LOUISIANA PUBLIC LEASE LAW. Presented by: Hanlon deverges Senior Assistant Parish Attorney Jefferson Parish Attorney s Office

Transcription

1 LOUISIANA PUBLIC LEASE LAW Presented by: Hanlon deverges Senior Assistant Parish Attorney Jefferson Parish Attorney s Office

2 OVERVIEW Background Procedure and Example Consequences for Noncompliance Exceptions

3 Background TITLE 33 MUNICIPALITIES AND PARISHES La. R.S. 33:4711. Sale, exchange, or lease of property by police jury Police juries may sell, lease, or exchange with private persons or other political corporations of this state any property owned by the police jury or the parish, when such property is no longer needed for public purposes

4 Louisiana Constitution Article VII 14 prohibits donations of public property. Public Lease Law helps ensure that fair market value is received for the use of public property protects the public trust by providing notice to the public so citizens have an opportunity to object

5 Goal of Public Lease Law Secure Most Advantageous Lease Possible in atmosphere of secret, competitive bidding (Maximize Rent) Protect the Public Trust Transparency Give all people a chance to bid. Prevent favoritism.

6 TITLE 41 PUBLIC LANDS CHAPTER 10 LEASES OF PUBLIC LANDS 41:1211 Lessor Defined For the purposes of this Part, the term lessor shall refer to and include the Register of the State Land Office, the commissioner of conservation, and any and all other branches, departments or agencies of the state, or any school district, levee district, drainage district, municipal or parochial subdivision of this state, or any penal or charitable institution, or state university or college, or other unit or institution, deriving its authority and powers from the sovereignty of the state.

7 PROCEDURE 1. APPLICATION 2. ADVERTISEMENT 3. BIDDING 4. SELECTION 5. EXECUTION OF LEASE

8 PROCEDURE APPLICATION La. R.S. 41:1213 Any person desiring to lease any land as set forth in this Part shall present to the lessor a written application, together with a cash deposit of twenty five dollars, which shall be returned to the applicant if he makes an unsuccessful bid, after a sum sufficient to pay the advertising costs has been deducted. The application shall set forth the name and address of the applicant, a reasonably definite description of the location and amount of land which the applicant desires to lease, and the purposes for which the lands are to be leased. Where such purposes include the placement of structures, obstacles, fill, or any other materials upon state lands, the application must be accompanied by legible copies of maps, plans, specifications, and such other information or data as may be required by the secretary of the Department of Natural Resources. The applicant shall ask that the application be registered, and that the land described therein be leased to him under the provision of this Part. The lessor shall register the application and shall order an inquiry to determine whether the lands applied for are leaseable for such purposes.

9 Procedure Advertisement and Bids (La. R.S. 41:1214) 1) Determination If the lessor determines that the land in question may be leased 2) Advertisement shall publish an advertisement in the official journal of the parish where the land is located setting forth a description of the land to be leased, the time when bids therefor will be received, and a short summary of the terms, conditions, and purposes of the lease to be executed. If the lands are situated in two or more parishes, the advertisement shall appear in the official journals of all parishes in which the lands are located. The advertisement shall be published for a period of not less than fifteen days and at least once a week during three consecutive weeks. The lessor may also send notices to those whom it may think would be interested in submitting bids for the leases.

10 Procedure Advertisement and Bids (La. R.S. 41:1214) 3) BIDS Secret, Sealed Include 10% deposit in form of certified check or money order (and not less than $75.00) Hand delivered, certified mail with return receipt, or electronic bid. Bids cannot be accepted on USPS holidays. Lessors shall provide a uniform system of electronic bids and may require electronic bidding for all bids.

11 Procedure SELECTION Opening of Bids; execution of leases (La. R.S. 41:1215) Opening of Bids: At the date and hour mentioned in the advertisement for the consideration of bids, the bids shall be publicly opened by the lessor at its office. The lessor shall accept only the highest bid submitted to it by a person or persons who meet all the conditions of this Part except in the case where the lessor is a public benefit corporation as authorized and defined in Subsection B of this Section. The lessor shall have the right to reject all bids. Successful bidders shall pay for their leases by a certified check. In all other respects, the lessor may execute any lease granted under such terms and conditions as it deems proper or as otherwise provided in this Part. Executed in triplicate

12 THE LEASE La. R.S. 41:1217 Term and rental Term shall not exceed 10 years. Rent must be paid in cash annually and in advance. May be extended for various lengths of time depending on permanent improvements made upon the land.

13 Special Procedures Public Benefit Corporations (La. R.S. 41:1215) State Wind Leases (La. R.S. 41:1733) College and University Property (La. R.S. 17: )

14 Example Jefferson Parish has identified a lot on Airline Highway that is not being used and could be used by several nearby companies for parking. The Parish Council, upon recommendation by the various Parish departments, has passed an ordinance authorizing the lease by public bid.

15 Advertisement for Bids SEALED BIDS will be received in the West Bank Purchasing Department, Suite 4200, Jefferson Parish General Governmental Building, 200 Derbigny Street, Gretna, LA until 2:00pm, December 1, 2017 and publicly opened thereafter for the following: PROPOSAL NO LEASE OF IMMOVABLE JEFFERSON PARISH PROPERTY The Parish of Jefferson, State of Louisiana, hereby advertises for the submission of bids to lease an approximately 60,000 square foot tract of land, consisting of a portion of Lot X, Metry Subdivision, zoned C-2, located just east of the MG Canal and west of Imaginary Drive with frontage on Airline Highway, for a starting minimum bid of $40, per year. The surface lease shall be subject to the condition that no buildings or other structures shall be erected on the lease site. In addition to the annual lease amount, the successful bidder shall be responsible for onetime costs for the resubdivision, rezoning and advertisement of said lease site in the total amount of $11, Bid Applications can be obtained through the Jefferson Parish Purchasing Department, Jefferson Parish General Government Building, 200 Derbigny St., Suite 4400, Gretna, LA Bids may be viewed online at: Each bid must be accompanied by a 10% deposit in the form of a cashier s check or certified check. The Jefferson Parish Council reserves the right to accept or reject any and all bids, in whole or in part, for just cause pursuant to the law. Director Purchasing Department

16 INVITATION TO BID --THIS IS NOT AN ORDER JEFFERSON PARISH PURCHASING DEPARTMENT JEFFERSON PARISH GENERAL GOVERNMENT BUILDING 200 DERBIGNY ST., SUITE 4400 GRETNA, LA (504) Bids will be received, in the Jefferson Parish Purchasing Department until the hour of, local time and then publicly opened on in the Purchasing Department. AS A 10% DEPOSIT IS DUE WITH BID SUBMISSION, ALL RESPONSES MUST BE SUBMITTED MANUALLY. BID FOR LEASE OF IMMOVABLE PROPERTY Legal Description: A portion of Lot X, Metry Subdivision, Jefferson Parish, measuring approximately 60,000 square foot, zoned C-2 and located just east of the MG Canal and west of Imaginary Drive with frontage on Airline Highway. Minimum Bid: $ 40, per year Bid Amount: $ Deposit Amount (10% of Bid Amount) $ (Deposit must be either an original cashier s check or an original certified check.) The bidder hereby acknowledges that this bid may be rejected by the Parish of Jefferson if the Property Bid Lease Agreement, identified as LEASE JP-1, is not executed or if the above referenced deposit is not enclosed with bid. Signature Title Print or Type Name Address Telephone City, State & Zip Code

17 INSTRUCTIONS TO BIDDERS AND GENERAL CONDITIONS Sealed bids will be received in the Jefferson Parish Purchasing Department, Jefferson Parish General Government Building, 200 Derbigny St., Suite 4400, Gretna, LA 70053, until the date and hour specified above, at which time they will be publicly opened. LATE BIDS WILL NOT BE ACCEPTED. In addition to the bid amount (annual lease rate), the successful bidder shall be responsible for onetime costs for the resubdivision, rezoning and advertisement of said lease site in the total amount of $11, After acceptance of the successful bid by the Jefferson Parish Council, said amount shall be due upon execution of the final lease documents. All bids submitted are subject to these instructions and general conditions and any special conditions and specifications contained herein, all of which are made part of this bid proposal reference. The JEFFERSON PARISH COUNCIL reserves the right to accept or reject any and all bids in whole or in part, for just cause pursuant to the law. ONLY BIDS WRITTEN IN INK OR TYPEWRITTEN, AND PROPERLY SIGNED BY A MEMBER OF THE FIRM OR AUTHORIZED REPRESENTATIVE, WILL BE ACCEPTED. PENCIL AND/OR PHOTOSTATIC FIGURES OR SIGNATURES WILL BE GROUNDS TO REJECT THE BID.

18 PROPERTY BID LEASE AGREEMENT * UNITED STATES OF AMERICA BY: PARISH OF JEFFERSON * STATE OF LOUISIANA TO: * PARISH OF JEFFERSON * * * * * * * * * * * * * BE IT KNOWN, that on the dates herein below set forth: The Parish of Jefferson, represented herein by Christopher L. Roberts, Jefferson Parish Council Chairman, (hereinafter referred to as "LESSOR"), pursuant to authority of Ordinance No , adopted on the 1st day of December, 2017 and Resolution No. adopted on the day of, 2017 does hereby lease to, represented by, Member (hereinafter referred to as "LESSEE"), the following described rights in and to the undeveloped real property described as a portion of Lot X, Metry Subdivision, Jefferson Parish, as shown on the attached survey by Survey Company dated November, 1, 2017, measuring 60,000 square feet (hereinafter referred to as Leased Premises ). The PARISH OF JEFFERSON does hereby as of the date of execution by LESSEE ( Effective Date ) lease to LESSEE or permit the use of the above described surface area to LESSEE for the purpose of constructing and using as a parking lot for the parking of automobiles, and said use of the property shall only be for parking of vehicles, for and in consideration of Lease Payments in the sum of $, payable annually on or before January 15 th to the Jefferson Parish Finance Department. In addition to the Lease Payments, Lessee shall pay Lessor $11, for costs associated with the resubdivision, rezoning and advertisement of the lease site. This Lease Agreement will be for a term of five (5) years with two (2) five (5) year options to renew on all of the terms herein, unless sooner terminated by either party. The Lease Payment as set forth above shall be increased on January 15, 2022, and on the same day of each five (5) year period thereafter, by the increase, if any, of the Consumer Price Index for U.S. Cities ( All Urban Consumer Price Index - Chained Index), All Items ( Index ), as published by the United States Department of Labor Bureau of Labor Statistics, over the Base Period Index ) multiplied by the previous year s Rent. The Base Period Index shall be the Index for the calendar year immediately preceding the Adjustment Date. When the adjusted Lease Payment has been determined,

19 Consequences for Noncompliance Mere irregularities and informalities do not necessarily void the contract. Generally, as long as there is substantial compliance, a court will not invalidate a lease. Leases have been found void where there is major noncompliance, such as not advertising at all.

20 Giles v. New Orleans City Park Imp. Ass n, 306 So.2d 823 (La. 4 th Cir. 1975) Plaintiff sued for an opportunity to bid on operation of a tennis concession in City Park Wisner Tennis Building. City Park granted lease extension to a vendor that properly went through the bid process the first time. Bid law allows for extensions when improvements are made to the property by the lessee. In this case, improvements to the building were made by the lessor, so the court found that the extension exemption did not apply. The lease was deemed invalid and to have no effect, and the court ordered City Park to advertise for bids for the lease. Purpose of public lease law is to avoid favoritism and to assure the best possible service for the public. They couldn t just favor the company that was already in place. This is an example of a court voiding a lease.

21 Upper Audubon Ass n v. Audubon Park Commission, 329 So.2d 206 (La. 4 th Cir. 1976) Audubon Park Commission, even though given power to charge and collect rent, is subject to public lease law and not exempt from public bid and advertisement requirements. Its leases were declared invalid because it didn t follow public lease law. The Court said that the Commission could evict vendors that were in space needed for zoo expansion, yet it was allowed to continue leasing other spaces on month to month basis to keep zoo functioning until bid law could be followed.

22 State ex. rel. Cuccia v. French Market Corp., 334 So.2d 241 (La. 4 th Cir. 1976) Cucchia, Plaintiff s Bid: $32,400/yr minimum, 7.5% on sales up to $500,000, 7.75% on sales up to $550,000, and 8% of all sales if exceeded $550,000. Masson, Defendant s Bid: $26,000/yr minimum, 7% on sales up to $500,000, 8% on next $250,000, 9% on next $250,000, and 10% on sales in excess of $1,000,000. Which one would you pick? The Plaintiff argued that his bid was higher. That bid is better until you get to $1,125,000 in sales. But worse after you have high sales. Well, Morning Call never exceeded $300,000 in sales when they were in the spot. Defendants would have had to increase sales by 400% before their magic figure would be reached. Court could not accept the argument that bid was higher because it might produce greater revenue if some unattainable figure of gross sales is used as the basis of comparison. The lease that French Market chose was unrealistic, so the court voided the lease for failing to follow public lease law. French Market also entered into a lease term of 15 years after advertising as 10 years. This did not comply with the statute either.

23 Plantation of the Green v. Gamble, 441 So.2d 299 (La. 4 th 1983) Unsuccessful bidder on restaurant at zoo sought to void bidding process. Plaintiff challenged saying that he was the high bid, that the property description in the ad was wrong, that the ad wasn t run properly, the defendant s bid was not delivered properly, and that the term of the lease was invalid.

24 Plantation of the Green v. Gamble, 441 So.2d 299 (La. 4 th 1983) Proposal for Plaintiff 3% of gross revenue or guaranteed minimum of $121, ,700 sq. ft. to be developed. 200 a la carte diners and 300 diners at private functions. Proposal of Defendant 5.2% of gross revenue guaranteed minimum of $121, sq. ft. to be developed. 200 a la carte diners (124 inside and 76 on ground floor patio) and 200 at private functions. Court found it was reasonable to accept $ less in minimum rent for 2.2% more in gross revenue with an applicant that was stronger according to the board. Court pointed out that this rested on a determination on an evaluation of ability of bidders to run a successful restaurant. Park Commission correctly chose bid that was likely to generate most revenue.

25 Plantation of the Green v. Gamble, 441 So.2d 299 (La. 4 th 1983) On the Property location issue, we already discussed this earlier the Audubon Zoo, 6500 Magazine St. was the description. Plaintiff said that this was not a valid description of where the restaurant would be. The court said that the zoo is well known and if you do not know it, you could easily find out. Court found this description was good enough. Regarding the Date in Advertisement, the original deadline was extended by 2 days. The ad had November 22 from Nov 1 17, then November 24 from Nov Even though this was a shorter period than required by law, all the parties were informed. The plaintiff even submitted on the 24 th. The Commission complied to the maximum extent possible under the circumstances. Mere irregularities do not necessarily void the lease. On the Method of Delivery issue law at the time required bid to be placed in US mail. Defendant delivered by hand. However, because there was no allegation that bid did not remain sealed or contents did not remain secret, the court found that public lease law was substantially complied with. On the Term of the Lease Lease term was for 50 years. Although the maximum allowed is 10 years, an extension is allowed if the lessee improves the property. In this case, the lease mandated that the lessee invest $600,000 in improvements and vest ownership in the lessor after the end of the lease. This satisfies the exception for a 10 year lease when a lessee makes improvements exceeding $100,000. Overall, because there was substantial compliance with the statute, the bidding process was not voided. Substantial compliance is key, everything does not have to be perfect, but cannot ignore major components of public lease law.

26 Kleiser v. Airport Com n, 640 So.2d 751 (La. 3 rd Cir. 1994) Kleiser was a 1994 case involving a service station on airport commission land. The losing bidder had highest bid for monthly rent but the winning bid went over and beyond to show how it would be more successful and improve site. Court will not substitute its judgment for the good faith judgment of an administrative agency when it is exercised in a fair and legal manner and not arbitrarily. The Court relied on the zoo case that we just discussed.

27 Terral Barge Line, Inc. v. Madison Parish Port Com n, 577 So.2d 787 (La. 2 nd Cir. 1991) Competing bids for a lease of a port facility. The bids were close, but the higher bid did not deposit 10% of primary term as required (only deposited 10% of first year). So one company deposited $25,000 and the other $6,200, even though the second had a slightly higher bid. Commission acted in its discretion in rejecting this bid because it did not substantially comply with the bid requirements.

28 Exceptions Leases in Parish buildings if lease is conditioned on the lessee providing health or social services to area residents at a reduced rate or free of charge (La. R.S. 41:1212(J)) Orleans and Jefferson Leases to owner of adjacent land if lease area is less than 10,000 sq. ft. (La. R.S. 41:1224) Bucktown Marina Boat Slips first come, first served, FMV (La. R.S. 41:1224.1)

29 Exceptions Hospital Service District (La. R.S. 46:1055, 1074) LSU Board of Supervisors (when leasing in accordance with La. R.S. 17: ). New Orleans Convention Center leases from (La. R.S. 41:1215.2) Fort Pike to the Rigolets Marina (La. R.S. 41:1215.3) Land given to Lafayette in 2009 (La. R.S. 41:1224.2)

30 Exceptions Leases to other political subdivisions, the state, or the United States (La. R.S. 41:1291) Leases if dedicated for the purpose of creating a research and development park in cooperation with certain educational boards (La. R.S. 41:137) Leases for Industrial Inducement Purposes. (La. R.S. 33: )

31 Exceptions A parcel that is insusceptible of development because of small size or because of building restrictions. Lake Terrace Property Owners Ass n v. City of New Orleans, 567 So.2d (La. 1990), at fn 6). Parcels that would have no value to anyone other than the adjacent landowners. Lake Terrace Property Owners Ass n v. City of New Orleans, 567 So.2d (La. 1990), at fn 6). If the contract is too complex to be the object of bidding, the contract is not void for failure to apply the public bid laws. Arnold v. Board of Levee Commissioners of Orleans Levee District, 327 So.2d 495 (La. App. 4th Cir. 1976); JTS Realty Corporation v. City of Baton Rouge, 499 So.2d 275 (La. App. 1st Cir. 1987); Hebert, 200 So.2d 877.

32 Exception for Short Term Use La. Atty. Gen. Op. No Church using community center on Wednesday nights and Sundays did not need to follow public lease law. Portion that church used was available to others at other times (i.e., non exclusive use). Opinion recommends standard agreement and uniform rate schedule. Considered not a lease under public lease law, but a fee for short term use of property. La. Atty. Gen. Op. No Applied above to a concession stand in park that had different leagues using it. No PLL if non exclusive use. La. Atty. Gen. Op. No PLL only applicable if concession stand is exclusive use of one vendor. La. Atty. Gen. Op. No Can charge fee for non exclusive use without public lease law; must follow public lease law if exclusive use by YMCA.

33 Questions? Thank you! Hanlon deverges