Surplus Property
Do state law bidding requirements exist for selling municipal "surplus" property?/ Selling to an Emplolyee?
No - except for employees described below.
What if an employee wants to buy the surplus property?
Special rules apply to purchase by an employee. If an employee is going to buy surplus property of the municipality or public trust, then he or she can only do so if the surplus property is offered for sale to the public after notice of the sale is published. 11 O.S. Section 8-113(C)
Does this mean to be surplus the property must have no value?
No. It simply means that the municipality has no further use for the property. The municipal can make a finding that the item is surplus and then follow local procedures to sell it.
Do these same rules apply to the sale of surplus real property?
These surplus property principles may or may not apply to the sale of municipal real property. Some Oklahoma case law says the sale of real property "held in trust for the public" (usually purchased by tax money or G.O. bonds) must be declared surplus or abandoned by the governing body and can only be sold by a vote of the people. You should consult your legal advisor if selling real property.
Do special rules apply to selling, conveying or leasing a utility?
Yes. Title 11, Sections 35-201 through 205 requires a vote of the people in order to sell a utility with a fair market value exceeding $10,000.
Is an exception created for selling the utility to another public entity?
Yes. The above statute creates an exception to a vote of the people if the sale is to the state or county or to a public trust of which the municipality is the sole beneficiary. If the municipality has a charter provision on this topic, the charter will control.
Does this statute define “utility”?
Yes. Utilities are defined to include municipally owned parks, lakes and recreation areas.
So, does all this mean a municipality can give or donate its surplus property to another?
No. A city of town absolutely cannot give a gift under the Oklahoma Constitution at Article 10, Section17. In addition, under general fiduciary legal principles, the governing body has a duty to receive fair market value for surplus property. Therefore, you should be careful about how you sell surplus property.
Can a municipality donate surplus property to another public entity like another municipality or a school or the county?
The Constitution makes no exception for another unit of government – public property simply cannot be donated or given away.
Then, if I can’t give it away, is it impossible to convey surplus property to someone else?
While surplus property cannot be given away – the OklahomaSupreme Court has determined that a public body can enter into an agreement todo a joint project or to exchange mutually beneficial promises.
Are there a couple of cases I should draw to the attention of my city or town attorney?
Yes. Burkhardt v.City of Enid, 771 P.2d 608 and State of Oklahoma ex rel. Brown v. City of Warr Acres, 1997 OK 117.
Now we are getting somewhere. How is this done?
The court has held that there must be consideration (enforceable promises or benefits) plus accountability in the contract to make sure the public is getting value for the “deal”.
Is a municipality free to make any agreement it wants for any purpose?
No. The Oklahoma Constitution at Article 10, Section 14 states that a city or town can only contract with another party for a municipal public purpose – which is a term of art that must be understood as a technical legal principle.
I need my municipal attorney to draft the agreement, but does a general principle apply?
Yes. If a city or town may perform a function that serves a municipal public purpose, the municipality may contract with a private entity for the performance of the service. It must be a true business arrangement.
Can the agreement to carry out a municipal public purpose be with another public body?
Yes. This may include providing in-kind services, swapping one piece of equipment for one owned by the county, or any other loan or trade of equipment or supplies so long as the value received matches the value given. Contracts between public entities are specifically authorized by the Interlocal Cooperation Act, 74 O.S. Section 1001 and following.