AGENDA ITEM'·/
May 15,2012
Enactment over Executive's disapproval
MEMORANDUM
TO:
FROM:
SUBJECT:
~ichael
Faden, Senior Legislative Attorney
Enactment over Executive's disapproval:
Bill 11-12,
County Property
-
Disposition
County Council
The Council enacted Bill 11-12 on May 1 by a 6-3 vote (Councilmembers Ervin, Floreen,
and Rice opposed) and the Executive disapproved
it
on May 14. See attached veto message.
Under Charter §208, the Council may override the Executive's disapproval if 6 Councilmembers
vote to re-enact the bill.
In the attached veto message, the Executive noted several specific policy objections to the
bill as enacted, few if any of which his staff had previously articulated. None of them present a
legal bar to re-enacting the bill, and all of them could be taken up as later amendments if this bill
is enacted over the Executive's veto.
F:\LAW\BILLS\1211 County Property\Veto Memo.Doc
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OFFICE OF THE COUNTY EXECUTIVE
ROCKVILLE, M.".RYLAND 20850
Isiah Leggett
County Executive
MEMORAL~DUM
May 14, 2012
TO:
Roger Berliner, President
County Council
Isiah Leggett
FROM:
~~--.:::~~~--­
County Executive
SIJBJECT:
Bill 11-12, County Property Disposition - Veto
After careful consideration of Bill 11-12, County Property Disposition, I have
reluctantly decided to veto the bill, and I am returning the bill to you with this memorandum. I
acknowledge the importance of timely notice to and consultation with Council regarding
property dispositions and appreciate Council's comprehensive review of the issues in this area.
However, Bi1111-12 creates several new layers of Council oversight that have potential to cause
delays, uncertainties, and increased costs for County government and private entities that do
business with the County. I believe there is a more constructive way to enhance Council
oversight of the types of transactions that Council cares most about.
The Council is already vested with broad authority regarding disposition of
County property. Existing laws governing master plans, zoning text amendments, the annual
capital budget, the six-year Capital Improvements Program (CIP), the annual operating budget,
and the Economic Development Fund give the Council extensive authority over use and .
disposition of County property at various stages in the process.
The current Executive Regulations governing disposition of County property
ensure that dispositions are "done in a fair and equitable manner that is open to public scrutiny"
(COMCOR I1B.45.01 et. seq.). These regulations invite review and comment from all
stakeholders at various stages in the process, including County Agencies, Outside Agencies (e.g.,
MNCPPC, MCPS, and municipalities), the public, and the Council. However, the regulations
have some extremely broad exemptions.
The exemptions included in the final version of Bill 11-12 suggest that the bill is
aimed primarily at the disposition of property relating to economic development, redevelopment,
and capital improvements. If Council's genuine interest is to have an opportunity "early in the
process" for review and comment on these types of property dispositions, the existing regulations
referenced above could be amended to eliminate some current exemptions so that the regulations
are applicable to all dispositions relating to economic development, redevelopment, and capital
montgomerycountymd.goY/311
240-773-3556
TTY
(j)
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Roger Berliner, President
May 14,2012
Page 2
improvements. The regulations could also be amended to require that the Reuse Analysis be
provided to Council for review and comment earlier than is now required. I would be willing to
propose such amendments as an alternative to this bill.
I have specific concerns about particular components ofthe bill.
Section IlB-45(a) requires the Executive to promulgate regulations that establish
a process for the disposition of any property "controlled by the County" in addition to prope:r:tY
owned by the County, as specified in current law. The County Attorney believes that this
I
appears to make the bill applicable to the process used by the Office of Community Use of
Public Facilities(CUPF) for making schools and County-owned buildings available for public
use. For example, the bill would apply to the situation where a church or cultural school reaches
the end of the 2
nd
year of use at a facility. In such a case, the Council would be required to
approve the extension of the CUPF permit. Moreover, the Council would most likely have to
waive the below market fees charged by CUPF..
Section I1B-45(d) requires the Executive to submit to Council for review and
comment "all material terms of the disposition, including the price or rent to be paid and
associated economic incentives" before seeking Council approval of a declaration of no further
need for the property. That same subsection also includes the following language:
"In
addition,
the Executive should when practicable submit for prior Council review the parameters and
material terms of a disposition that has not begun to be negotiated." Certainly, price or rent is a
"material term" of a disposition, but this term may not have been negotiated prior to obtaining
Council declaration of no further need. Nevertheless, the bill appears to mandate that this
information be provided at that stage. At the very least, this is confusing. More troubling, is the
likelihood that providing this information to Council so close to the stage when the Council
makes the declaration of no further public need invites the Council to make its decision on
whether to "surplus" the property on a basis that should be irrelevant to whether the County has
no further need of the property.
Section I1B-45(b)(3) exempts "a license to use County property to provide child
or adult day care services." This exemption is narrow and, therefore, leaves open to argument
the issue of whether school property that is available for use by a day care facility (and scheduled
by CUPF) is within the purview ofBi1l11-12. Currently, day care facilities have a license issued
by CUPF to use school property that is usually renewed for up to 5 years. Whether the County
has "control" for purposes of Bill 11-12 is ambiguous. Moreover, the issue of who controls this
space is the subject of on-going litigation. The County is currently taking the position in this
litigation that the County does not control this space, but Bill 11-12 may muddy the waters.
Bi1111-12 includes an exemption for disposition of property that will be used
primarily for housing development if the recipient legally commits to the Director of the
Department of Housing and Community Affairs that at least 30% of the housing units built on
the property will be moderately priced dwelling units or other units that are exempt from the
development impact tax. During final action on the bill and in response to direct questioning,
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Roger Berliner, President
May 14, 2012
Page 3
Council legal staff indicated that this exemption is not intended to apply to most mixed use
developments. In my mind, there is no valid reason for this distinction.
Under Section 11B-45(e), Council has discretion to extend the statutory deadline
for approving a declaration of no further need or disposition of property at less than full market
value. This discretion creates opportunities for delays that could "kill" prudent property
dispositions that serve the public interest.
The provisions of Bill 11-12 which give Council veto authority over property
dispositions below full market value could undermine the long term credibility of the County in
its negotiations with private parties. Typically, responses to solicitations for public/private
partnerships resulting in land disposition are evaluated on objective criteria relating to the
offerors' qualifications, experience, and financial capability. Business terms and monetary offers
are seldom part of solicitations. The primary reason for this is because the County has multiple
policy objectives and those objectives do not always translate into a high/low bid scenario in
which property values playa significant role in what ultimate deal is judged to be in the best
public interest. Requiring Council notice and approval of dispositions at less than full market
value adds to the complexity of such negotiations and the role property values play in striking a
best value deal. While I understand that this Council explicitly stated that this is not its intent,
the potential for Council negating lengthy and complex negotiations because it disagrees on a
single point -- property valuation
--
is extremely troublesome.
Finally, I note that the grandfather clause included in Bill 11-12 is too narrow to
protect the County investment of time, money, and good will in numerous property dispositions
currently underway and in various stages of the process, including transactions for which: (1) a
Request for Proposal (RFP) or Request for Expression of Interest (REOl) has been issued but no
responses received; (2) responses to an RFP or REOl have been received and are being
evaluated by the County; (3) the County has selected a bidder for an RFP or REOl but
negotiations have not yet begun; (4) the County has selected a bidder for an RFP or REOI and
negotiations are underway; or (5) the County has signed a letter of intent to execute a sale, lease,
license, general development agreement or other binding contract.
For all oftl1-e reasons discussed above, I am vetoing Bil111-12 and urging the
Council to reconsider its vote to support this bill.
c:
Kathleen Boucher, Assistant Chief Administrative Officer
David Dise, Director, Department of General Services
Marc Hansen, County Attorney
Art Holmes, Director, Department of Transportation
Rick Nelson, Director, Department of Housing and Community Affairs
Steve Silverman, Director, Department of Economic Development
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Expedited Bill No.
11-12
Concerning:
County
Property
. Disposition
Revised: 5-1-12
Draft NO.8
Introduced:
March 13,2012
Enacted:
May 1, 2012
Executive: _ _ _ _ _ _ _ __
Effective: _ _ _ _ _ _ _ _ __
Sunset Date: .....:....:.N=on:.:..:e=--_ _ _ _ __
ChI _ _, 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 property;
ill
prohibit
the
County from disposing of certain property at less
than
full market value,
unless the Council waives this requirement; and
[[(3)]]
£il
generally amend the County law regarding disposition of County property.
(1)
(2)
By amending
Montgomery County Code
Chapter 11 B, Contracts and Procurement
Section 11B-45
Boldface
Underlining
[Single boldface brackets]
Double underlining
[[Double boldface bracketsn
... ... *
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
1
Sec. 1. Section IIB-45 is amended as follows:
IIB-45.
(a)
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Disposition of real property.
The County Executive must adopt regulations to establish a process for
the disposition of any real property owned or controlled
J2y
the County,
other than surplus school facilities and [other] property ofnominal value
identified in the regulation.
[[As used in this Section. "disposition"
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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)
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coordination among public agencies, including any [municipal
corporation] municipality in which the real property is located;
(2)
(3)
opportunity to reserve property for alternative public use;
comparative analysis of reuse proposals before any disposition
actions; and
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(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)
(B)
has nominal value; or
is recommended to be reused by the County government.
!1il
As used in this Section. disposition means a sale. a lease or license fora
telID of
[[l11
2 years or longer. or a lease or other document which
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includes an option to buy. If a license or lease for an initial term
Q£.kss
thaIL[[l]1 2 years is extended or renewed beyond
[Un
2 years. that
extension or renewal is a disposition. Disposition does not include:
ill
a lease of or license to use any parkland,or any facility located on
parkland, that the Parks Department operates or manages for the
County:
-2­
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EXPEDITED BILL
No.
11-12
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!2)
a license to use County property that is coterminous with a
contract for services performed by the licensee; [[or])
ill
ill
ill
a license to use County property to provide child or adult day
care services;
[~]]
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a sale or lease of property to the Housing Opportunities
Commission for housing development;
a sale of one or more housing units obtained by the County using
its right of first refusal under Section l1A-3 or lIA-4, Chapter
25A. or Chapter 53A. and resold for not less than the County
paid: or
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!§)
a transfer of County right-of-way that is needed to implement a
m&lor transit project that is included in the applicable master or
other land use plan.
.W
Unless the County Council waives this requirement under subsection
ee)e2)(B). the Executive must not dispose of any property owned or
controlled by the County at less than full market value.
In
caseof a sale
of property. full market value must be determined by at least one
professional appraisal of the property obtained by the Director within
[[the previous)]
[[2]]
12 months before a declaration is submitted to the
Council.
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@
llefore seeking Council approval of a declaration of no further need
under subsection eel. the Executive must submit to the Council and
allow the Council at least 30 days to comment on:
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ill
!2)
all material terms of the disposition. including the price or rent to
be paid and any associated economic incentives: and
any appraisal that the Executive relied
Ort
or will rely on in setting
the property's marketvalue.
-3­
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EXPEDITED BILL
No. 11-12
55
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In addition, the Executive should when practicable submit for prior
C9uncil review the parameters and material tenus of
a
disposition that
has not begun to be negotiated. Any document submitted under this
subsection, [[other than any document submitted under the preceding
sentence which]] to the extent the document need not be disclosed under
state law, [[is a public document]] must be treated as confidential.
[[(hl]]
~
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[[Before]]
In
addition to the process required under subsection (a),
before the disposition of any real property owned or controlled
Qy
the
County (other than g property which has either nominal value or an
appraised value lower than $100,000) becomes
fmal[[~]]~
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ill
the Executive 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 for the property during the term of
the lease or license; and
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al
the [[County]] Council,
Qy
resolution adopted after the Council
holds g public hearing with at least
U
days advance notice, must
approve:
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[(ill]]
(A) the [[disposition]] Executive's declaration of no
further
need~
and
[[ill]]
all
[[all material terms of the disposition, including the
price or rent to be paid and any associated economic
incentives.]] any disposition of the propertY at less than
full market value.
The Director must adjust the $100,000 floor in this subsection on July 1
every third year
by
the percentage increase or decrease in the
appli~
Consumer Price Index. or any successor index, during the previous 3
-4­
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ExPEDITED BILL
No.
11-12
82
:'''1
calendar years, rounded to the nearest $100Q. The Council may waive
the public hearing required by this subsection if it concludes that a
hearing on a particular proposed disposition is not necessary to properly
assess the proposed action. If the Council does not act under this
subsection within 60 days after the Executive has submitted [[all
information necessary to assess]] the proposed action, the proposed
action is automatically approved. The Council may extend [[this]] the
60-day deadline by resolution if the Council President has informed the
Executive, within 30 days after the Executive submitted the proposed
action. that the Council has not received all information necessary to
review the proposed action. If ([this]] the 60-day deadline would fall
during August or from December I? through December 31, the deadline
is automatically extended until the next scheduled Council session.
This subsection
~d
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subsection (c) do not apply to any disposition of
property that will be used primarily for housing development if the
recipient legally commits to the Director of the Department of Housing
and Community Affairs that at least 30% of the housing units built on
the property will be moderately priced dwelling units or other units that
are exempt from the development impact tax under Section 52-49(g)(l)­
(±1
ill
*
*
*
[(c)]
[[@]]
W
The Executive must adopt regulations to establish a process for
[(b)]
[[W]]
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
buy]. The regulations must provide for:
-5­
Of
a lease with an option to
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ExPEDITED BILL
No. 11-12
109
110
*
[(d)]
[[ill]]
(b)
*
*
*
*
*
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112
Sec. 2. Expedited Effective Date; Applicability.
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 11B-45. as amended by Section 1 of this Act. [[applies]]
does not apply to any disposition of County property [[completed on or after]] for
which
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a
legally enforceable contract. lease. or other agreement was signed by all
Sec. 3. Applicability - White Flint Sector Plan area.
Section I1B-45Cb)-Ce), as amended by Section 1 of this Act does not apply to
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parties before that date.
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any sale by the County of real property located in the boundaries of the White Flint
Sector Plan if:
W
the property was acquired by the County from the State Highway
Administration:
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au
Uil
the property was originally acquired by the
Administration to construct Montrose Parkway; and
State Highway
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the sale by the County is completed on or before December 31, 2012.
- 6­
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ExPEDITED BILL
No.
11-12
127
Approved:
128
Roger
129
Date
Approved:
130
DISAPPROVED
Isiah Leggett, County Executive
l31
5L14L2012
Date
This is a correct copy ofCouncil action.
132
Linda M. Lauer, Clerk of the Council
Date
-7­