Property Disposal Protocol

City of Bradford Metropolitan District Council

PROPERTY DISPOSAL PROTOCOL 2008

Scope

This protocol applies to all disposals of Council land and buildings.

1.General Principles

1.1Councils are subject to constraints when they sell land or buildings. Some of these are enshrined in law; others arise because of a general expectation that local authorities should be seen to act fairly when disposing of land. Local authorities should, as a rule, sell land for the best available consideration. Land dealings by local authorities attract keen public interest and procedures must be clearly defined. This Protocol is designed to ensure that land disposals are fair and transparent and that the Council receives the best consideration that can reasonably be obtained. There are a variety of methods by which land may be marketed. These include: -

Formal Tendering - the Council invites sealed bids, which are opened together. The Council and the purchaser then immediately enter into a contract under which the purchaser usually pays a 10% deposit.

Informal Tendering – the Council invites offers which are opened together immediately following the closing date for the bids specified in the Tendering process. If a higher unsolicited offer is subsequently received all parties may be asked to resubmit.

Private Treaty – this is where negotiations are carried out between the vendor and prospective purchasers privately and in comparative secrecy.

Auction – the property is marketed as part of the auction process. The contract is signed and exchanged at the auction with the highest bidder.

1.2Land/property disposals will normally be done through a competitive tendering process by open advertisement on the market, wherever there is likely to be more than one potential purchaser.

1.3The method of marketing will be determined by the Assistant Director of Asset Management in compliance with this Protocol.

1.4Occasionally, a limited marketing exercise may be used where the land or property has already been subjected to open market testing or following short-listing after initial expressions of interest exercise.

1.5Where appropriate, sales may be conducted by private treaty where a marketing exercise has failed to secure a buyer.

1.6The Capital Investment Team must be informed of all proposed transactions where an asset swap arrangementis to be considered. The proposed annual programme of disposals and associated capital receipts will be reported to the Capital Investment Team for information and consideration as part of capital investment planning.

1.7The full implications for the Council’s VAT position will need to be taken into consideration on disposing of property in consultation with the Council’s VAT advisors.

2.Exceptions to the General Principles

2.1For certain types of property open market advertising may not achieve the best consideration. For example: -

Sales of small areas of land where there is realistically only one potential purchaser, for example, sales to adjoining owners.

Sales of land where there is a ‘special purchaser’ for whom the land has a higher value than for anyone else, for example, “ransom strips” under the Stokes v Cambridge principle.

2.2Occasions arise where the Council wishes to support or encourage a specific use or development. In these instances sales will be negotiated to particular purchasers. Examples are:

Sales to Registered Social Landlords (RSLs)

Sales to developers or companies for industrial/commercial development to create new employment opportunities or protect existing jobs.
Sales to religious/community/voluntary groups to meet a local need.
Sales to selected partners in specific areas. All such sales will be in accordance with the procedure outlined in the Partnership agreement. In such cases disposal may be a direct negotiated private treaty sale, authorised by delegated powers under Paragraph A4 (1) of the Constitution or in sensitive or potentially contentious cases, by theExecutive or by a special property disposal sub-committee.

2.3For direct negotiations with a particular developer, the developer will need to satisfy the Council on the following issues: -

The provision of detailed information and plans of the proposed development.
The timescale for completion of the development.
Detailed funding arrangements and confirmation that these are in place.
Evidence of end user commitment and the opportunity for the Council to discuss that commitment directly with the end users.
Details of the developer’s financial offer for the property.
Developer’s track record with similar developments.
Any partnership record with other local authorities.
Full details of any proposed joint venture opportunity.
Details of any conditions precedent to which the proposal is subject.
Any wider/longer term regeneration benefits from the proposal. For example, employment or training opportunities during construction or from the proposed end user.
Provision of any other off site benefits or facilities.
Potential for attraction of shoppers/visitors/users to the district’s facilities.
Capacity of the proposal for bringing other sites forward or opening up other development potential.
Potential for leverage of private/other public funds and grants.
Capacity of the proposal to remove or reduce other Council financial liabilities.
Contribution to the Council’s regeneration priorities in the Sustainable Community Strategy and Economic Development Strategy.

2.4The above information will be assessed against standard criteria: -

Are there other developers who could deliver the project?
What other potential uses are there for the site?
Is there a robust and justifiable case for direct negotiation and not market testing in accordance with the protocol?

2.5 Developers will be required to enter into legally binding agreements to ensure that the development proposed and associated regeneration benefits are delivered.

3.Masterplans /Area basedRegeneration

The Council recognises the importance of ownership, use and occupation of assets in delivering regeneration objectives whether as part of an area regeneration programme or individual projects.

3.1In area based regeneration initiatives and Masterplan areas where the Council wishes to work with a partner or partners to secure a common agreed goal, sales to those partners or transfers into the partnership within the area may be directly negotiated to further the aims and objectives of the Partnership or Joint Venture Agreement. The land and buildings intended to be made available in the partnership arrangement will be identified at the outset and approved by the Executive through the Capital Investment Team. However, the partnership document must be capable of amending this, by agreement, to account for changing circumstances identified by the detailed evolution of the delivery plans, new funding regimes and new opportunities which may arise.

3.2Once a partner is selected, the following points need to be considered:

All proposals to acquire or dispose of land and buildings will be dealt with by Asset Management.
The statutory basis under which the land is held by the Council must be identified.
Likewise, the relevant powers under which the land is to be disposed need to be identified.
If the land is public open space, the appropriate statutory advertising procedures need to be complied with.
In all cases the open market value of the land or property should be established via Asset Management. An independent valuation may be required depending upon the circumstances of each case.
If the sale is to be at an undervalue either a general or specific consent from the Secretary of State will have to be in place to enable the Transfer to proceedand all conditions complied with.

4.Statutory Requirements on Best Consideration

4.1The Council has a statutory duty under Section 123 of the Local Government Act 1972 not to dispose of land at less than the best price reasonably obtainable unless the consent of the Secretary of State has been obtained

4.2For all methods of disposal, the Council must be able to demonstrate the achievement of best consideration to this end: -

Land and property disposals will be carried out or commissioned by the Council’s qualified valuers, whether the disposals be by open marketing or by negotiation. A reserve price can be put on any property being offered for sale at auction.
Selected negotiated disposal terms may be subject to independent valuation.
Selected development opportunities will be market tested to establish up to date valuation benchmarks.
The assessment of best consideration may take into account any additional benefits to the Council to which monetary value can properly be attributed.which is capable of being assessed by a qualified valuer.
Direct negotiations with partners will be operated on an open book accounting basis to provide the necessary information and supporting evidence to enable the Council and its auditors to assess that factors taken into account in the negotiations are valid and properly quantified and that the Council’s statutory obligations have been met.

5.Disposal Procedures

5.1The following procedures will be followed in all proposals for disposals of land and property: -

Details of ownership are verified at the outset.
The Assistant Director, Asset Management, as Corporate Property Officer is responsible for declaring a property surplus to requirements having taken into account the principles of good asset management.
Planning potential for changes of use/development is fully established prior to disposal. In appropriate cases where development potential exists planning permission will be obtained prior to disposal.
Ward Councillors are always informed of proposals to dispose of property within their ward.
A detailed valuation is prepared and approved prior to disposal.
Detailed terms and conditions for the disposal are prepared in advance of sale and drawn to the attention of prospective purchasers
Adequate security measures are maintained during the disposal process to ensure probity and integrity.
Procedures for the receipt and opening of tenders/offers are followed in all cases.
Properties declared surplus are brought to the attention of other Council departments prior to disposal. Any Department wishing to take occupation of such a property must have the approval of the Corporate Property Officer, who will need to be satisfied that the proposed use constitutes efficient use of assets other alternatives including co-location have been fully explored.
Contentious or sensitive issues are resolved either under delegated powers in consultation with the Corporate Portfolio Holder or by reference to the Executive, taking into account recommendations from the Member Steering Group and the outcome of consultation with Ward Councillors.
Instructions to Legal Services must include confirmation that the requirements of Section 123 Local Government Act 1972 have been met.

6.Consultation and Decision Making

6.1Member Steering Group

The Member Steering Group will oversee the annual programme of property disposals and assist with the resolution of any disputes or objections arising from the consultation process, taking into account the Council’s requirements of the Property and Facilities Management Programme and the policy on disposal of surplus assets. The recommendations of the Steering Group will be taken into account when decisions are made through the Council’s decision making procedures in the Constitution.

6.2Neighbourhood Forums / Area Committees

Occasionally in sensitive cases with a high level of public interest the subject of a proposed disposal may be discussed at a Neighbourhood Forum or Area Committee to engage with the local community and understand local concerns.

6.3Ward Councillors

Ward Councillors are notified of all proposed land and property disposals in their Wards. If no comments are received the disposal will proceed.

Where objections to the proposal are received from Ward Councillors, the objections will be referred to the Member Steering Group following which a decision will be made in accordance with the decision making powers set out in the Constitution. Ward Councillors will be given the opportunity to explain the reason for the objection. Where the disposal is a critical part of an approved corporate strategy the general presumption is that disposals will proceed unless there is very good reason not to.

6.4Petitions

Where a petition is received in respective of a proposed disposal, the Council’s Protocol for dealing with Petitions will be followed.

7.Disposal Of A Revenue Earning Asset

7.1Where it is proposed to dispose of a revenue earning asset the Assistant Director Finance and relevant service Assistant Director must be consulted to assess the revenue implications and any action necessary to offset these.

8.Transfer of Asset to Communities – Development of the Third Sector

In response to the Government’s initiative to strengthen the Third Sector and implement the Quirk Review on the Transfer of Assets to Communities the Council’s policy is as follows:-

That all applications should be channelled through Asset Management to co-ordinate assessment and evaluation to ensure a consistent approach.

Applications should be considered as part of a strategic asset management planning and options appraisal process to determine inter alia whether the Council has an operational requirement for the identified asset and if not, whether it is able to make the asset in question available for use by the third sector as opposed to securing a capital receipt through disposal on the open market. Furthermore, the potential/suitability for use by the third sector should be considered when determining whether vacant assets should be re let or offered for sale on the market.

That the Council will only transfer assets where benefits to both parties can be identified and agreed joint outcomes achieved. Partnership or management agreements between the Council and third sector organisations will be required setting out what is expected of each party and the agreed outcomes of a project. Such an agreement will be supplemental to a tenancy agreement and where freehold transfer takes place should be linked to the provision of any future funding provided by the Council.

That any transfer will not necessarily take place at less than market value with terms being determined on a case by case basis. When considering projects an assessment of feasibility, sustainability and outcomes in terms of engagement with the wider community and links to the Council’s priorities should be made – pending publication of the government’s guidance on risk assessment the Council will use procedures in the existing Accountable Body Guidance Manual and Organisational Fitness Criteria as a basis for evaluation.

That all transfers will be on a long leasehold basis except where it is shown to the satisfaction of the Council that a freehold transfer is essential.

That a full financial appraisal of capital and revenue implications is carried out when applications are being considered.

9. b-works Member Consultation

9.1 Where land and property is proposed to be disposed of under the b-works project the b-works Member consultation protocol will be followed;

9.2 Asset Management will produce a map of each electoral ward detailing land and property proposed to be disposed of in that ward.

9.3 The ward map will be emailed to ward members for consideration together with a request for a meeting to take place between ward members and Asset Management Officers to discuss the disposal proposals.

9.4 Officers will provide ward members with written confirmation of the decisions made at the ward map consultation meeting.

9.5 Proposed disposals for which ward members and officers are unable to reach a consensus will be referred to the Portfolio Holder for Regeneration & Economy for final determination.

9.6 Officers will provide members with regular written updates of the progress of all disposals within their wards.

Property Disposal Protocol V7 300710