RECOMMENDATION

Approval of an ordinance amending Chapter 4.20 of Title 4 of the San Jose Municipal Code by adding Section 4.20.080 to authorize the conveyance by private sale of City property for economic development or redevelopment.

BACKGROUND

Existing City ordinance permits the negotiated sale of surplus property located in or adjacent to Neighborhood Business Districts to private parties in order to encourage appropriate development. Councilmembers and the Administration have expressed an interest in having greater flexibility to allow negotiated sales of City owned property for economic development or redevelopment beyond the Neighborhood Business Districts The flexibility proposed in the ordinance would allow the City and/or Redevelopment Agency to target specific industries or economic activities that would further the purposes of the Getting Families Back to Work initiative.

ANALYSIS

General Requirements for the Sale of City Property

The Municipal Code requires the sale of City owned property, except as specifically exempted under the Code, at public auction to the highest responsible bidder. One of the exemptions under the Code is the sale of City owned property located in or adjacent to Neighborhood Business Districts in order to encourage appropriate development

Proposed Ordinance

The proposed ordinance would expand on the above referenced exception and permit the sale of City owned real property to a private party for the purpose of economic development or redevelopment beyond the Neighborhood Business Districts. The purchase price for the property would be its fair market value, unless the Council determined that a public purpose would be served by its sale at less than fair market value.

Additionally, the Council would have the discretion to impose conditions on the sale and use of the property. For example, the Council could obligate the buyer to any and all of the following conditions:

1. To use the property only for the purposes designated by the Council.

2. To begin the economic development or redevelopment of the property within a period of time fixed by the City.

3. To comply with any other conditions which the Council deems necessary to carry out the purposes of the economic development or redevelopment.

CONCLUSION

Once the Council has determined that City owned property is not needed for municipal purposes but could better be used for economic development or redevelopment, the proposed ordinance would permit the sale of the property at fair market value unless the Council determines that a public purpose would be served by its sale at less than fair market value.

RICHARD DOYLE

City Attorney

Edmundo Moran

Sr. Deputy City Attorney