Agenda Item 9
May 1,2012
Action
MEMORANDUM
TO:
FROM:
SUBJECT:
~iChael
Faden, Senior Legislative Attorney
Action:
Expedited Bill 11-12, County Property - Disposition
County Council
Government Operations and Fiscal Policy Committee recommendation (2-1,
Councilmember Ervin dissenting): enact with amendments.
Expedited Bill 11-12, County Property - Disposition, sponsored by Councilmembers
Leventhal and EIrich, Council President Berliner, and Council members Andrews, Riemer, and
Navarro, was introduced on March 13, 2012. Public hearings were held on March 20 and 27.
See selected testimony, ©38-Sl. Government Operations and Fiscal Policy (GO) Committee
worksessions on this Bill were held on March 29 and April II. At the latter worksession the
Committee recommended (2-1, Councilmember Ervin dissenting) that the Bill be enacted with
comprehensive amendments.
Introduced Bill
As introduced, Bill 11-12 would modify the procedures for disposition of County
property and require the County Council to approve disposition of certain County properties. As
defined in this Bill, "disposition" of property which the County owns or controls
I
includes any
sale, lease or license for a term of at least 3 years, or lease or other document which includes an
option to buy.
Specifically, Bill 11-12 would modify County Code §IIB-4S by:
• tightening up the current property disposition process (which includes an opportunity
for Council comments but not approval) so as to preclude the broad exemptions found
in current County regulations (see COMCOR §IIB.4S.01.02A-D, shown on ©IS).2
This would be done by only allowing property "of nominal value" to be exempted
from the current process? The current regulations exempt, among other categories,
"parcels at the County Life Sciences Center" and "matters of significant or strategic
interest to the County's economic development," which are not further defined. In
Iproperty which the County "controls" would include property leased or licensed to the County government, as well
as any property deeded to the County.
2See amended subsection (a) on
©2,
lines
3-\9.
3
See
©2,
lines
4-6.
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particular, this amendment would require property disposed of for economIC
development purposes to follow the required process;
• requiring Council approval before any disposition of County property becomes finaL
Council approval would take the form of a resolution, adopted after the Council holds
a public hearing with at least 15 days advance notice.
Under the Bill as introduced, the Council would also approve the material terms of each
property disposition, particularly the price or rent to be paid and any associated economic
incentives. The purpose of this requirement is to avoid a situation where an Executive gains
approval to dispose of a property and then modifies the terms of disposition in a way that (in the
Council's or the public's view) might not be in the County's best interest. The Council's ability
to approve the terms, as well as the disposition itself, is the crux of the disagreement (discussed
further below) between Council legal staff and the County Attorney regarding this BilL
State law
4
requires the County to advertise the sale or other disposition of "any property
belonging to the county or any agency thereof ... upon such terms and compensation as said
county may deem proper" for 3 weeks in a newspaper circulated in the county "and giving
opportunity for objections thereto." Council staff does not read this requirement as precluding
the County from enacting a law providing for other public notice and opportunities to comment
before the disposition is finalized. State law does not otherwise regulate the procedures for
disposing of County property.
Council staff transmitted an information request (see ©26) to Executive staff, seeking
data on recent property transfers. Responses to that request are attached at ©27-30. After the
Committee worksession, Executive branch staff also forwarded a list of current licenses to use
County property (see list, ©52-54).
Legal Issues
Given the direction the
GO
Committee took in its redraft of this Bill, the following
discussion is mainly of historical interest, but we are keeping
it
in this memo for completeness
and legal background
The County Attorney, in reviewing this Bill, concluded that under the County Charter's
division of legislative and executive authority, the Council could reserve to itself the power to
approve the sale or other disposition of County property, but not the terms on which that
property would be sold or disposed of. See County Attorney memos on ©31-37. Council legal
staff disagrees.
The constitutional doctrine of separation of powers is generally not applicable to local
government.
5
Rather, Maryland courts look to the county charter and local law to identifY
governmental functions as legislative or executive at the local level.
4
MaryJand Code, Article 25A §5(8).
5County Council a/Montgomery County
v.
Investors Funding Corporation.
270 Md.
403.
2
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In the case of
Prince George's County v. Silverman
(see opinion, ©7-14), the Court of
Special Appeals confirmed that the Council can enact a law that requires Council approval
before the County can sell or dispose of any County property. The Court affirmed a Circuit
Court holding that the Prince George's County law requiring Council approval of the
Executive's declaration that a property is surplus is "a
necessary and proper exercise of
legislative checks and balances on the executive determination to dispose of County
property.
To hold otherwise could result in the County Executive's declaration that all the
county-owned property is surplus.
,,6
The Court explained that "the procedure for disposing of
surplus property .. .is designed to
insure fairness and to prevent arbitrary and discriminatory
dispositions."
The critical point of the
Silverman
holding is that the Court did
not
find that the decision
on the transfer of County property is a purely Executive function, as the County Attorney's
argument would presume. Rather the Court noted a valid Council interest in retaining control
over the disposition of public property, rather than finding only unilateral Executive authority.
The Court in
Silverman
went on to say:
"It
is important to note that the [Prince George's]
code requires council approval only of the County Executive's determination that the property is
surplus; not approval of the prospective grantee," Bill 11-12 conforms to this judicial guideline;
it would authorize the Council to approve the material terms of any sale or lease (including the
price or rent to be paid and any associated economic incentives), but
not
the identity of the buyer
or lessee. In other words, if the Council approves a sale to one party on certain terms, it could
not then disapprove the sale of the same property on the same terms to any other party.
To respond to the heart of the County Attorney's argument, the Council would not have a
governing interest
iri
the identity of the prospective grantee, but
the Council clearly does have a
fiscal interest in the amount of the proceeds.
A below-market sale is effectively a transfer,
akin to an expenditure, of County resources, and the Council has the same interest in that kind of
transaction as it has for any expenditure. Just as any Executive's authority to buy property for
the County is always subject to appropriation, the Executive's authority to sell property would be
subject to the Council's fiscal authority under the Charter. Otherwise, as the Court in
Silverman
implied, the Executive could effectively give away County property without receiving full value.
Nowhere does the County Charter expressly reserve to the Executive the authority to
7
dispose of County property, and
we are not aware ofany Maryland case that so requires.
The
County Attorney's memo lumps together all manner of Executive branch activities in searching
for cases that uphold the Executive's prerogatives. However, the
irrevocable
sale or transfer of
valuable County property is qualitatively different from the day-to-day administration of County
government and from the standard contracts that the County Attorney's memo relies on.
58 Md. App. at 53-54.
7The County Attorney's reliance on part of the
Silverman
case, is incorrect because that Court was guided by a
specific provision (§402) of the Prince George's County Charter which
~r;pressly
assigns to that County's executive
branch the authority to "sign or cause to be signed on the County's behalf all deeds, contracts, or other instruments."
The Montgomery County Charter has no similar language.
6
See
3
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While the County Attorney stresses that the approval of contracts is an Executive
function under the applicable caselaw and argues that the Council has no role in those decisions,
this analysis ignores the fundamental fact that all contracts are - and must be subject to
appropriation. That is, regardless of the Executive's authority to enter into the contract, the
Executive cannot spend any money to implement it unless and until the Council appropriates that
money. Thus the Council in most cases has effective fiscal control over the results of the
Executive's use of the contracting power. However, property disposition contracts are unique in
that they do not require any further appropriation; thus, once the contract is executed, no checks
and balances apply. That is why these contracts cannot be lumped in with other types of
contracts; to do so would enshrine unilateral Executive actions into a Charter that is based on the
Council's fiscal authority.
In the last substantive paragraph of the County Attorney's memo, he suggested some
possible legislative solutions which do not go as far as this Bill but which, he concluded, would
pass legal muster. Council staff does not concede that the options the County Attorney proposed
are necessary to comply with the County Charter. In the interest of moving this legislation
forward and avoiding a legal deadlock, the GO Committee recommended a redrafted Bill
(discussed below) which incorporated variations on the County Attorney's suggestions that the
Committee concluded would protect the public interest in effective checks and balances on
disposition of County assets.
Committee redraft
At its April 11 worksession, the GO Committee recommended (2-1, Councilmember
Ervin dissenting) enactment of the redrafted Bill shown on ©1-5. That redraft was based on an
amendment offered by Councilmembers Rice and Riemer. At the March 29 worksession the
County Attorney concurred that this amendment would not violate the County Charter.
Major Elements
The Committee redraft would:
• prohibit the Executive from disposing of any County property at less than full market
value, unless the Council waives this requirement;
• delete from the Bill the Council's express authority to approve the terms of a
disposition except a disposition of property at less than full market value;
• allow the Council a 30-day period to comment on the proposed terms of any property
disposition, either setting parameters before a deal is negotiated (as Federal Realty
recommended; see their testimony, ©46) or after the Executive has tentatively agreed
to terms; and
• assign the Council the authority to approve or disapprove the Executive's declaration
that an item of County property can be disposed of because it is no longer needed.
Process
How would the process outlined by this redraft work in practice? The Bill
allows a great deal of flexibility, so that the Executive can tailor his compliance with the varied
needs of each transaction. For example, the Executive could submit the required "declaration of
no further need" for the property for Council review and approval before his staff begins to
negotiate a property transfer, after negotiations have been completed, or at any time in between.
4
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Similarly, he could seek Council input on the parameters and material terms of a disposition
before negotiations start or bids are invited; in fact, the redraft encourages him to do so (see ©3,
lines 48-53). The redraft requires the Executive to seek Council comment on (but not approval
for) the material terms of the disposition other than a below-market sale or lease before seeking
Council approval of the "declaration of no further need", but that comment could be sought well
before the Executive submits the declaration, or at the same time. The Bill leaves those timing
decisions generally to the Executive's discretion.
Exemptions
In addition to the exemptions from the
Council review
process for
properties of nominal value and those with an appraised value below $100,000, this redraft (see
©2-3, lines 24-33) would exempt the following transactions from the
entire property disposition
process:
• Leases or licenses of County property managed by the Parks Department. County
Parks Director Mary Bradford testified (see ©40) that, because many parks are
actually owned by the County (and were bought with County general obligation
bonds) but managed by the Parks Commission under a long-time operating
agreement, applying the disposition procedure to them would be unnecessary and
burdensome.
• Licenses to use County property to provide day care services or to perform contracts
for services with the County. A license is simply permission to use property for a
certain time or purpose; it conveys no other real estate rights. As the lists on ©29-30
and 52-54 show, these types of licenses are among the most common dispositions of
County property, along with licenses to place cellular telephone antennas on County
property. (For background on how the County uses licenses, see the DGS memo on
©28.)
• Property transferred to the Housing Opportunities Commission for housing
development.
The Committee rejected (2-1, Councilmember Ervin dissenting) 2 amendments offered
by Councilmember Floreen to exempt from the Bill's disposition process any land transfer
necessary to build a master-planned road or transit project and any land transfer necessary to
accomplish an economic development project which is subject to approval through the Economic
Development Fund.
Remaining issues
Councill'resident amendments
Council President Berliner directed staff to draft a set of
amendments covering the following topics:
1) Effective date (grandfathering)
The redraft's effective date clause (see ©5, lines 91­
92) would apply this Bill to any transaction that is not completed before the Bill becomes law.
In other words, the processes mandated by this Bill would apply to a transaction that is begun,
but not completed, before the Bill becomes law.
5
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Executive staff and representatives of other parties argued that any property transfer for
which the parties have finalized and signed a legally enforceable agreement should not be subject
to the processes in this Bill, even if the transaction has not yet been "completed" - i.e. ownership
of the property has not been legally transferred. To do this, amend ©5, lines 91-92 as follows:
County Code Section llB-4:5, as amended by SectiolLl..cithis Act}.. .H(ipplies]] does not
apply to any disposition of County property [[completed on or afterl1 for which a legally
enforceable contract. lease, or other agreement was signed by all parties before that
date.
Council staff asked Executive branch staff for a list of all property transfer agreements to
which the County is a party and that would be exempted by this amendment. We have not
received the list before this packet went to print.
2) Affordable housing Councilmembers Floreen and Ervin, Action in Montgomery
(AIM), and the Affordable Housing Conference (AHC) recommended (see testimony, ©49-51)
that the disposition of property when that property would be used to provide affordable housing
significantly above the minimum required by law should be exempt from the disposition
requirements of this Bill, including Council approval of property transfers.
Committee recommendation: adopt the more limited amendment by Committee Chair
Navarro, which only exempts property transferred to the Housing Opportunities Commission for
housing development purposes.
A broader amendment, similar to that proposed by AIM and AHC, would exempt from
the Council approval requirement (rather than the entire property disposition process) any
transfer primarily for housing development in which the recipient commits to provide at least
30% of the dwelling units as moderately-priced dwelling units (MPDU's) or other affordable
housing (defined as housing exempted from the County impact taxes). Under this approach, the
recipient of the property need not be a non-profit housing provider.
To do this, insert on ©4 after line 78:
This subsection doesnot apply to any disposition of prQl}erty that will be used primarily
fuL
housing developmentiLJh.e recipient legally commits to the Director of the
Department of Housing and Communitv Affairs that at least 30% of the housing units
built on the property will be moderately priced dwelliIlg units or other units that are
exempt from the development impacttax under Section 52-49(g){ll-C4).
3) Appraisal time limit For a sale of property, the Bill (see ©3, lines 36-40), requires
full market value to be determined by at least one appraisal obtained within the previous 6
months. As Director Dise noted, the normal practice is to obtain more than one appraisal,
usually one from each party and a neutral 3
rd
appraiser. This provision is not intended to alter
that practice.
6
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Real estate la\\''Yers contended that a maximum of 6 months is too stringent a requirement
to assure that an appraisal is not outdated or "stale". They argued that 12 months is a more
reasonable limit. To make this change, replace {iwith
on ©3, line 39.
4) Right-of-way exemption Council President Berliner would exempt from the
disposition review process any transfer of a County right-of-way that is needed to advance a
master-planned road or transit project. This can be done by inserting, on ©3 after line 33:
ill
a transfer of County right-of-way that is needed to advance a road or transit
IHoject that is included in the applicable master or other land use plan.
5) Confidentiality When the Council is given the material terms of a proposed
disposition to comment on, arguably those terms should be kept confidential (to the extent
allowed by the state Public Information Act) before the transaction is final. To do so, ©3, lines
50-53, could be amended as follows:
Any document submitted under this subsection. [[otber than any document submitted
under the preceding sentence which]] to the extent the document need not be disclQsed
under state law. [[is a public document]] must be treated as confidential.
6) Public hearing waiver The Council could be authorized to waive the required public
hearing on the Executive's proposed "declaration of no further need" if the disposition is non­
controversial. This could be done by inserting, on ©4, line 72: The Council may waive the
o.lli2lic hearing Jequired by this subsection if it concludes that a hearing on a particular pr9Posed
disposition is not necessary to properly assess
th~
proposed action.
7) Council deadline Similar to Method 2 regulations, the redraft allows the Council by
resolution to extend the 60-day deadline to act on the Executive's declaration of no further need.
If the deadline falls during August or December 15-31 (customary periods of Council recess), the
deadline is automatically extended to the next Council session (see ©4, lines 75-78).
Council President Berliner may offer an amendment to limit any extension to a situation
in which the Council has informed the Executive, within 30 days after receiving the Executive's
proposed declaration, that the Council has not received all information necessary to review the
proposed action. This can be done by inserting after resolution on ©4, line 75: if the Coupcil
President has informed the Executive. within 30 daYUlfter the Executive submitted the proposed
action, that the Council has not received all information necessary to revie:w the p!QPQ§ed action.
Other amendments
Council staff suggests that the Council review the need for the
following potential amendments.
8) Right of first refusal/pass-through Montgomery Housing Partnership noted that
when the County buys an MPDU, a condominium unit, or an entire apartment building using its
statutory rights of first refusal and then typically resells the unit or building to an individual or a
nonprofit housing provider, the disposition process in this Bill would apply unless that type of
transaction is expressly exempted. To do so, insert on ©3 after line 33:
7
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ill
a sale of one or more housing units obtained by the County using its right of first
refusal under Section
l1A-3
or
l1A-4
or Chapter 25A. and resold for not less than
the County paid.
9) Operational issues
Operational issues that the GO Committee discussed, but did not
further amend in its redraft, include:
a)
Lease term
Committee members considered whether the minimum term for a lease or
license covered by the disposition process should be less than 3 years, as the Bill
provides. Keep in mind that the lease term includes any automatic renewal period, so
that, for example, a 2-year lease with an automatic 2-year renewal period (unless one
party opts out) would exceed the 3-year floor. Alternatives could be to reduce the
coverage floor to 2 years or to cover any lease if either its term is longer than 3 years
or
the value of the property is higher than a specific amount.
b)
Low-value exemption
As drafted, the Bill (see ©4, lines
56~57)
would exempt
property of nominal value or with an appraised value lower than $100,000 from the
requirement of a declaration of no further need and the accompanying Council
review. The $100,000 amount is the value of the asset (property or interest in
property) conveyed,
not
the amount of the transaction, so that for example a lease of
property worth more than $100,000 for a nominal amount would be covered.
This packet contains:
Expedited Bill 11-12 with Committee amendments
Legislative Request Report
Prince George's County
v.
Silverman
CSA opinion
Current County property disposition regulation
Information request to Executive staff
Response from DGS
County Attorney Memo
Follow-up County Attorney memo
Selected hearing testimony
List of licenses to use County property
Fiscal and economic impact statements
Circle
#
1
6
7
15
26
27
31
35
38
52
55
F:\LAW\BILLS\1211 County Property\Action Memo.Doc
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Expedited Bill No. -'-11.!..--""'12=----::-_ _ __
Concerning:
County
Property
Disposition
Revised: 4-27-12
Draft NO.7
March 13, 2012
Introduced:
Expires:
September 13,2013
Enacted: _ _ _ _ _ _ _ _ __
Executive: _ _ _ _ _ _ _ __
Effective: _ _ _ _ _ _ _ _ __
Sunset Date:
....!...!No!::!n-"=e~
_ _ _ _ __
Ch. _ _, Laws of Mont. Co. _ __
COUNTY COUNCIL
FOR MONTGOMERY COUNTY, MARYLAND
By: Councilmembers Leventhal and EIrich, Council President Berliner,
and Councilmembers Andrews, Riemer, and Navarro
AN EXPEDITED ACT
to:
modify the procedures to dispose of County property;
require the County Council to approve certain [[dispositions of]] actions regarding
certain County properties, and authorize the Council
to
review certain agreements to
dispose of County
pr~;
ill
prohibit the County from disposirlg of certain property at less than full market
value~
unless the Council waives this requirement; and
[[(3)]]
ill
generally amend the County law regarding disposition of County property.
(1)
(2)
By amending
Montgomery County Code
Chapter 11 B, Contracts and Procurement
Section 11 B-45
Boldface
Underlining
[Single boldface brackets]
llouble underlining
[[Double boldface brackets]]
* * *
Heading or defined term.
Added to existing law by original bill.
Deletedfrom existing law by original bill.
Added by amendment.
Deletedfrom existing law or the bill by amendment.
Existing law unaffected by bill.
The County Council for Montgomery County, Maryland approves the following Act:
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EXPEDITED BILL
No. 11-12
Sec.
1.
Section
IlB-45
is amended as follows:
2
3
4
IlB-45.
(a)
Disposition of real property.
The County Executive must adopt regulations to establish a process for
the disposition of any real property owned or controlled
Qy
the County,
other than surplus school facilities and [other] property of nominal value
identified in the regulation.
[[As used in this Section, "disposition"
5
6
7
8
9
means
~
sale,
~
lease or license for
~
term of
1
years or longer, or
~
lease
or other document which includes an option to buy.]] The regulations
must provide for:
(1)
10
coordination among public agencies, including any [municipal
corporation] municipality in which the real property is located;
11
12
13
14
(2)
(3)
opportunity to reserve property for alternative public use;
comparative analysis of reuse proposals before any disposition
actions; and
15
16
(4)
public notice and hearing on possible dispositions before final
decision on disposition, except that the County Executive may
waive the public hearing requirement for any real property that:
(A)
17
18
19
20
has nominal value; or
is recommended to be reused by the County government.
(B)
(b)
As used in this Section, disposition means a sale, a lease or license fOf a
term of 3 years or longer, or a lease or other document which includes
an option to buy. If a license orlease for an initiaLterm of less than 3
years is extended or renewed beyond 3 ye?!,s, that extension or renewal
is a disposition. Disposition does not include:
21
22
23
24
25
ill
a lease of or license to use any parkland, or any facility located on
parkland, tha.t the. Parks Department operates or manages for the
County;
f:\law\bills\1211 county property\1211 bill 7.doc
26
27
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EXPEDITED BILL
No. 11-12
28
29
30
31
32
ill
ill
ill
a license to use County property that is cotenuinous with a
contract for services perfonued by the licensee;
[[m:]]
a license to use County property to provide chilci or adult day
care servIces; or
a sale or lease of property to the Housing Opportunities
Commission for housing deyelopment._
33
34
35
36
!£l
Unless the County Council waives this requirement under subsection
(e)(2)(B), the Executive must not dispose of any property owned or
controlled by the County at less than full market vallIe.
In
case of a sale
of property, full market value must be detenuined by at least one
professional appraisal of the property obtained by the Director within
[[the previous]] 6 months before a declaratimLis submitted to the
Council.
37
38
39
40
41
42
(ill
Before seeking Council approval of a declaration of no further need
under subsection (e). the Executive must submit to the Council and
allow the Council at least 30 days to comment on:
43
44
45
46
ill
ill
all material tenus of the disposition, including the price
~nt
to
be paid and any associated economic incentives: and
any appraisal that the Executive relied on or will rely on in setting
the property's market value.
47
48
49
In addition, the Executive should when practicable submit.fuLJ2ri9r
Council review the parameters and material tenus of a disposition that
has not begun to be negotiated. Any documeflt submitted under this
subsection, other than any document submitted
u~he
50
51
52
53
preceding
sentence which need not be disclosed under state laW', is a public
document.
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EXPEDITED BILL
No.
11-12
54
55
56
57
58
59
60
61
[[!Q}]]
~
[ffiefore]] In addition to the process required under subsection (a),
before the disposition of any real property owned or controlled
Qy
the
County (other than
£!
property which has either nominal value or an
appraised value lower than $100,000) becomes
final[l.,.1]~
ill
tlliLExecutive must publish a declaration in the County Register
and post a notice on the County website that the County has no
further need for the property or, if the disposition is a lease_ or
license, has no further need fm:.Jh.eproperty !;luring the term of
the lease or license: and
62
63
64
65
66
ill
the [[County]] Council,
Qy
resolution adopted after the Council
holds
£!
public hearing with at least
li
days advance notice, must
approve:
[[ill]]
U\1
ml
the [[disposition}] Executive's declaration of no
67
68
further need; and
[[ill]]
[[aU material terms of the disposition, including the
69
70
71
price or rent to be paid and any associated economic
incentives.]] any disposition .of the property at less than
full market value.
If the Council does not act under this subsection within 60 days
after the Executive has submitted [[all information necessary to
assess]] the pro12osed action, the proposed action is automaticallY
approved. The Council may extend this deadline buesill.illion.
If this deadline would fall during August
or~m
72
73
74
75
76
77
78
79
80
December 15
through December 31, the deadline
is
automatically extended
until the next scheduled Council session.
[(b)]
[[(£}]]
[(c)]
[[@]]
ill
*
*
*
W
The Executive must adopt regulations to establish a process for
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EXPEDITED BILL
No. 11-12
81
disposition of surplus schools. As used in this Section, "surplus school"
means any building used at any time as a public school and later
conveyed to the County and all or part of the land which constitutes the
school site[, and "disposition" means a sale or a lease with an option to
buy]. The regulations must provide for:
82
83
84
85
86
87
88
[(d)]
[[WJ]
ilil
*
*
*
*
*
*
Sec. 2. Expedited Effective Date.
89
90
91
The Council declares that this legislation is necessary for the immediate
protection of the public interest. This Act takes effect on the date when it becomes
law. County Code Section
llB-45,
as amended by Section 1 of this
any disposition of County property completed on or after that date.
Approved:
.t\~h_applies
to
92
93
94
Roger Berliner, President, County Council
Date
95
Approved:
96
Isiah Leggett, County Executive
Date
97
This is a correct copy o/Council action.
98
Linda M. Lauer, Clerk of the Council
Date
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LEGISLAriVE REQUEST REPORT
Expedited Bill 11-12
County Property
-
Disposition
DESCRIPTION:
Modifies the current procedures for disposition of County properties
to remove certain exemptions. Requires County Council approval of
certain property dispositions.
Apparently unrestricted Executive authority to dispose of County
property on any terms after minimal advertisement and without
public or legislative input.
To require the County Council, after public hearing, to approve the
disposition of certain County properties and the terms of disposition.
Department of General Services
To be requested.
To be requested.
To be requested.
To be researched.
Michael Faden, Senior Legislative Attorney, 240-777-7905
Applies only to property owned or controlled by the County. Would
apply to County property located in a municipality.
Not applicable.
PROBLEM:
GOALS AND
OBJECTIVES:
COORDINATION:
FISCAL IMPACT:
ECONOMIC
IMPACT:
EVALUATION:
EXPERIENCE
ELSEWHERE:
SOURCE OF
INFORMATION:
APPLICATION
WITHIN
MUNICIPALITIES:
PENALTIES:
f:\law\bills\1211 county property\legislative request report.doc
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Page 1
PRINCE GEORGE'S COUNTY, Maryland v. Marc SILVERMAN
No. 682, September Term, 1983
Court of Special Appeals of Maryland
58 Md. App.
41; 472
A.2d 104;
1984
Md. App. LEXIS 301
March 8, 1984
PRIOR HISTORY:
[***1] APPEAL FROM THE
CIRCUIT COURT FOR PRlNCE GEORGE'S COUNTY
AUDREY E. MELBOURNE, JUDGE.
DISPOSITION:
JUDGMENT AFFIRMED. COSTS
TO BE PAID BY APPELLANT.
Executive of Prince George's County to execute a deed of
conveyance to Silverman.
On appeal the County raises three issues for our
consideration:
I.
Whether the court erred in holding that
the County Council's action regarding
Resolution CR-120-1981, [***2] which
pertained to the "Marton Tract", was
illegal and improper.
COUNSEL: Ralph E. Grutzmacher, Associate County
Attorney for Prince George's County, with whom were
Thomas P. Smith, County Attorney for Prince George's
County and Michael O. Connaughton, Deputy County
Attorney for Prince George's County on the brief, for
appellant.
Russell W. Shipley, with whom were Steven
R.
Smith
and Shipley, Curry
&
Taub, P.A., Landover on the brief,
for appellee.
JUDGES: Moylan, Uss and Bell, JJ.
OPINION BY: BELL
OPINION
[*46) [**106) Marc Silverman (Silverman),
Appellee, sought a Declaratory Judgment and a Writ of
Mandamus to have Prince George's County (County),
Appellant, convey the "Marton Tract" to him as the
highest qualified bidder. The Circuit Court for Prince
George's County ordered that the sale be ratified and that
a Writ of Mandamus issue commanding the County
II. Whether the court erred in holding
that a contract for the sale of the "Marton
Tract" existed between the County and
Silverman.
III. Whether the County Executive
has the capacity to contract to convey the
"Marton Tract"
in
the absence of approval
by the County CounciL
FACTS
In 1980, the Board of Education conveyed the
Marton Tract to Prince George's County. The Board of
Education had acquired the tract in 1958 from the Marton
family. The
r*47]
tract consists of approximately four
acres of land and is part of Lot 7
in
the Richard S. Hills
Subdivision. The property lies north of Maryland Route
198 near the intersection of Route 198 and Interstate 95.
(j)
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Page 2
58 Md. App. 41, *47; 472 A.2d 104, **106;
1984 Md. App. LEXIS 301, ***2
Since March of 1977, the County has disposed of
some 40 to 50 "major surplus properties" (property
containing improvements or property valued in excess of
$
25,000). Although Section 2-111.1 of the Prince
[**107] George's County Code requires the County
Executive to inventory surplus property for approval by
the County Council
before
he disposes of it, in all of the
40 to 50 surplus property dispositions, the County
Executive first secured [***3]
a bona fide
transferee/purchaser and
thereafter
submitted the matter
to the council for approval.
In
all cases
except
the
Marton Tract, the council approved the sale of the surplus
property.
The Marton Tract was advertised for sale
in
January
of 1981 as surplus property of the County. Silvennan
contacted Raymond Austin of the County's Bureau of
Property Management in response to the advertisement.
He received a "bid package" from that office. Silvennan
submitted a sealed bid, on a fonn entitled "Bid and
Option to Acquire Real Property", in the amount of
$
50,000 with a cashier's check for
$
5,000 payable to the
County.
The sealed bids were opened on February 27, 1981,
and Silverman qualified to participate in the oral auction.
At the auction, Silverman was declared the successful
bidder at
$
71,605. Silverman certified his bid on that
same day. The only other competing bidders were Eileen
and Wayne Updike, daughter and son-in-law of Clara
Marton, at
$
70,000. On March 11, 1981, the County
cashed Silverman's check for
$
5,000.
During April of 1981, the County Executive
prepared the proposed list of surplus property
dispositions, designated as Resolution CR-63-1981,
[***4] and submitted the list to the County Council for
approval. The Marton Tract was "deleted" from the list
with no explanation.
On August 11, 1981, Austin infonned Silverman that
his bid for the Marton Tract had been accepted but that
because [*48] the period for notification of acceptance
of the option by the County had expired, the option was
null and void. A tender of a check in return of the deposit
accompanied that notification. In response to the letter
from Austin, Silvennan met with County officials
in
an
attempt to ascertain the problem.
On August 28, 1981, the County infonned Silverman
that the County Executive intended to resubmit the
Marton Tract for approval as surplus property as
Resolution CR-120-1981. When the council first
considered CR-120-1981 on October 13, 1981, it voted 6
to 5
in
favor of approval; then one councilman changed
his vote to defeat the resolution 6 to 5. Following that
action the council approved, by a vote of 6 to 5, a motion
to table consideration of the resolution indefinitely. At
no point during their consideration did the council make
any reference to whether the subject property was needed
for a public purpose. The transcript of the [***5] council
proceedings indicated that some council members felt the
prior owners, the Martons, had been unfairly forced to
sell their land.
At the time CR-120-1981 was under consideration
by the County Council, legislation was pending which
would have amended the provision in the Code regarding
the prior owners rights to reacquire surplus property. On
October 13, 1981, when the council considered the sale
of the Marton Tract, the Code provided:
Notwithstanding the foregoing
provisions of this subsection (d), a person
from whom property was acquired by the
County, or the person's successor in
interest, shall have first right over
municipality, any government entity or
agency other than Prince George's County,
or any other person to reacquire the
property (or such portion of it which is
declared surplus) if all the following
conditions are met:
(3) The determination of the County
Executive that the property is surplus
occurs within
ten (10)
years after County
acquisition. (Emphasis added).
[*49] Prince George's County Code
Section 2-1 l1.1(d).
The pending legislation would have changed the period
during which the prior owners had a right [***6] to
reacquire the property from 10 to 15, 25, or 40 years.
(Note -- Section 2-111.1 was
in
fact amended on [**108]
June 23, 1982 to extend the period to 25 years.)
When Silverman filed the instant action to enforce
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Page 3
58 Md. App. 41, *49; 472 A.2d 104, **108;
1984 Md. App. LEXIS 301, ***6
his option to purchase the Marton Tract, Clara Marton
intervened. The court found Clara Marton would be
entitled to reacquire the property only if the following
two conditions were met: (1) The Council's action on
CR-120-l98l was legal and proper, and (2) Amended
Section 2-111.1 applied to this case. After a thorough
and well reasoned discussion, the court found:
the County Executive's determination
that the Marton Tract is no longer needed
for a public purpose was correct, there
being no evidence to the contrary; that the
Council's failure to approve -- the "Marton
Tract" as surplus was motivated by legally
unauthorized
considerations,
i.e.,
prolonging a sale of county property until
a Code Amendment could be enacted that
would enure to the benefit of a special
interest; that the purchaser [Silverman}
met all the procedural requirements made
known to him by the County; and that
Petitioner, Marc Silverman, should be
granted the relief he seeks in these
proceedings
[***7]
for the reasons herein
set forth.
The court further found that under the law in effect at the
time the matter was before the County Council, Clara
Marton had no right of reacquisition because the 10 year
period had expired.
municipal governing body in passing an ordinance are not
subject
[***8]
to judicial inquiry.
Our discussion of this issue is addressed in two parts:
(A) whether the court had authority to address the matter;
(B) whether the court erred in finding the council's action
improper.
A.
The standard of review by the circuit court when the
County Council or another administrative body is acting
in a quasi-judicial or administrative capacity is whether
the action was arbitrary, capricious, or discriminatory.
County Council v. Carl
M
Freeman Assoc.,
281
Md. 70,
74, 376
A.2d 860
(1977);
See also; Montgomery County
v.
Woodward and Lothrop, 280 Md.
686,
706,
376
A.2d
483 (1977);
Stratakis
v.
Beauchamp,
268
Md.
643, 652,
304 A.2d
244 (1973). The test to determine whether
action is legislative or administrative is whether the
action is one making new law, i.e. an enactment of
general application prescribing a new plan or policy, or is
one which merely looks to or facilitates the
administration, execution or implementation of a law
already in force.
City of Bowie
v.
County Comm'r for
Prince George's County,
258
Md.
454, 463. 267
A.2d 172
(1970).
In considering CR-120-198l on October 13, 1981,
the council was not functioning in a purely legislative
(***9]
capacity.
(*51J
Rather, it operated in a
quasi-judicial or administrative capacity. The council
dealt with the disposition of one isolated parcel of
property. The effect of its decision was restricted to the
individuals who had an interest in the property and had
no effect on the general safety or welfare. The council
essentially adjudicated Silverman's rights in the property.
Thus the trial court did not invade
(**109]
the province
of the council because it did not attack the validity of a
legislative enactment; rather it simply determined
whether the council's action on Resolution CR-120-l981,
pursuant to a
prior
legislative enactment (Section 2-111.1
ofP.G.Co. Code), was arbitrary and discriminatory.
. The County's reliance on
District Land Corp., supra,
for the proposition that the court invaded the legislative
province of the council is misplaced. The Court of
Appeals held in that case that a comprehensive rezoning
plan bearing a substantial relationship to the public health
and welfare enjoys a strong presumption of validity, and
that the motives, wisdom, or propriety of a municipal
I.
Whether the Council's action regarding the
Marton Tract was illegal and improper.
The lower court found that the council's sole function
in considering CR-120-l981 was to determine whether
the
(*501
Marton Tract was needed for a public purpose.
Since the council indefinitely tabled the resolution to
allow Section 2-111.1 to be amended so that a prior
owner could reacquire the property, the court held the
council acted improperly and arbitrarily.
The County contends that based on the applicable
statutory provisions, which require the council to approve
the Executive's determinations, the trial court invaded the
province of the County Council in determining that it
considered impermissible factors. The County cites
County Council for Montgomery County v. District Land
Corp.,
274
Md.
691, 337
A.2d
712 (1975) in support,
which holds that the motives, wisdom or propriety of a
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Page 4
58 Md. App. 41, *51; 472 A.2d 104, **109;
1984 Md. App. LEXIS 301, ***9
body in passing the ordinance effectuating the
comprehensive rezoning are [***10] not subject to
judicial inquiry. The adoption of a sectional zoning map
in that case, was deemed a "legislative" act because it
concerned legislative facts, e.g. zoning of a large area and
impact on general welfare of the county. In the case at
bar, however, the consideration of the Marton Tract
involved the council in a quasi-judicial capacity.
B.
Division 2, Section 2-111.1 sets forth a framework for the
declaration of county owned property as surplus and the
disposal of the property.
It
provides in pertinent part:
The County Executive shall be
authorized to sell, lease or otherwise
dispose of any County owned real
property, no longer needed for public use
or in furtherance [***12] of the public
purpose, in accordance with the following
provisions:
(a) The County Executive shall
establish an inventory of all real property
and improvements titled in the name of
Prince George's County ...
(b) The County Executive, at least
once annually, shall review the inventory
of all real property and improvements held
in fee by Prince George's County and shall
[*53) transmit, for the approval by
resolution of the County Council, a list of
all properties to be leased, offered for sale,
or otherwise disposed of ....
The trial court did not err in holding that the
council's failure to approve CR-120-1981 was improper
and arbitrary.
The initial question we must address, for purposes of
the instant case, is within which branch of the
government does the power to dispose of surplus property
lie.
Executive Branch
Article XI-A of the Maryland Constitution
(Home
Rule Amendment) sets forth the steps to be taken at the
local level to establish a charter local government.
Section I of [*52] Article XI-A the Home Rule
Amendment authorizes the counties to choose a charter
form of government, which if adopted by the voters of
the county, becomes the law or "constitution" of the
county. Section 2 mandates the adoption by the
Maryland General Assembly of a grant of express powers
for those counties choosing a charter form of
government. Pursuant [***11] to the mandate, the
General Assembly enacted the "Express Powers Act",
codified in
Article 25A of the Annotated Code of
Maryland.
Article 25A,
Section 5(B)
of the Maryland
Code permits the disposition by the County of "any real
or leasehold property belonging to the County, provided
the same is no longer needed for public use."
The Prince George's County Charter, Article IV,
Section 402 enumerates the specific powers of the
executive branch of the county government. It provides
that all those specific powers vested in Prince George's
County by the Constitution shall be vested in the County
Executive. Among the enumerated powers is the power to
"sign or cause to be signed on the county's behalf all
deeds, contracts, and other instruments . . ." Prince
George's County Charter, Article IV, Section 402(8).
Prince George's County Code, Subtitle Two,
Pursuant to the above, we agree with the trial court
that the County Executive was empowered to dispose of
county [**110) owned surplus property in accordance
with the requirements of Section 2-111.1.
Legislative Branch
Subsection (S) of the Express Powers Act,
Article
25A. ofthe Maryland Code
provides:
The foregoing or other enumeration of
powers
in
this article shall not be held to
limit the power of the county council, in
addition thereto, to pass all ordinances,
resolutions, or by-laws, not inconsistent
with the provisions of this article or the
laws of the State, as may be proper in
executing and enforcing any of the powers
[***13] enumerated in this section ... as
may be deemed expedient in maintaining
the peace, good government, health and
welfare of the county.
This section contains a general grant of power to pass
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Page 5
58 Md. App. 41, *53; 472 A.2d 104, **110;
1984 Md. App. LEXIS 301, ***13
laws for the peace, good government, health and welfare
of the County. Pursuant to this grant of power, measures
may be passed which are necessary and beneficial, and
will be adjudged valid by the courts, provided they are
reasonable and consistent with the laws and policy of the
State.
Montgomery Citizens League
v.
Greenhalgh, 253
Md.
151, 161,252
A.2d
242 (1969). Thus where council
legislation bears a reasonable relationship to the
implementation of an enumerated power, the legislation
will be upheld.
Applying the above analysis to the County Code we
agree with the trial court that:
(I) The requirement that the County
Executive annually inventory all County
owned property no longer needed for a
public purpose is necessary for the
Council to be apprised of the County's
surplus land holdings and proper to return
to the tax rolls or other governmental
agencies; and
[*54} (2)· The provlSlon requiring
Council approval that properties are in fact
surplus is likewise a necessary [***14}
and proper exercise of legislative checks
and
balances
on
the
executive
determination to dispose of County
property: To hold otherwise could result in
the County Executive's declaration that all
the county-owned property is surplus.
auctions were held and bona fide deposits were cashed
prior to council approval by resolution. [***15J The
reason for ignoring the specifics of Section 2-111.1 was
obviously to enable the council to know the identity of
the grantee and his proposed use of the property. This
procedure contravenes the legislative intent of Section
2-111.1 which is to prevent discrimination and arbitrary
action.
Pursuant to the code, the council's sole duty was to
consider factors directly related to whether the property
was no longer needed for public use.
It
was not
authorized to table the matter until a code amendment
could be enacted that would enable the Marton family to
repurchase the property. In its answers to Interrogatories
propounded by Silverman, the County admitted that the
property was in fact surplus property. Since it is
undisputed that the property was surplus, it is clear that
the council acted arbitrarily in failing to approve
CR-120-1981. The court did not err.
[*55} [**111J II.
Whether a contract for sale of
the "Marton Tract" existed.
By ratifying the sale of the Marton Tract, the trial
court implicitly found that a contract existed between
Silverman and the County. Prince George's County
contends that there never was a contract between the two
parties because (***16) the County never accepted the
Bid and Option Agreement submitted by Silverman. The
County asserts that the option became null and void by
the terms of the agreement itself when the 45 day period
for acceptance set forth in paragraph lIB of the agreement
expired. The County cites
American Medicinal Spirits
Company
v.
Mayor and City Council of Baltimore, 165
Md.
128. 166
A. 407
(1933) in support, which states at p.
133, 166A. 407:
Since the offeror was at liberty to make
no offer,
it
was free to determine and
impose whatever terms it might choose,
and among these it might require that its
offer be accepted within a designated time
and in a specific manner. If no acceptance
is made in the manner and within the
period fixed by the offer, the offer
Williston
v.
necessarily
expires.
Contracts,
Sections 53, 61, 76.
The County further urges that the 45 day provision
The problem in this case, however, is not whether
Section 2-111.1 is valid, but whether Section 2-111.1 was
properly followed. Section 2-111.1 sets forth the
procedure for disposing of surplus property.
It
is
designed to insure fairness and to prevent arbitrary and
discriminatory dispositions.
It
is important to note that
the code requires council approval only of the County
Executive's determination that the property is surplus; not
approval of the prospective grantee.
Prince George's County has been disposing of its
surplus property in contravention of the code. Despite
the code's requirement of obtaining approval before a
grantee has been selected, the County has condoned the
Executive's procurement of the grantee first. In the 40 to
50 surplus property cases, the property was advertised as
surplusage in newspapers, sealed bids were accepted, oral
@
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Page 6
58 Md. App. 41, *55; 472 A.2d 104, **111;
1984 Md. App. LEXIS 301, ***16
amounted to a right to terminate the contract, and in the
absence of fraud, undue influence, or mistake, such a
reservation is valid and enforceable.
Acme Markets, Inc.
v.
Dawson Enterprises, Inc.,
253
Md.
76, 251
A.2d 839
(1969); Kahn
v.
Janowski,
191
Md.
279,
60 A.2d 519
(1948).
At the outset
[***171
we note that although the facts
of
American Medicinal Spirits, supra,
appear similar to
those of this case, we find the reliance by the County
thereon misplaced. In
American Medicinal Spirits,
a
company contracted to purchase land from the city
conditioned on the city passing an ordinance within one
year. The city failed to pass the ordinance within the
specified period. The Court held the contract amounted
to a unilateral offer to purchase by the company and that
one term of the offer was not met. Therefore, the
purchaser/company could opt to declare the
[*561
contract null and void. The rationale behind this holding
was obviously to prevent the city from procrastinating
and to assure the company that an effort would be made
to fulfill the terms of the contract in a timely manner.
The Court did not address the issue before us -- whether
the city/seller (or in this case the County) could
purposefully avoid passing the ordinance and then
declare the contract null and void.
Silverman posits that the County did in fact approve
his bid by negotiating his check of
$
5,000; by
acknowledging in an informal memorandum that the bid
for the property was ratified and by Austin's
[***181
letter of August 11, 1981, stating the County accepted his
bid. Additionally, Silverman asserts that he had the sole
right to exercise the option; therefore it was not even
necessary for the County to accept. As to the allegations
concerning the 45 day provision in the agreement,
Silverman contends the provision was an illegal and
unenforceable provision.
Before we address the parties' contentions, we must
determine exactly what the agreement entitled "Bid and
Option to Acquire Real Property" represents.
An option to purchase property is a continuing offer
to sell by the optionor which is irrevocable during the
stated period.
Beall
v.
Beall,
291
Md.
224, 434
A.2d
1015
(1981).
An
option is not a mere offer to sell, but is a
binding agreement if supported by consideration.
Blondell
v.
Turover,
195
Md.
251, 72
A.2d
697 (1949).
The optionee has what is termed a power of acceptance,
and when he accepts the offer in the prescribed manner,
the option is exercised and a binding bilateral contract of
sale is created.
Straley
v.
Osborne,
262
Md.
514, 278
A.2d
64
(J
971).
Paragraph lIB of the agreement between Silverman
and the County provides:
within 45 days after
[***191
Optionee
has been notified that his bid was
accepted, Optioner shall notify Optionee
in writing that his Option was accepted. If
notice is
[**1121
not given to Optionee
within the allotted time, this Option shall
become null and void.
[*57]
This provision implies that the County retains
the power to revoke its "offer" and thereby prevent the
formation of a binding contract. Since by defmition, an
option cannot be revoked, this agreement, despite its title,
cannot be deemed an option contract. Accordingly, we
must analyze the parties' positions under general contract
principles.
A contract is formed when an unrevoked offer made
by one person is accepted by another.
An
"offer" is the
"manifestation of willingness to enter into a bargain, so
made as to justify another person in understanding that
his assent to that bargain is invited and will conclude it."
1 .
Restatement Contracts (2d)
§
24 (1979). A
manifestation of willingness to enter into a bargain is not
an offer if the person to whom it is addressed knows that
the person making it does not intend to conclude a
bargain until he has made a further manifestation of
consent.
Foster
&
Kleiser
v.
Baltimore County,
[***2of
Md.,
57
Md.App.
531,
470 A.2d
1322 (1983) citing 1
Restatement Contracts (2d)
§
26 (1979). By the same
token, an invitation to bid is not an offer, but the bid or
tender is an offer which creates no right until accepted.
Rofra, Inc.
v.
Board ofEducation,
28
Md.App.
538, 346
A.2d
458 (1978). Acceptance of an offer can be
accomplished by acts as well as words; no formal
acceptance is required.
Porter
v.
General Boiler Casing
Co.,
284
Md. 402, 409,
396
A.2d 1090
(1979);
Duplex
Envelope Co.
v.
Baltimore Post Co.,
163
Md.
596,
605,
163 A.
688 (1933).
Judge Adkins, writing for this Court in
Foster
&
Kleiser, supra,
espoused the principle that a provision in
a contract requiring council approval amounts to a
condition of acceptance; and therefore, there can be no
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Page 7
58 Md. App. 41, *57; 472 A.2d 104, **112;
1984 Md. App. LEXIS 301, ***20
binding contract until such approval is forthcoming.
In
addition, the requisite approval must comply with the
applicable laws. In that case, Foster
&
Kleiser leased a
tract of land in Baltimore County owned by County
Mutual Acceptance Corp. The lease was terminable upon
60 days prior written notice from either party. Baltimore
County offered to purchase the property. The agreement
between Baltimore County
[***211
and County Mutual
stated:
[*58] In the event that this Agreement
is not approved by the Baltimore County
Council, this Agreement shall become null
and void ...
County Mutual terminated Foster
&
Kleiser's lease, and
the contract of sale was approved by the County Council.
Foster
&
Kleiser brought suit, alleging among other
things, that the submission of the contract of sale by
Baltimore County to County Mutual was an offer to
purchase the land; that the offer was accepted when
County Mutual executed the contract; and that there was
a binding contract subject to approval of the County
Council. We held at p. 538 of
57
Md.App., 470
A.2d
1322:
there could be no binding or enforceable
contract until approval by the County
Council had occurred. Therefore, what
Foster
&
Kleiser claims was an offer
submitted to County Mutual by Baltimore
County was not an offer, but merely part
of preliminary negotiations. County
Mutual could not have accepted this
"offer" without further action by the
County, that
action being approval by the
County Council, as required by the County
Charter.
(Emphasis supplied).
The Baltimore County Charter
§
715 stated in
[***22]
pertinent part:
... Any contract ... must be approved
by the County Council before it is
executed if the contract is
(1)
For the purpose of
Applying the above principles to the sequence of
events in this case, we hold that· a binding contract did
exist between Silverman and the County. The
advertisement for sale of the Marton Tract by the
[**113]
County did not constitute an offer.
Rofra, Inc.,
supra.
Rather, Silverman's bid, initially at
$
50,000 and
finally at
$
71,605, constituted his offer to purchase the
property. There is no Statute of Frauds problem because
Silverman certified his bid in writing on the same day.
The County accepted Silverman's offer when [*59] it
declared Silverman the successful bidder. The
negotiation of Silverman's
$
5,000 check by the County,
on March
11,
further confmned its acceptance.
By -the terms of the agreement, however, this
acceptance was conditioned on "notice [being] given to
the Optionee within 45 days." This provision enabled the
council to approve or disapprove
[***23]
the sale.
Had
this provision stated that the entire agreement required'
approval by the council and the applicable statute
reinforced such a requirement, as in
Foster
&
Kleiser,
we
would have to hold that a binding bilateral contract was
not formed for lack of acceptance. In this case, however,
the applicable statute, Section 2-111.1 of the Prince
George's County Code, mandated that the Council only
approve the determination that the property was surplus,
and no more. If the council had in fact determined that
the property was needed for a public purpose, the County
could then declare the agreement void. As we discussed
in Issue I,
supra,
however, the council conceded that the
property was surplus. Therefore, the condition in the
contract requiring council approval was fulfilled and the
County is deemed to have accepted Silverman's offer.
Moreover, the County's subsequent action in this
case constituted a waiver of its right to invoke the 45 day
provision. The right to rescind may be waived by
"continuing to treat the contract as a subsisting
obligation."
Michael v. Towers,
253
Md.
114, 117, 251
A.2d
878 (1969),
quoting
Kemp v. Weber, 180 Md. 362.
24 A.2d
779 [***24] (1942).
"If a party ... does any act
which recognizes the continued validity of the contract or
indicates that he still feels bound under it, he will be held
to have waived his right to rescind."
Lazorcak v.
Feuerstein,
273
Md.
69, 76. 327
A.2d
477-481 (1974).
See also, Bagel Enterprises, Inc. v. Baskin and Sears, 56
real or leasehold property
where the purchase price of
the property is in excess of
$
5,000 ... Balto.Co.Code
1978 (1982 Cum.Supp.)
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Page 8
58 Md. App. 41, *59; 472 A.2d 104, **113;
1984 Md. App. LEXIS 301, ***24
Md.App.
184, 467
A.2d
533 (1983). The Court of Appeals
in
Coopersmith v. Isherwood,
219
Md. 455,150 A.2d 243
(1963) elaborated on this principle, stating at p. 462,
150
A.2d243:
A right to rescind, abrogate, or cancel a
contract must be exercised promptly on
discovery of the facts from which it
[*601
arises; it may be waived by continuing to
treat the contract as a subsisting
obligation. The general rule is that the
right to rescind must be exercised within a
reasonable time, although there is
authority to the effect that the mere
question of how much time a party to a
contract has permitted to elapse is not
necessarily determinative of the right to
rescind, the important consideration being
whether the period has been long enough
to result in prejudice to the other party.
that the county is estopped from raising this issue.
To apply estoppel, the party claiming the benefit of
estoppel must have been misled to his detriment and
[***261
must have changed his position for the worse,
having believed and relied upon the representations of the
party sought to be estopped.
Dorsey v. Beads,
288
Md.
161, 171, 416
A.2d
739
(1980); Neuman v. Travelers
1ndemnity Co.,
271
Md.
636, 654, 319
A.2d
522 (1974);
Lusby v. First National Bank,
263
Md.
492,
505,
[*611
283 A.2d 570
(1971);
Savonis v. Burke,
241
Md. 316,
319, 216
A.2d
521 (1966). This Court in
Zimmerman v.
Summers,
24
Md.App. 100, 330 A.2d
722 (1975)
elaborated on the principle stating at p. 123,
330 A.2d
722:
[T]he rule now to be followed in
Maryland however is that equitable
estoppel may be applied not only when the
conduct of the party to be estopped has
been wrongful or unconscientious, and
relied upon by the other party to his
detriment,
but also when the conduct
apart from it morality, has the effect of
rendering
it
inequitable
and
unconscionable to allow the rights or
claims to be asserted or enforced.
(Emphasis added).
In
this case, the County continued to treat its
agreement with
[***25]
Silverman as a subsisting
obligation by reconsidering the Marton Tract under
Resolution CR-120-1981 in October of 1981, long after
the 45 days expired. Furthermore, the council's act of
"deleting" the Marton Tract from the first resolution, and
its act of indefinitely tabling the second resolution
certainly amounted to prejudice to Silverman.
In
light of
the above, the County is estopped from invoking a
defense based on the 45 day provision.
III.
Whether the County Executive has the capacity to
contract to convey the "j\1arton Tract" without approval
by the County Council.
The County contends the Executive lacked the
capacity to sell the "Marton Tract" to Silverman.
Silverman asserts that this issue was not'preserved for our
review.
Md.Rule 1085.
Although this issue was not directly raised below, the
court indirectly addressed this issue when it considered
what powers the Legislature and Executive have pursuant
to Section 2-111.1. Therefore, we do [**114] not
dismiss by virtue of
Rule 1085.
Silverman also argues
The practice of the County Council prior to its
consideration of CR-120-1981 and subsequent thereto has
been to have the County Executive enter into a contract
with the prospective purchaser of surplus
[***271
property before submitting the matter to the council for
its approval. The County cannot now deny the validity of
the procedures it created for its own benefit. Silverman
relied on representations that the Executive had the
capacity to contract.
It
certainly would be "inequitable
and unconscionable" to allow the County now to assert
this defense.
JUDGMENT AFFIRMED.
COSTS TO BE PAID BY APPELLANT.
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~
COMCOR
IlB.45.01
Disposition of Real Property
g
llB.45.01.01 Purpose
1.0 To provide policies and procedures whereby disposition is made of certain County- owned real
property.
~
llB.45.01.02 Applicability
2.0
A.
B.
These policies and procedures apply to the disposition of all County-owned real property except:
parcels at the Montgomery County Life Sciences Center;
former school sites containing school buildings no longer in public school use;
C. sites acquired for specific purposes such as roads, housing projects, and public parking facilities
and parking lot districts; sites disposed of for purposes related to roads, housing, matters of significant
or strategic interest to the County's economic development; or public parking facilities in parking lot
districts;
. D. sites, generally, which are leased for under five years, or splinter parcels which are leased for
any length of time.
IJi111B.45.01.03 Definitions
3.0
COUNTY AGENCY - Any department or Agency of the Montgomery County Government.
3.1 COUNTY-WIDE PUBLIC USE - Use ofreal property available to or benefiting all residents of
Montgomery County.
.
3.2 DISPOSITION - The placement of a site in reservation, the leasing of
~
site, other than splinter
parcels, for five years or more, the assignment ofthe site's reuse to a County or Outside Agency, or the
declaration of the site as surplus.
3.3 EXECUTIVE ORDER ON REUSE AND DISPOSITION - Instrument by which the County
Executive places a site in reservation, approves a lease, assigns a reuse, declares a site surplus.
3.4
LEASE - A contract for use of a site, other than a splinter parcel, for five years or more.
3.5 LOCAL MUNICIPAL USE - Use of real property by a limited number of County citizens. This
would include use restricted to residents of a local municipality or the application of special fees or other
restrictions on non-local residents for use of the property.
3.6 OUTSIDE AGENCY - Any agency, outside the Executive and Legislative branches of the
Montgomery County Government. This would include but not be limited to WSSC,
~CPPC,
Revenue
Authority, Housing Opportunities Commission, MCPS, Montgomery College, and Local Municipalities.
3.7 SALE BY DIRECT NEGOTIATION - The sale ofreal property is confined to negotiations
between the County and a single potential purchaser. The bid process and the public offering are waived,,;)
.
,
.
\!V
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3.8 SALE BY
FIXED
PRICE - An offering of real property for sale at a fixed price. This fonn of sale
is usually part of a sale where other factors such as proposed uses and design are considered as
important as the price.
3.9 SALE BY MINIMUM PRICE COMPETITION - An offering of real property for sale to the
public wherein a minimum acceptable sales price is stated. Bids below the stated minimum price are not
accepted.
3.10
SALE BY PUBLIC AUCTION - A public sale conducted by an auctioneer.
3.11 SALE BY REUSE COMPETITION -
An
offering for sale based on the proposed reuse. The
prospective purchaser is chosen according to the reuse deemed most in the public interest. Price is of
secondary importance.
3.12 SALE BY SEALED PROPOSALS -
An
offering of real property for sale to the public. The
highest offer wins the rights to negotiate a contract for purchase. As implied, all proposals are secret
until the official time of opening. If contract negotiations fail, the offering is withdrawn.
3.13 SITE RESERVATION - An action taken by the County Executive, via an Executive Order, to
defer further disposition actions on the site in question:
A.
in order that the site may be used in accordance with an approved Master Plan,
pending detennination of the site's suitability for a project contained in an adopted Capital
Improvement program, or
C. in anticipation of greater reuse or disposal prospects in the future.
Sites placed in reservation may be leased.
3.14 SPLINTER PARCELS - Parcels of such size, shape, topography or other characteristics as to
have only nominal value.
3.15 SURPLUS SCHOOLS - Real property that is not needed to meet the present and anticipated
future needs of County Agencies and Outside Agencies and that has been designated as surplus by,
Executive Order pursuant to a Reuse Analysis.
3.16 SURPLUS SCHOOL SITES - Unimproved school sites that have been declared surplus by the
Board of Education, approved for transfer by the State of Maryland, and transferred to the County.
3 .17
TAX SALE PROPERTY - Property acquired by the County as a result of non-payment of taxes.
B.
[i!jJ
llB.45.01.04 Policy
4.0 The County Executive may, pursuant to this Executive Regulation, dispose of County- owned real
property not currently programmed, except those properties excluded under Section 2.0, Applicability.
4.1 Property disposition shall be done in a fair and equitable manner that is open to public scrutiny.
Review and comment on disposition of real property shall be invited, as specified in this Executive
Regulation, from County Agencies, Outside Agencies (including but not limited to MNCPPC, MCPS,
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Page 3 of23
and Local Municipalities, where applicable), the public at the public hearing(per Section 9.2.B.), and
the County Council.
4.2 . Proposals that respond to certain reuse preferences of the County (as supporting other, non­
financial public policy objectives) may be given priority over proposals offering higher prices.
4.3 Sites designated for particular public uses in an approved Master Plan (including portions of sites
which may be needed for road improvements) and sites which may be suitable for approved CIP projects
shall be placed in reservation.
4.4 All other things being equal, County-wide public uses would be given first priority, municipal
public uses would be given second priority, quasi-public uses third priority, and private uses would be
given fourth priority.
4.5 Sites placed in reservation for Master Plan purposes, or designated by the County Executive for
use by an Outside Agency, shall be transferred to the Outside Agency upon payment of the fair market
value as determined pursuant to this Executive Regulation, or in accordance with other payment policies
established by the County Executive. For sites transferred to the :MNCPPC for parks, the MNCPPC shall
pay remaining debt service.
4.6 Sites sold to private purchasers must be sold at prices not less than their fair market value as
determined by the Director, DPWT (based on one or more independent appraisals), unless otherwise
specified in the Executive Order on Reuse and Disposition.
4.7 In disposing of property to private users: the County shall install site improvements only in
exceptional cases.
4.8 The County Executive may dispose of County-owned real property through leases containing
rights of first refusal to purchase, or options to purchase, provided that the material provisions ofthese
Executive Regulations are complied with at the time of disposition.
Ii
llB.45.01.05 Responsibilities and Authority
5.0 Contract Review Committee (CRC) shall approve for compliance with law and Executive
Regulations
.
A.
B.
C.
5.1
the method of disposition,
the Request for Proposals, and
the contracts for sale of surplus real property.
County Attorney's Office shall
A.
B.
C.
approve all deeds, contracts, leases, and forms as to form and legality;
approve the use of outside counsel, and
assist in contract negotiation as needed.
®
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5.2
A.
Department of Public Works and Transportation (DPWT) shall
develop and maintain an inventory of real property,
administer the disposition of real property, and
establish the necessary Departmental procedures and practices.
Department of Finance shall
A.
B.
administer the disbursement and receipt of funds, and
refer the annual inventory of tax sale properties to DPWT for disposition.
Office of Management and Budget (OMB) shall
A.
participate in the Preliminary Reuse Review, and
review and comment on Reuse Analyses .
Chief Administrative Officer (CAO)or his
A.
designe~
B.
C.
5.3
5.4
B.
. 5.5
shall
approve and sign all options, contracts, and leases; and
B.
approve the Reuse Analysis for referral to the County Council, the Planning Board, and the
general public.
5.6
County Executive
A. shall execute all deeds of conveyance, covenants, and restrictions incidental to the transfer of
property by the County.
B.
C.
D.
5.7
A.
shall approve the reservation of properties via Executive Order,
shall approve the reuse assigned to a site, via Executive Order, and
shall approve the declaration of a site as surplus, via Executive
Order~
Planning Implementation Section shall
participate in the Preliminary Reuse Review, and
review and comment on Reuse Analyses.
Office of Procurement shall
B.
5.8
A. be responsible for Bids and Requests for Proposals and review all contracts for sale for
compliance with law and Executive Regulations.
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Page 5 of23
5.9
The COlUlty Council shall
A. be provided with opportunity to reviewand comment on the Reuse Analysis (including
recommendations) prepared by DPWT, and,
B.
approve all proposals to sell properties acquired through tax sales, pursuant to Section 52-38 of
the Montgomery COlUlty Code, 1994, as amended.
~
llB.45.01.06 Services
6.0 Subject to County law, Administrative Procedures and existing appropriations, DPWT may
arrange or contract for services, work or facilities furnished by an individual or agency, public or
private, in connection with the proposed or actual disposition of property. This shall include but not be
limited to:
A.
Appraisal services
Legal services
Engineering and/or architectural services
Newspaper and other media services
Installation ofpublic facilities
General planning/consulting services
B.
C.
D.
E.
F.
~
llB.45.01.07 Inventory
of Real
Property
7.0
DPWT shall develop and maintain an inventory of County-owned real property.
~
llB.45.01.08 Initiation of Disposition Process
8.0 Ifa site is in the DPWT inventory as provided for in 7.0 above and is deemed by DPWT
preliminarily suitable for disposition, DPWT shall, as a first step, refer the site to Planning
Implementation Section and to
OMB
for Preliminary Review under the procedure below for
Determination of Reuse.
ij
llB.45.01.09 Determination of Reuse
9.0
Step 1 - Preliminary Review
COMB
and Planning Implementation Section)
A. Master Plan - Within fourteen days, Planning Implementation Section shall review the site
in
relation to approved Master Plans. Planning Implementation Section should consult informally with the
MNCPPC if necessary to ascertain a clear understanding of the Master Plan regarding the site
in
question. A site specifically designated in an approved Master Plan for particular public uses, or that
portion of such site which may be needed for right-of-way for road improvements in the Master Plan,
shall be recommended for placement in reservation. If, after review, questions remain about the
intention of the Master Plan, the site shall not be placed in reservation for Master Plan purposes.
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Page 60f23
B.
Functional Use - Within fourteen days, OMB shall review the site as to its desirability for future
public use as fIre stations, police stations or other projects as contained in an adopted Capital
Improvements Program (CIP). Current use of the site should be included in this analysis. A site
identifIed as potentially suitable for use in an approved CIP project shall be recommended by OMB to
DPWT to be held in reservation until its suitability is determined.
C. For each site recommended for reservation by either Planning Implementation Section or OMB,
DPWT shall forward an Executive Order on Reuse and Disposition to the County Executive for decision
together with its own recommendations, those of OMB, those of Planning Implementation Section, and
other supporting documents as applicable.
D. Subsequent to County Executive approval, DPWT shall forward copies ofthe approved
Executive Order to all appropriate County and Outside Agencies.
E.
If a site is placed in reservation for use by an Outside Agency (pursuant to an approved Master
Plan), DPWT shall prepare an agreement for transferring the site to that agency_ Payment for the site
shall be the appraised fair market value based on the highest and best use, unless otherwise provided for
in the Executive Order on Reuse and Disposition, or in accordance with other
paym~nt
policies
established by the County Executive. For sites transferred to the rYlNCPPC for parks, the :l\.1]\l"CPPC shall
pay remaining debt service.
, F. . If, as a result of the Preliminary Review, no reservation of the site is made by the County
Executive, DPWT shall proceed to administer the Secondary Review as provided below.
9.1
Step 2 - Secondary Review (Agencies)
A.
DPWT shall prepare and distribute to all appropriate County and Outside Agencies information
pertaining to the site and shall invite them to propose reuses. Further, agencies shall be encouraged to
identify any future needs that might require easements or covenants for attachment to the deed in the
event the site is sold; any community use occurring on the site; and any municipal zoning or Master Plan
provisions that should be considered.
B. Agencies shall notify DPWT in writing, within 30 days, of their interest in, or comments on, the
site. The notifIcation shall include the proposed reuse, if any, along with the pertinent supporting data
suffIcient to justify the Agency's proposed reuse.
9.2
Step 3 - Reuse Analysis
A.
DPWT shall prepare and submit to the County Executive via the Chief Administrative OffIcer a
Reuse Analysis on each site not reserved under the provisions of 9.0 above. This analysis shall include,
but not be limited to, a discussion ofthe following:
1.
Proposals made under the Secondary Review process.
2. Individual site characteristics including, but not limited to, zoning (including municipal
zoning, where applicable), topography, improvements, utilities, access, and transportation.
3. Marketing conditions including, but not limited to, the cost of development, fmancing, the
scheduled availability of public facilities for the site, and other conditions of the market.
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Page 7 of23
4. All reuse options identified by DPWT or by others to this point, with the advantages and
disadvantages of each.
5.
Recommendations by DPWT.
6. If DPWT recommends that the site be transferred to any Outside Agency, the appraised fair
market value shall be included in the Reuse Analysis.
B.
The County Executive shall conduct a public hearing on the DPWT reuse recommendations
pursuant to AP 1-9, Public Hearings. (Note: In addition to advertisement requirements provided for in
AP 1-9, notice shall be sent to all County Council members, the heads of all Outside Agencies, and the
heads of all civic associations whose areas encompass or abut the subject parceL) The County Executive
may waive the requirements of sections 9.2.B., 9.2.C., and 9.2.D.
1.
2.
for splinter parcels and
for recommended reuse of the site by a County Agency.
The County Executive shall notifY the County Council of his waiver decision and his reasons
therefor.
C.Sirnultaneously with the advertisement of the public hearing, DPWT
1. shall transmit
~e
Reuse Analysis to the J\1NCPPC and to other appropriate County and
Outside Agencies (including the BOE and applicable municipality) with an invitation to comment at or
before the public hearing provided for above; and
2. shall transmit the Reuse Analysis to the County Council who shall provide comments, if any,
on or before the date of the public hearing provided for above. The CAO or his designee shall offer to
consult with the Council regarding the Reuse Analysis.
D. After the public hearing, DPWT shall coordinate with the Hearing Officer to submit to the
County Executive
1.
2.
3.
4.
5.
6.
E.
the Hearing Officer's Report; .
the Reuse Analysis;
responses from J\1NCPPC and other agencies;
the results of consultation with the County Council;
an Executive Order on Reuse and Disposition, ready for signature; and,
other relevant materials.
The County Executive shall, by Executive Order,
specifY a reuse of the site by a County or Outside Agency, along with any conditions on that
reuse;
~
l!:0
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Page 8 of23
2.
3.
place the site in reservation for determination of reuse at a later date; or
declare the site surplus and available for sale in accordance with specified conditions, if any.
F.
If
use by a County Agency is approved by the County Executive, DPWT shall administer the
transfer of control to the receiving agency subject to the following stipulations:
1. The receiving agency shall make substantial progress towards the reuse of the property
within two years from the date of the transfer.
2.
Extension of control exceeding two years shall be granted only by Executive Order.
3. In the event an extension is not granted, DPWT shall reassume control over the property and
reinitiate the reuse process.
4. If the property is being considered for transfer to a third party, the receiving agency shall
replace DPWT in the administration of Sections 10.0, 10.1, 11.0, 11.1, 11.2, 12.0, 13.0 through 13.6,
14.0 through 14.2 where these Sections are applicable to the transfer. The price to be paid by the third
party shall be the appraised fair market value of the site unless provided for otherwise in the Executive
Order on Reuse and Disposition or in other payment policies established by the County Executive.
5.
Receiving agencies shall file semi-annual progress reports with DPWT.
G. If use by an Outside Agency is approved by the County Executive, DPWT shall administer the
transfer of ownership to the appropriate agency upon:
1.
Execution of an agreement, and
2. Payment to the County of the appraised fair market value based on the Highest and Best Use,
unless otherwise stipulated in the Executive Order on Reuse and Disposition or in other County
Executive policy decisions. For sites transferred to the MNCPPC for parks, the MNCPPC shall pay
remaining debt service.
H.
If
the site is declared surplus, DPWT shall proceed to sell it as provided for below..
~
llB.45.01.1O Selection of Sale Method
10.0 If not stipulated in the Executive Order on Reuse and Disposition, DPWT may dispose of the site
by sale in accordance with any method permitted by State and local law, including but not limited to:
A.
B.
C.
D.
E.
Minimum price competition
Sealed bids
Fixed price
Direct Negotiation
Reuse Competition
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Page 90f23
F.
G.
Related variations and combinations of the preceding
Public Auction
The criteria for the selection shall include, but not be limited to, general market conditions, potential
reuse, characteristics peculiar to the individual site, and conditions of the fmancing market.
10.1 DPWT shall submit its recommendations for the method to be used to sell the surplus real
property, together with supporting Justification, to the CRC for approval. CRC shall approve or
disapprove the selected method on the basis of compliance with Law and Executive Regulations:
[iJ
IlB.45.01.11 Requests for Proposals
11.0 If a disposition method involving public offering is selected, DPWT shall develop, and the
Office of Procurement shall issue a Request for Proposals or Bids.
.
11.1 The Request for Proposals or Bids is the formal public notice of the offering ofthe land.
It
should be accomplished through publication in one or more newspapers of general circulation in the
County and through mailed notices to all persons and firms that have signified to DPWT a bona fide
interest in acquiring any of the land in the offering. The information contained in the invitation, at a
minimum, should include:
A.
Identification of land to be offered.
A general description of the types of development permitted and conditions ofuse, plus general
notice to bidders of the need to comply with Zoning Ordinance requirements in the event rezoning is
proposed.
C. Identification of the kind of disposal and the disposal method, including criteria and procedures
for making selection.
D. The cutoff date of the receipt of proposals, if established. This is required in the case of
minimum-priced competition, sealed bid, and public auction disposal methods.
E.
Instruction on how to obtain further information about the terms and conditions of the disposal
and procedures for submitting proposals. The instructions shall state the amount of any fee charged by
DPWT for the offering documents (Prospectus) if applicable.
B.
11.2 The Prospectus shall contain all the terms and conditions of the offering.
It
must be readily
available to all prospective purchasers promptly after publication or issuance of the first invitation for
proposals. DPWT shall submit copies of the Prospectus to the Office of Procurement prior to
publication. The Prospectus should normally contain:
A.
The site Plan and Declaration of Covenants and Restrictions, if any. Also, a clear statement of
any other restrictions imposed on the property. A description of the property for which proposals are
invited, including:
1. Legal and other description sufficient to identify clearly the boundaries and area of the land
involved, together with a map or plat showing the location of the land. Location of existing and
proposed streets and utilities to serve the property, to the extent available.
®
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Page 10 of23
2.
Information on general grades and evaluations, if available.
3. Information on: test borings and their analysis to the extent available, location and type of
existing basements, foundation walls, footings, abandoned utilities, and the extent and character of filL
4. The County shall not be liable for the accuracy of data and the Prospectus shall contain the
appropriate disclosure statement.
B.
A statement as to kinds of proposals that may be submitted and a description of the method of
selecting purchasers.
C.
Proposed form of contract of sale.
D. Statement of requirements for the submission of proposals, including place, cutoff date and
time, and documentation required as to the bidder proposal, including the good faith deposit or bid bond
requirements.
E. All forms specifically required from the bidder in submitting proposals, including the Warranty
of Non-Collusion.
F. Statement describing carrying charges, if any, that may be charcred against the selected bidder
prior to transfer of title and payment of the purchase price and the proposed form of deed by which the
County will convey title to the land.
.
IIJ
llB.45.01.12 Selection of Purchaser
12.0 Upon receipt of bids (or proposals, depending on the selection method employed), DPWT, in
consultation with the Office of Procurement, shall select the prospective purchaser.
h111B.45.01.13 Contract Negotiation
13.0
Once the purchaser has been selected, DPWT shall negotiate the contract of sale.
13.1 A Declaration of Covenants and Restrictions may be used to provide a recordable document
specifying the land use controls on the site.
It
may cover all or only a portion ofthe site. The declaration,
if
used, shall be recorded by DPWT in the County's land records, give constructive notice of its
provisions, and be legally enforceable.
13.2 The time permitted for the performance of each obligation in the disposal agreement shall be
specified. Such times should be tailored to meet the circumstances, avoiding unnecessary risks and
encouraging timely compliance by the purchaser.
13.3 The obligations of DPWT and the purchaser for the installation of any site improvements which
are to be provided after the agreement is executed shall be specified in the disposal agreement. The
County shall install site improvements only in exceptional cases.
13.4 The land disposal agreement must be adequately secured by a good faith deposit in cash,
certified check or other approved security. The amount of the deposit or other security shall be
determined by the Director, DPWT.
It
is normally between 5% and 15% of the purchase price.
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13.5 If various segments of a property are to be conveyed on separate dates, a schedule shall be
annexed to and made part of the agreement, setting forth the legal description, date of conveyances and
amount to be paid for each segment The determination of the dates and payments for the various
conveyances shall be coordinated vvith DPVlT's appraisals and determination of market value. The
amount to be paid for a segment may be its market value (as of the date of conveyance) or the prorata
share of the total purchase price (although, cumulatively, the purchaser pays only the total coritract price
for the entire property). The good faith deposit shall be based upon the sales price ofthe entire property.
A map outlining the segments shall be annexed to the agreement.
13.6 Before authorizing a disposal, DPWT shall determine that the purchaser possesses the
qualifications and [mancial means and responsibility to acquire and develop (where applicable) the land
in accordance with- the proposed disposal agreement
~
llB.4S.01.14 Approval of Contracts; Notice
14.0 DPWT shall submit all contracts along with supporting documents to the CRC for determination
of compliance vvith the Request for Proposals or Bids and applicable law and Regula.tions. Once
approved by the CRC, the contracts shall be submitted to the Chief Administrative Officer or his
designee for execution.
14.1 All proposals to sell property acquired through tax sale shall be approved by the County Council,
pursuant to Section 52-38 of the Montgomery County Code, 1994, as amended.
14.2 The proposed disposition shall be advertised by DPWT once a week for three successive weeks
in at least one local newspaper of general circulation. In addition, DPWT shall send a notice regarding
the disposition to the County Council and to appropriate County and Outside Agencies. The
advertisement and Notice shall include the following:
Terms of Sale
Compensation
Purchaser
Proposed use
Legal Description
Opportunity shall be given for objections thereto. Severability
The provisions of these regulations are severable and if any provision, clause, sentence, section,
word or part thereof is held illegal, invalid or unconstitutional or inapplicable to any person or
circumstances, such illegality, invalidity or unconstitutionality, or inapplicability shall not affect or
impair any of the remaining provisions, clauses, sentences, sections, words or parts of these regulations
or their application to other persons or circumstances.
(Administrative History: Reg. No. 31-97; Dept.: Public Works and Transportation; Supersedes: Reg. No.
67-91
AM)
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Page 1 of 1
Faden, Michael
From:
Sent:
To:
Cc:
Subject:
McMillan, Linda
Friday, March 09, 2012 4:04 PM
Dise, David
E.
Brenneman, Cynthia; Boucher, Kathleen; Faden, Michael; Mihill, Amanda
Information Request - Bill 11-12, Property Disposition
Importance: High
Hello,
As you are aware, Bill 11-12, County Property - Disposition, is scheduled to be introduced at next Tuesday's (March 13th)
CounCil session. The public hearing is scheduled for March 20th at 1:30 p.m. The GO Committee will have a
worksession as a part of their March 26th (2:00 p.m.) session.
The bill as drafted would apply to the sale of property with a value of less than $100,000 or a lease for a term of 3 years or
longer or lease with an option to buy where the real property being leased has a value of less than $100,000. In order for
the Council to have a better understanding of how this bill would have impacted sales and leases in the last 3 years, I am
requesting the following information:
(1) A list of all land sales that occured in 2009, 2010, and 2011 and the sales price.
(2) A list of all leases with a term of 3 or more years that were executed in 2009, 2010, and 2011 and the value of
the real property that was leased.
(3) A list of all leases with an option to buy that were executed in 2009, 2010, and 2011 and the value of the real
property that was leased.
The information can be provided by calendar year or fiscal year if one is easier that the other, as long as it is the same for
all three responses.
In addition to those transactions included in the draft bill, Council staff understands that the County alllows private entities
to use County property (land and/or facilities) through a license. Please provide a description of what such a license is,
when it is used, the process for issuing such a license, and where it is authorized in law or regulation. I have not been
able to find such a mechanism in COMCOR 11 B.45.01
With regard to leases, I also note that the definition of a lease in COM COR is "a contract for use of a site, other than a
splinter parcel, for five years or more.
II
I do not see such a definition in the Code (but might be missing it.) Is it current
practice that any "lease" arrangement is for a period of 5 years or more?
It would be most helpful if you could send a response by the end of the day on Thursday, March 15th so that it can be
included in the packet for the public hearing that will be distributed on March 16th. If March 15th is not workable, we do
need to have the information by the end of the day on Tuesday, March 20th so that it may be included in the GO
Committee packet that will be distributed on March 22nd.
I am hopeful that there is a central source in Finance or Procurement for this information. If you have questions or
problems with meeting this request, please call or e-mail me or Mike Faden.
Thanks,
Linda
Linda McMillan
Senior Legislative Analyst
Montgomery County Council
linda.mcmillan@mootgomerycountymd.gov
240-777-7933
3116/2012
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e.G.
DEPARTMENT OF GENERAL SERVICES
Isiah Leggett
County Executive
David E. Dise
Director
I"'I.%N
Se,F"
L-'­
LPtO')
~
MEMORANDUM
March 22,2012
TO:
Linda McMillan, Senior Legislative Analyst
County Council
,.
~
.
FROM:
David E. Dise, Direclor9'
Department of General Services
'
...
,
SUBJECT:
Request for Information on Dispositions
In
response to your request, attached, please find a spreadsheet listing the various
documents that were executed in 2009, 2010 and 2011, disposing of County owned
property. In the limited amount of time we had to respond, we had input from DGS,
DED, DOT's PLD and Acquisition Sections, DHCA (none identified) and DEP (none
identified). Please note that we didn't include documents that are in progress, but not
signed, like the Police HQ disposition that DED is handling.
Also note that we did not receive any specific information on documents from
MNCP&PC, although we did receive a general response from Bill Gries. As you may
know, "there are more than 10,000 acres of parkland titled
in
the name of the County, in
more than 800 different parcels, so this [Bi1l11-12] does have the potential to get a little
cumbersome as we manage our park system. We have agricultural leases, park house
rentals, public/private partnerships, facility leases, utility easements, road and intersection
improvements, etc. that could have us going to the Council for disposition approvals on a
pretty regular basis."
In response to your question
#
1, the bottom of the spreadsheet shows a list of 10 sales.
They were executed by DGS, DOT and DED and ran the gamut from straight
dispositions to development deals where the County leveraged land for other benefits for
important initiatives like the SGI (transit oriented housing) and the redevelopment of
downtown Silver Spring.
Office of Real Estate
10 1 Monroe Street, 9th Floor • Rockville, Maryland 20850 • 240-777-6001 • 240-777-60 11 FAX
www.rnontgornerycountyrnd.gov
Located one block west ofthe Rockville Metro Station
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Request for Information on Dispositions
In response to your question #2, the first 40 documents are leases and licenses that
exceeded 3 years in length. We don't appraise property for the purpose ofleasing or
licensing it, so the only value we could associate with each lease was the annual rental
amount, which, in most cases, increases each year. We are not clear whether you would
be looking for an appraisal of an entire building or just part of the building if we leased a
small suite in a large building. Neither seems to add relevant information to a discussion
ofthe merit of the lease. We believe some discussion might be in order before this
requirement is codified. Ordering appraisals on all leases would significantly increase
time frames and operating budgets and overburden our limited number of appraisers.
In response to your question #3, no department identified any leases with options to
purchase that were executed or implemented within the timeframe parameters.
You also asked about the difference between leases and licenses and when we choose to
use licenses. Leases convey real estate rights. Licenses convey no real estate rights.
They are basically permission to use the premises and are terminable on very short
notice. We use them mostly were we have contractors who are offering services out of
County owned space (HHS contractors are our biggest category of licenses) and we need
to be able to terminate them in the event they fail to perform their services. We need
continuity of services. We wouldn't want HHS to terminate a contractor without the
ability to terminate his use of County space, so that the next contractor could move in and
begin providing services immediately. When the contractor is no longer needed to
provide services, for whatever reason, he no longer needs to be in County space. Ifhe
was vested with real estate rights, we would have to go through a process to evict him.
We also use licenses in instances where we just don't want to give a third party any rights
in our real estate.
In response to your question about where the authority arises to use licenses, the County
Attorney advises that the authority to license County property usually arises as an implied
authority to implement a County program. The authority to implement a County program
arises generally out of the County Code andior the County budget. The Express Powers
Act is general enabling authority to acquire and dispose of County property, but that
general enabling authority is most often effectuated by a county law andior budget
appropriation.
Please call me if you have any questions.
DD:CB:DREAMS:RE:projects:cyndi's temp:Response to LindaMcMillan on Dispo
2
@
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Property Dispositions
2009 FOlWard
Office of.Real Estate
Department of General Services
Responsive Documents
INSTRUMENT
DATE
PROPERTY
GRANTEE/LESSEE/LICENSEE
COMMENT
CONSIDERATION
LEAD DEPT
Leases
and
Licenses
1
2
3
4
5
6
First Amendment to License
Agreement
License Agreement
License Agreement
First Amendment
License Agreement
License Agreement
License Agreement
License Agreement
License Agreement
License Agreement
1st Amend to Lease
1st Amend to License
License Agreement
License Agreement
Amenament to License
Agreement
License Agreement
2nd Amend to Lease
115/2009
1/512009
3/U/2UUS
4301 Willow Lane
12612 Galway Drive
1301 Piccard Drive
12100 Darnestown
Damascus Tower
1109 Spring Street
7-1 Metropolitan Ct
15910 Somerville Street
12900 Middletown Road
20130 Wasche Rd
3950 Ferrara Dr
Fire Station 31
One Lawrence Court
14327 Stonebridge Drive
2103 Luzerne Avenue
Wasche Rd, Dickerson
MartinSburg Ra,
Dickerson
7425 Macarthur Blvd.
Wasche Rd, Dickerson
Seven Locks Road
14705 Avery Road
734 University
Wonders Child Care
Academy Child Development
People Encouraging People
Cricket Communications
Nextel
Mental Health Associates
Pan-Asian Medical
Knowledge Learning Center
Peppertree, Inc.
Robert Harney
Mental Health Associates
Nextel
Powell Recovery Center
Academy Child Development
Rockville Day Care Assoc.
John and Jane Hunter
William Willard
Clara Barton Day Care
David Scott
All Star Fleet Services
Chrysalis House
Cas a De Maryland
6/24/2010
3/24/2009
4/17/2009
5/4/2009
5/26/2009
7/1/2009
7/1/2009
71712009
8/26/2009
8126/2009
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
Expired 6/30/2011-currenlly running mo to mo
Expires
12/31/14-
2- 2 year options
I
ermmates concurrently Wltn unaenymg
Contract for Services
3/24/2014
Telecom agreement with 5 year term
I
ermmates concurrentlY wltn unaenymg
Contract for Services
Expires
05/26/2014
Expires
12/31/14-
2- 2 year options
Expires
6/30/13-
2 2 year options
5 year lease extension
Expiration in
8/2014
Telecom agreement with 5 year term
Terminates concurrently With unaerlymg
Contract for Services
Expires
4/30/2013-no
options
Expires
4/30/2013-2-2
year options
17 ac. Farm Lease; 5 yr term
56 ac. Farm lease; 5 yr term
Expires
6/30/2013-1-2
year option
312 ac. Farm lease; 5 yr term
Termmates concurrenuy Wltn underlYing
Contract for Services
I
ermlnates concurrently wltn unaenYlng
Contract for Services
Terminates concurrently With underlymg
Contract for Services
I I::xteno
I
erm OUt
iO
..:v..:
I 10
allow ;:.trammore to
defer paying for two years for defrayment
Expenses
30-Jun-15
Expires
08/20/2015
Expires
08/25/2015
I ermmates concurrently wltn unaerlYlng
Contract for Services
License to use barn for 5 years
18 yr term - extended to 2026
Current Term expIres 4/;JU/<:Ul J-restnctlve
covenant pushes final term until 2022
expo
1/1112; 8/15/12; 12131/12
Lease of closed school
w/15
year term
N/A
!ji10,038
$1.00
$24,600.00/YR
$29,034/YR
$1.00
None
$79,450/YR
29,056/YR
caretaker to provlae
certain repairs
$14,052IYR
$29,0341YR
,
DGS
DGS
DGS
DGS
DGS
DGS
DGS
DGS
DGS
DGS
DGS
DGS
DGS.
DGS
DGS-­
DGS
DGS
DGS
DGS
DGS
DGS
DGS
11/20/2009
1/6/2010
1115/2010
3/19/2010
3/19/2010
3/24/2010
3/29/2010
5/10/2010
5/13/2010
6/9/2010
$1.00
$25,OOOIYR
$32,790IYR
$7651YR
$1,800IYR
$32,9711YR
$11,587.50IYR
$1.00
$1.00
$1.00
I
Letter Agreement to exercise
option
3rd Amendment to Lease
License Agreement
License Agreement
License Agreement
Second Amendment to
Lease Agreement
:;econa Amendment to
Lease Agreement
License Agreement
License Agreement
License Agreement
License Agreement
1st Amend to License
Lease Agreement
License Agreement
Lease Agreement
2nd Amend to Lease
23
24
25
26
27
28
29
30
6/25/2010
711/2010
8/20/2010
8/2512010
3/112011
3/15/2011
3/28/2011
4/14/2011
5/2/2011
6/912011
Strathmore Hall
101 Monroe Street
E. County Gov't Clr.
E. County Gov'l Ctf.
14701 Avery Road
Draper Barn
Land near library
10611 Tenbrook Drive
Brickyard Rd
MacDonald Knolls
Strathmore Hall
Montgomery County Revenue Authority
Mobile Med. Inc.
Peoples Well ness Ctf.
Maryland Treatment Centers
William F. Willard Farms
Damascus Herilage Society
Arc of Montgomery
Nick's Organic Farm
CHI, Inc.
NIA
$34,000-$37,000
None
None
$1.00
$1,5001YR
$1.00
$20,0761YR
various
$71,1501YR
DGS
DGS
DGS
DGS
DGS
DGS
DGS
DGS
DGS
DGS
31
32
@)
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Agenda Item 9
May 1,2012
Action
MEMORANDUM
TO:
FROM:
SUBJECT:
~iChael
Faden, Senior Legislative Attorney
Action:
Expedited Bill 11-12, County Property - Disposition
County Council
Government Operations and Fiscal Policy Committee recommendation (2-1,
Councilmember Ervin dissenting): enact with amendments.
Expedited Bill 11-12, County Property - Disposition, sponsored by Councilmembers
Leventhal and EIrich, Council President Berliner, and Council members Andrews, Riemer, and
Navarro, was introduced on March 13, 2012. Public hearings were held on March 20 and 27.
See selected testimony, ©38-Sl. Government Operations and Fiscal Policy (GO) Committee
worksessions on this Bill were held on March 29 and April II. At the latter worksession the
Committee recommended (2-1, Councilmember Ervin dissenting) that the Bill be enacted with
comprehensive amendments.
Introduced Bill
As introduced, Bill 11-12 would modify the procedures for disposition of County
property and require the County Council to approve disposition of certain County properties. As
defined in this Bill, "disposition" of property which the County owns or controls
I
includes any
sale, lease or license for a term of at least 3 years, or lease or other document which includes an
option to buy.
Specifically, Bill 11-12 would modify County Code §IIB-4S by:
• tightening up the current property disposition process (which includes an opportunity
for Council comments but not approval) so as to preclude the broad exemptions found
in current County regulations (see COMCOR §IIB.4S.01.02A-D, shown on ©IS).2
This would be done by only allowing property "of nominal value" to be exempted
from the current process? The current regulations exempt, among other categories,
"parcels at the County Life Sciences Center" and "matters of significant or strategic
interest to the County's economic development," which are not further defined. In
Iproperty which the County "controls" would include property leased or licensed to the County government, as well
as any property deeded to the County.
2See amended subsection (a) on
©2,
lines
3-\9.
3
See
©2,
lines
4-6.
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Property Dispositions
2009
Forward
INSTRUMENT
DATE
PROPERTY
Office of Real Estate
Department of General Services
GRANTEE/LESSEE/LICENSEE
COMMENT
CONSIDERATION
I
LEAD DEPT
DGS
DGS
DGS
DGS
DGS
DGS
DGS
DGS
!
Leases and Licenses
33
34
35
36
37
38
39
40
License Agreement
3rd Amend Lic Agrmnt
5th Amend Lic Agrmnt
Lease Agreement
License Agreement
License Agreement
License Agreement
Lease Agreement
9/2612011
9/30/2011
10/16/2011
10/31/2011
11/14/2011
11/18/2011
1212/2011
3/9/2012
7511 Holly Avenue
Fire Station 31
Fire Station 31
12!:lUl
I
own !,jommons
Dr., Germantown
4805 Edgemoor Lane
981 Rollins Ave.
13411 Riley's Lock Road
29 Courthouse sq.
Quality time Learning Center
APe Realty dlbla Sprint
Verizon Wireless
Black Rock
Conflict Resolution Center
Mobile Med. Inc.
Hearts and Homes for Youth
Peerless Rockville
Expires
6/30/2013-2-2
year option
Telecom agreement with 5 year term
Telecom agreement with 5 year term
Lease renewal! 7 year extension
I
ermlOates concurrentlY wltn unaerlYlOg
$11,917,00IYR
$34,549IYR
$34,549IYR
$1.00IYR
None
None
None
$13,419.00IYR
i
Agreement for Services
Term extension expires
11/18/2016
Terminates concurrently with underlying MOU
Term extension expires
0319/2017
Deeds
--
1
2
3
Deed
Deed
Deed
Master Planning and Real
Estate Purchase Agrmnt that
will lead to a deed
Deed
Deed
112012010
1/29/2010
6/24/2010
South lawn Lane
Kemptown Church Rd
PLD Lot #16
Konterra Limited Partnership
Eunice Waters
RSTLLC
Swap of South lawn for Kensington Parcel
15,941 sf
Part of Assemblage for Galaxy residential
building
Master Planning document with purchase
schedule based on number of lots sold
Berman exercised option to purchase
Sale of surRlus property
Exercise of option to purchase that was
obtained during Silver Spring redevelopment
prolect
BioReliance executed its right to purchase
under a 1998 Lease-Purchase Agreement
. Sale of pipestem parcel fe: Roberts closing
Disposition of 2nd District property in exchange
for property w/new building;
we
put in $7.5M for
the improvements
_
..
Land and parking
improvements worth
$1,215,000
$930
$1 ,278,00U plUS 16U
spaces, the first 60 free
DGS
DOT-ACQ
DOT-PLD
4
5
12120/2010
2/14/2011
5/18/2011
County Services Park
Peary High School
Blunt Road,
Germantown
Par A, Blk E, Silver
Spring. PLD Lot #1
Parcel
NIQ
-
Shady
Grove Life Sciences
Center
EMOC Casey 6
2nd District Police,
Bethesda
EYAISCP Associates
Berman Hebrew Academy
Islamic Society of Germantown
TBD
$1,829,595
$50,000
DGS
DGS
DGS
-
6
7
Deed
8117/2011
Foulgef Pratt
$10,810,875
DOT-PLD
8
9
Deed
Deed
Development Agreement
8/17/2011
9/12/2011
BioReliance Corporation
Oakmont Limited Partnership
$634,713
$114,000
OED
DGS
10 _
~at
will lead to a deed
9126/2011
JBG Associates
-----­
We obtain land in trade
DGS-DBDC
®
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particular, this amendment would require property disposed of for economIC
development purposes to follow the required process;
• requiring Council approval before any disposition of County property becomes finaL
Council approval would take the form of a resolution, adopted after the Council holds
a public hearing with at least 15 days advance notice.
Under the Bill as introduced, the Council would also approve the material terms of each
property disposition, particularly the price or rent to be paid and any associated economic
incentives. The purpose of this requirement is to avoid a situation where an Executive gains
approval to dispose of a property and then modifies the terms of disposition in a way that (in the
Council's or the public's view) might not be in the County's best interest. The Council's ability
to approve the terms, as well as the disposition itself, is the crux of the disagreement (discussed
further below) between Council legal staff and the County Attorney regarding this BilL
State law
4
requires the County to advertise the sale or other disposition of "any property
belonging to the county or any agency thereof ... upon such terms and compensation as said
county may deem proper" for 3 weeks in a newspaper circulated in the county "and giving
opportunity for objections thereto." Council staff does not read this requirement as precluding
the County from enacting a law providing for other public notice and opportunities to comment
before the disposition is finalized. State law does not otherwise regulate the procedures for
disposing of County property.
Council staff transmitted an information request (see ©26) to Executive staff, seeking
data on recent property transfers. Responses to that request are attached at ©27-30. After the
Committee worksession, Executive branch staff also forwarded a list of current licenses to use
County property (see list, ©52-54).
Legal Issues
Given the direction the
GO
Committee took in its redraft of this Bill, the following
discussion is mainly of historical interest, but we are keeping
it
in this memo for completeness
and legal background
The County Attorney, in reviewing this Bill, concluded that under the County Charter's
division of legislative and executive authority, the Council could reserve to itself the power to
approve the sale or other disposition of County property, but not the terms on which that
property would be sold or disposed of. See County Attorney memos on ©31-37. Council legal
staff disagrees.
The constitutional doctrine of separation of powers is generally not applicable to local
government.
5
Rather, Maryland courts look to the county charter and local law to identifY
governmental functions as legislative or executive at the local level.
4
MaryJand Code, Article 25A §5(8).
5County Council a/Montgomery County
v.
Investors Funding Corporation.
270 Md.
403.
2
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OFFICE OF THE COUNTY ATTORNEY
Isiah Leggett
County Executive
Marc P. Hansen
County Attorney
MEMORANDUM
March 16,2012
TO:
Kathleen Boucher
Assistant ChiefAdministrative Officer
FROM: MarcP.Hansen
County Attorney
mCl4£­
II~
Clifford L. Royalty
~
Chief, Division of Zomng, Land Use, & Economic Development
RE:
Bm No. 11-12, County Property - Disposition
Opinion
The negotiation and execution of agreements and legal instruments disposing of County­
owned interests in real property is an executive function. The County Charter vests executive
functions in the County Executive. County Bi1111-12 violates the County Charter by authorizing
the County Council to unilaterally veto a disposition of property. Although we conclude that Bill
11-12 is legally flawed, we suggest, at the conclusion of this memorandum, means by which the
Council may exert legislative control over the disposition of County-owned property.
Background
On March 13,2012, the County Council introduced Expedited Bill No. 11-12 concerning
"County Property - Disposition" ("Bill"). The Bill proposes to amend Montgomery County
Code
§
11B45 ("Disposition ofReal Property") to, as stated in the Bill, "require the County
Council to approve certain dispositions of certain County properties."
(Bill,
p.
1).
The Bill
provides that before the "disposition of any real property owned or controlled by the County ...
becomes final," the County Council, "by resolution ... must approve ... the disposition and all
material terms of the disposition ...." The Bill exempts from the proposed Council approval
process property worthless than $100,000 and leases with terms of less than 3 years. According
to the Bill's accompanying memorandum, the Bill authorizes the Council
to
approve the
"material terms of each property disposition" so as to "avoid a situation where an Executive
101 Monroe Street, Third Floor, Rockville, Maryland 20850
240-777-6700 • (fax) 240-77·6706 • clifford.royalty@montgomerycountymd.gov
®
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In the case of
Prince George's County v. Silverman
(see opinion, ©7-14), the Court of
Special Appeals confirmed that the Council can enact a law that requires Council approval
before the County can sell or dispose of any County property. The Court affirmed a Circuit
Court holding that the Prince George's County law requiring Council approval of the
Executive's declaration that a property is surplus is "a
necessary and proper exercise of
legislative checks and balances on the executive determination to dispose of County
property.
To hold otherwise could result in the County Executive's declaration that all the
county-owned property is surplus.
,,6
The Court explained that "the procedure for disposing of
surplus property .. .is designed to
insure fairness and to prevent arbitrary and discriminatory
dispositions."
The critical point of the
Silverman
holding is that the Court did
not
find that the decision
on the transfer of County property is a purely Executive function, as the County Attorney's
argument would presume. Rather the Court noted a valid Council interest in retaining control
over the disposition of public property, rather than finding only unilateral Executive authority.
The Court in
Silverman
went on to say:
"It
is important to note that the [Prince George's]
code requires council approval only of the County Executive's determination that the property is
surplus; not approval of the prospective grantee," Bill 11-12 conforms to this judicial guideline;
it would authorize the Council to approve the material terms of any sale or lease (including the
price or rent to be paid and any associated economic incentives), but
not
the identity of the buyer
or lessee. In other words, if the Council approves a sale to one party on certain terms, it could
not then disapprove the sale of the same property on the same terms to any other party.
To respond to the heart of the County Attorney's argument, the Council would not have a
governing interest
iri
the identity of the prospective grantee, but
the Council clearly does have a
fiscal interest in the amount of the proceeds.
A below-market sale is effectively a transfer,
akin to an expenditure, of County resources, and the Council has the same interest in that kind of
transaction as it has for any expenditure. Just as any Executive's authority to buy property for
the County is always subject to appropriation, the Executive's authority to sell property would be
subject to the Council's fiscal authority under the Charter. Otherwise, as the Court in
Silverman
implied, the Executive could effectively give away County property without receiving full value.
Nowhere does the County Charter expressly reserve to the Executive the authority to
7
dispose of County property, and
we are not aware ofany Maryland case that so requires.
The
County Attorney's memo lumps together all manner of Executive branch activities in searching
for cases that uphold the Executive's prerogatives. However, the
irrevocable
sale or transfer of
valuable County property is qualitatively different from the day-to-day administration of County
government and from the standard contracts that the County Attorney's memo relies on.
58 Md. App. at 53-54.
7The County Attorney's reliance on part of the
Silverman
case, is incorrect because that Court was guided by a
specific provision (§402) of the Prince George's County Charter which
~r;pressly
assigns to that County's executive
branch the authority to "sign or cause to be signed on the County's behalf all deeds, contracts, or other instruments."
The Montgomery County Charter has no similar language.
6
See
3
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Kathleen Boucher
March 16,2012
Page 2
gains approval to dispose of a property and then modifies the terms of the disposition ...."
(Me.morandumfrom Michael Faden to County Council dated March 13,2012).
Discussion
Article
XI~A
of the Maryland Constitution authorizes.counties
to
adopt home rule
charters. As described by the Maryland courts, these charters "function as 'constitutions' for the
counties adopting them."
Montgomery County
v.
Anchor Inn Seafood Restaurant,
374 Md. 327,
331 (2003) (internal citations omitted). Section 3 of Article XI-A "mandates that a county
adopting a home rule charter must select one of two types of government: (1) an elective
legislative body known as the County Council without an elected County Executive or (2) an
elected County Council plus an elected County Executive."
Id.
In 1968, the County created the
r
latter form of government through the adoption of a new charter. The County's Charter
separates "the county government into legislative and executive branches."
Id.
Charter
§
101
vests "all legislative powers" in the Council; Charter § 201 vests the "executive power" of
County government in the County Executive. The
1968
Commentary Upon Proposed Charter
(July 10, 1968) states that Charter § 201 ''is intended by this provision to confer
an
executive
power of the County government upon the Executive.... " (Emphasis added)
(Commentary,
p.
18).
The "compartmentalization insured by the Charter between legislation on the one hand
and administration and execution on the other is a distinction that has been acknowledged and
acted upon by legislative bodies and the courts of other States."
Scull
v.
Montgomery Citizens
League,
249 Md. 271, 282 (1968). When tasked with differentiating a legislative act from an
executive one, the Maryland courts have cited to, or applied some variation of, a test articulated
in
Scull.
The
Scull
court described the test as follows:
A
recognized test for determining whether a municipal ordinance is legislative
and so subject to referendum, or whether it is executive or administrative and is
not, is whether the ordinance
is
one making a new law -- an enactment of general
application prescribing a new plan or policy -- or is one which merely looks to or
facilitates the administration, execution or implementation of a law already in
force and effect.
Id., see also Eggert
v.
Montgomery County Council,
263 Md. 243 (1971) (the County Council
lacked authority to review the County Executive's decision to construct a bridge within the
County.)
Although there is no case applying the
Scull
test to a statute identical to that proposed by
the Bill, the courts have applied the test in analogous contexts.
In
City ofBowie
v.
County
Commissioners for Prince George's County,
the court ruled that a resolution authorizing the
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While the County Attorney stresses that the approval of contracts is an Executive
function under the applicable caselaw and argues that the Council has no role in those decisions,
this analysis ignores the fundamental fact that all contracts are - and must be subject to
appropriation. That is, regardless of the Executive's authority to enter into the contract, the
Executive cannot spend any money to implement it unless and until the Council appropriates that
money. Thus the Council in most cases has effective fiscal control over the results of the
Executive's use of the contracting power. However, property disposition contracts are unique in
that they do not require any further appropriation; thus, once the contract is executed, no checks
and balances apply. That is why these contracts cannot be lumped in with other types of
contracts; to do so would enshrine unilateral Executive actions into a Charter that is based on the
Council's fiscal authority.
In the last substantive paragraph of the County Attorney's memo, he suggested some
possible legislative solutions which do not go as far as this Bill but which, he concluded, would
pass legal muster. Council staff does not concede that the options the County Attorney proposed
are necessary to comply with the County Charter. In the interest of moving this legislation
forward and avoiding a legal deadlock, the GO Committee recommended a redrafted Bill
(discussed below) which incorporated variations on the County Attorney's suggestions that the
Committee concluded would protect the public interest in effective checks and balances on
disposition of County assets.
Committee redraft
At its April 11 worksession, the GO Committee recommended (2-1, Councilmember
Ervin dissenting) enactment of the redrafted Bill shown on ©1-5. That redraft was based on an
amendment offered by Councilmembers Rice and Riemer. At the March 29 worksession the
County Attorney concurred that this amendment would not violate the County Charter.
Major Elements
The Committee redraft would:
• prohibit the Executive from disposing of any County property at less than full market
value, unless the Council waives this requirement;
• delete from the Bill the Council's express authority to approve the terms of a
disposition except a disposition of property at less than full market value;
• allow the Council a 30-day period to comment on the proposed terms of any property
disposition, either setting parameters before a deal is negotiated (as Federal Realty
recommended; see their testimony, ©46) or after the Executive has tentatively agreed
to terms; and
• assign the Council the authority to approve or disapprove the Executive's declaration
that an item of County property can be disposed of because it is no longer needed.
Process
How would the process outlined by this redraft work in practice? The Bill
allows a great deal of flexibility, so that the Executive can tailor his compliance with the varied
needs of each transaction. For example, the Executive could submit the required "declaration of
no further need" for the property for Council review and approval before his staff begins to
negotiate a property transfer, after negotiations have been completed, or at any time in between.
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Kathleen Boucher
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16,2012
Page 3
issuance ofbonds for the acquisition of an airport was an executive act.
258
Md.
454 (1970).
In
Queen Anne's Conservation, Inc.
v.
County Commissioners ofQueen Anne's County,
the court
ruled that "the negotiation oftenns protective of public health, safety, or welfare, in a contract
entered into by a local government body is a discretionary executive act, not a legislative one."
382
Md.
306, 321 (2004).
As was aptly stated by the Court of Appeals in
Montgomery County
v.
Revere National Corporation,
"[w]hen the executive branch of the county government, in
carrying out the laws and functions of government, enters into a contract, such action constitutes
the exercise of executive discretion."
341
Md.
366, 390 (1996).
The Attorney General has also provided pertinent guidance.
In
2000,
the Attorney
General concluded that the General Assembly was not pennitted to require the Stadium
Authority to submit certain construction contracts to a legislative committee for approval.
2000
Md. A
G
LEXlS
19.
The Attorney General wrote:
The distinction [between the right to review and comment and the right to approve or
disapprove a contract negotiated by an executive agency] is critical. A provision that
rendered the Stadium
Authority'~
individual agreements subject to legislative approval
would establish a legislative veto over executive action. Although this Office once
concluded that a statute reserving to a legislative committee a veto over proposed
regulations was not clearly unconstitutional,
63
Opinions ofthe Attorney General
125,
127 -28
and
150-51 (1978),
there was little judicial authority on the subject at that time.
Subsequently, most state courts that have considered the issue have held that legislative
veto provisions violate the separation of powers provisions of their respective state
constitutions.
See generally
Rossi,
Institutional Design and the Lingering Legacy of
Anti-Federalist Separation ofPowers Ideals in the States,
52
Vand.
L.
Rev.
1167, 1201­
04
&
no.
186-90 (1999)
(collecting cases and noting that, with one exception, legislative
vetoes have been found unconstitutional by every state court to consider the question).
Similarly, the United States Supreme
Court
has held that a provision giving Congress a
legislative veto violated the federal constitution.
INS
v.
Chadha,
462
U.S.
919 (1983).
Id.
at
25~27.1
,
The negotiation and execution of a contract to dispose of property is an executive
function? Under the County Charter, that function has been delegated to the Executive. The
Bill intrudes upon the Charter's separation ofpowers'by authorizing the Council to exercise an
illegal "legislative veto" over a core executive function.
See Immigration and Naturalization
Service
v.
Chadra,
462
U.S.
919 (1983).
As
Mr.
Faden's memorandum acknowledges, the
Council intends that the Bill will enable it to review and approve the terms of a contract
This opinion was authored by now Court ofAppeals Judge Robert McDonald.
2
Of course, this Charter-driven rule must yield to higher law. For example, State law authorizes
the County Council to dispose of surplus school sites. See
Md. Code Ann., Educ.
§
4-115.
I
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Similarly, he could seek Council input on the parameters and material terms of a disposition
before negotiations start or bids are invited; in fact, the redraft encourages him to do so (see ©3,
lines 48-53). The redraft requires the Executive to seek Council comment on (but not approval
for) the material terms of the disposition other than a below-market sale or lease before seeking
Council approval of the "declaration of no further need", but that comment could be sought well
before the Executive submits the declaration, or at the same time. The Bill leaves those timing
decisions generally to the Executive's discretion.
Exemptions
In addition to the exemptions from the
Council review
process for
properties of nominal value and those with an appraised value below $100,000, this redraft (see
©2-3, lines 24-33) would exempt the following transactions from the
entire property disposition
process:
• Leases or licenses of County property managed by the Parks Department. County
Parks Director Mary Bradford testified (see ©40) that, because many parks are
actually owned by the County (and were bought with County general obligation
bonds) but managed by the Parks Commission under a long-time operating
agreement, applying the disposition procedure to them would be unnecessary and
burdensome.
• Licenses to use County property to provide day care services or to perform contracts
for services with the County. A license is simply permission to use property for a
certain time or purpose; it conveys no other real estate rights. As the lists on ©29-30
and 52-54 show, these types of licenses are among the most common dispositions of
County property, along with licenses to place cellular telephone antennas on County
property. (For background on how the County uses licenses, see the DGS memo on
©28.)
• Property transferred to the Housing Opportunities Commission for housing
development.
The Committee rejected (2-1, Councilmember Ervin dissenting) 2 amendments offered
by Councilmember Floreen to exempt from the Bill's disposition process any land transfer
necessary to build a master-planned road or transit project and any land transfer necessary to
accomplish an economic development project which is subject to approval through the Economic
Development Fund.
Remaining issues
Councill'resident amendments
Council President Berliner directed staff to draft a set of
amendments covering the following topics:
1) Effective date (grandfathering)
The redraft's effective date clause (see ©5, lines 91­
92) would apply this Bill to any transaction that is not completed before the Bill becomes law.
In other words, the processes mandated by this Bill would apply to a transaction that is begun,
but not completed, before the Bill becomes law.
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Kathleen Boucher
March 16,2012
Page 4
negotiated by the executive - contract negotiation is not a legislative function because it is
accomplished on a case-by-case,
ad hoc,
basis rather than through "an enactment of general
application,"
Scull
v.
Montgomery Citizens League,
249 Md. 271, 282 (1968).
It
has been suggested that a Maryland Court of Special Appeals decision,
Prince
George's County
v.
Silverman,
58 Md. App. 41 (1984), supports the proposed provisions of the
Bill. In
Silverman,
the court affinned a lower court's decision to compel the Prince George's
County executive to convey land to a prospective purchaser.
Silverman
does not establish a rule
that a legislative body may approve the terms of a contract disposing ofproperty. Indeed, the
Court approved a Prince George's County ordinance that allowed for a legislative determination
that property was "surplus." But this determination does riot stand for the proposition that the
disposition ofland is a legislative function. Indeed, the com:t: in
Silverman
upheld a disposition
contract entered into by the executive without council approval.
An
argument has been
advanced that the Council can approve all ofthe terms of a disposition contract, but not the
identity of the prospective purchaser; this argument is illogical. The branch of government with
the authority to detennine who to transfer the property
to
must necessarily be the branch that
determines the terms and conditions of the disposition.
Although we conclude that Bill 11-12 violates the separation ofpowers mandated by the
County Charter, we do not mean to imply that the Council is without the authority to exert
control over how the Executive effects a disposition of County-owned property. For example,
the Council could enact legislation to require the Executive to provide the Council with an
opportunity to comment on the terms of any proposed property disposition, including the sale
price. The Council could require that the Executive must dispose of surplus property at fair
market value. Finally, the Council could require the Executive to obtain Council approval before
declaring County-owned property as surplus.
Please contact us if you would like to discuss our opinion.
Cc:
Michael Faden, Senior Legislative Attorney
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Executive staff and representatives of other parties argued that any property transfer for
which the parties have finalized and signed a legally enforceable agreement should not be subject
to the processes in this Bill, even if the transaction has not yet been "completed" - i.e. ownership
of the property has not been legally transferred. To do this, amend ©5, lines 91-92 as follows:
County Code Section llB-4:5, as amended by SectiolLl..cithis Act}.. .H(ipplies]] does not
apply to any disposition of County property [[completed on or afterl1 for which a legally
enforceable contract. lease, or other agreement was signed by all parties before that
date.
Council staff asked Executive branch staff for a list of all property transfer agreements to
which the County is a party and that would be exempted by this amendment. We have not
received the list before this packet went to print.
2) Affordable housing Councilmembers Floreen and Ervin, Action in Montgomery
(AIM), and the Affordable Housing Conference (AHC) recommended (see testimony, ©49-51)
that the disposition of property when that property would be used to provide affordable housing
significantly above the minimum required by law should be exempt from the disposition
requirements of this Bill, including Council approval of property transfers.
Committee recommendation: adopt the more limited amendment by Committee Chair
Navarro, which only exempts property transferred to the Housing Opportunities Commission for
housing development purposes.
A broader amendment, similar to that proposed by AIM and AHC, would exempt from
the Council approval requirement (rather than the entire property disposition process) any
transfer primarily for housing development in which the recipient commits to provide at least
30% of the dwelling units as moderately-priced dwelling units (MPDU's) or other affordable
housing (defined as housing exempted from the County impact taxes). Under this approach, the
recipient of the property need not be a non-profit housing provider.
To do this, insert on ©4 after line 78:
This subsection doesnot apply to any disposition of prQl}erty that will be used primarily
fuL
housing developmentiLJh.e recipient legally commits to the Director of the
Department of Housing and Communitv Affairs that at least 30% of the housing units
built on the property will be moderately priced dwelliIlg units or other units that are
exempt from the development impacttax under Section 52-49(g){ll-C4).
3) Appraisal time limit For a sale of property, the Bill (see ©3, lines 36-40), requires
full market value to be determined by at least one appraisal obtained within the previous 6
months. As Director Dise noted, the normal practice is to obtain more than one appraisal,
usually one from each party and a neutral 3
rd
appraiser. This provision is not intended to alter
that practice.
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