in the discretion of the DFCM.] DFCM [may]shall set a time deadline for the submission of bids.

(b) When using a Real Estate Agent, in lieu of the advertising referred to in Rule R23-22-8(4)(a) above, advertising may be through a customary service used by the real estate agent.

(5) Award of Contract. DFCM shall endeavor to enter into a contract with the bidder/offeror that provides the best value to the State of Utah taking into account the price, other terms and factors related to the sale. If the contract is with a person that does not have the highest bidding/offered price, then DFCM shall file a written justification statement describing the circumstances in which the selected bidder/offeror represents the best value to the State of Utah.

(6) Document Preparation and Approvals. In accordance with State law, DFCM shall negotiate, draft and execute the applicable Real Estate Contract or transaction documents with due consideration to the State agency's comments. The State agency may be required by DFCM to be a signatory to the Contract. Legal documents shall either be on a form approved by the Utah Attorney General or submitted for approval to the Utah Attorney General. The same requirements shall apply to closing documents prepared by the title company.

 

R23-22-[8]9. Waiver for Requirements, Other Than R23-22-6.

(1) The requirements under Rule R23-22-[6]7 may not be waived.

(2) To the extent allowed by law, any provision of this Rule R23-22, other than Rule R23-22-[6]7, may be waived by the DFCM Director when the adherence to the provision of the rule is not economically efficient or other special circumstances are documented which indicate that the enforcement of the rule would not be in the public interest.

 

KEY: [real estate, historical significance, property transactions ]procedures, selling, surplus, real property

Date of Enactment or Last Substantive Amendment: [ August 7, ]2014

Notice of Continuation: February 20, 2013

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

 

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