OLR RESEARCH REPORT
February 19, 2008
2008-R-0149
SURPLUS PROPERTY
By: Sandra Norman-Eady, Chief Attorney
You asked for a summary of, and flow chart depicting, the process for
disposing of surplus property by the Department of Public Works (DPW).
You also asked for information about a Committee on Conservation and
Development and whether it has any role in the process.
SUMMARY
DPW is responsible for the disposition of most state property that is
declared surplus. The Office of Policy and Management (OPM) must
approve an agency’s or department’s determination that property is not
needed. In addition, the Department of Environmental Protection can sell
or transfer property under its control as can the Department of
Transportation. As requested, this report focuses solely on the process
DPW follows when disposing of state real property.
Generally, after property is declared surplus, the OPM secretary
notifies all state agencies of its availability and gives them 90 days to
submit a plan for using it. But the commissioner of the Department of
Economic and Community Development (DECD) has the right of first
refusal to use the property for housing. The town or towns where the
property is located are also notified (as are the local legislators) and have
an opportunity to purchase the property at its fair market value. When
the DECD, other state agencies, and the town are not interested in
acquiring the property, DPW must sell, lease, or otherwise convey it on
the open market.
Mary M. Janicki, Director
Phone (860) 240-8400
FAX (860) 240-8881
http://www.cga.ct.gov/olr
Connecticut General Assembly
Office of Legislative Research
Room 5300
Legislative Office Building
Hartford, CT 06106-1591
Olr@cga.ct.gov
There is no state Committee on Conservation and Development. But
there is a Continuing Legislative Committee on State Planning and
Development that reviews the state plan of conservation and
development that state agencies must consider when acquiring,
developing, or otherwise improving real property.
According to Patrick O’Brien in OPM’s Bureau of Assets and
Management, neither the plan nor the committee has a role in the
surplus property disposition process.
PROCESS FOR DISPOSING OF STATE SURPLUS PROPERTY
Unneeded Property Offered to State Agencies
When a state agency, department, or institution determines that it
has unneeded real property, it must notify the OPM secretary. The OPM
secretary approves the agency’s determination that the property is not
needed and notifies all state agencies of its availability. Agencies
interested in acquiring the property must submit a plan to the secretary
within 90 days showing how they would use the property, a timetable for
using it, and a budget. Among these agencies, the DECD commissioner
has the right of first refusal if it plans to use the property as an
emergency shelter, transitional living facility for the homeless, or lowand moderate-income housing.
Unwanted State Property Offered to Towns
If DECD does not pursue the property for housing development, OPM
analyzes any other agency acquisition plan and arranges a conveyance. If
no agency submits a proposal to use the property, OPM declares the
property surplus and conveys it to DPW, which is responsible for selling,
leasing, exchanging, or entering into other agreements to dispose of it.
The DPW commissioner must notify the town where the property is
located and the legislators who represent it of the state’s intent to
dispose of the property. An independent appraiser determines the
property's fair market value and OPM determines the property's
environmental condition and its boundaries.
Once these determinations are made, the town has 45 days to notify
the state of its interest in purchasing the property at fair market value.
OPM and DPW staff work with the town to complete the sale within the
statutory timeframe of 60 days.
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Disposal of Property on the Open Market
If the town is not interested in the property or fails to express its
interest within the 45 days, DPW and OPM can try to dispose of it on the
open market. When the parcel is particularly large, OPM sometimes hires
real estate consultants to advise the state on potential strategies for
optimizing marketing and sales activities. A DPW property agent
advertises and sets an opening date for bids. DPW’s bidding office
receives all bids, which are publicly opened and read aloud on the bid
opening date. The minimum acceptable bid is the appraisal value plus a
10% bid deposit. If the bid terms are different than what was initially
contemplated by the town where the property is located (i.e., lower sale
price or the proposal is to lease rather than purchase the property), the
state must offer the town the opportunity to purchase on the new terms.
If the town is not interested, the disposition by bid continues.
The DPW commissioner, OPM secretary, and the State Properties
Review Board (SPRB) must review and approve the sales transaction. The
state treasurer must also approve the transaction if the property was
purchased or improved with state tax-exempt proceeds.
Legislative Approval of Disposition Plans
The Finance, Revenue and Bonding and Government Administration
and Elections committees get a copy of the transaction packet, consisting
of the appraisal report, the proposed purchase price, and any other
related information. The committees have 30 days after receipt to
approve or disapprove the transaction. If they do not act within this
timeframe, the transaction is considered approved. However, the DPW
commissioner may withdraw, alter, amend, or otherwise change a
transaction in some way and resubmit it in which case the committees
have 30 days from the date of the resubmittal to act.
Once the committees approve the transaction, the DPW property
agent notifies the approved bidder by certified mail that its bid has been
accepted and the attorney general conducts a final legal review.
The DPW commissioner must restart the process again, beginning
with notice to the official and legislative representative of the town where
the property is located if it is not sold within three years of the initial
notice (CGS §§ 4b-21 and 3-14b).
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FLOWCHART OF SURPLUS PROPERTY DISPOSITION PROCESS
State agency, department, or institution (agency) determines
that it has unneeded real property
Agency notifies the OPM secretary of the surplus and control of
property is transferred to DPW
OPM notifies state agencies, including DECD, of property
availability and gives them 90 days to submit a plan
Transfer property to DECD if it can be used as an emergency
shelter, transitional living facility for the homeless, or low- and
moderate-income housing
If another agency wants the property,
it is transferred
If no other state agency desires the property, it is treated as surplus and
the OPM secretary contacts DPW and the state treasurer if tax exempt
obligation proceeds involved
Environmental studies, surveys, and property appraisals completed
DPW offers property to the municipality where the property is located
If no agreement with town, DPW may offer property for sale
or lease or otherwise dispose of it
Sell, lease, or transfer to town if agreement reached
DPW completes conveyance instrument after
getting approval from OPM and SPRB
However
DPW cannot proceed with the plan to dispose of the property and
must offer it to the town again if (1) DPW does not submit proposal to
SPRB within 3 years after initial offer or (2) SPRB doesn’t approve the
transaction within 5 years after initial offer.
DPW submits the transaction Finance, Revenue and
Bonding and GAE committees for approval within 30
days
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STATE PLAN OF CONSERVATION AND DEVELOPMENT
The current approved plan covers the period 2005-2010 and was
recommended by the Continuing Legislative Committee on State
Planning and Development. By law, OPM must revise the plan on a fiveyear cycle. State agencies must consider the plan when they prepare
plans of their facility needs as required under CGS § 4b-23. The
agencies must be consistent with the plan when:
1. acquiring real property that costs in excess of $200,000;
2. developing or improving real property at a cost in excess of
$200,000;
3. acquiring public transportation equipment or facilities at that cost;
or
4. authorizing a state grant in excess of that amount for the
acquisition, development, or improvement of real property or
transportation equipment of facilities.
According to Patrick O’Brien, in OPM’s Bureau of Assets and
Management, neither the plan nor the committee has a role in the
surplus property disposition process. The primary reason for this is that
in most transactions the state does not know how the property being
conveyed will be used, according to O’Brien. In the past 15 years, the
state has disposed of over 60 properties and only had advance notice of
how three of the properties (Norwich Hills, Fairfield Hills, and Seaside)
were going to be used, O’Brien stated. With respect to the three
properties, the state requested developers to disclose the proposed uses
because, given the size of the properties, the uses would significantly
impact the towns where the properties were located, said O’Brien. The
state worked with the towns to come up with acceptable usages.
SNE:tjo
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