CURRENT TRENDS AND CASE STUDIES IN PROPERTY DISPOSITION FOR THE COMMUNITY COLLEGE FACILITY COALITION S (CCFC) 21 ST ANNUAL CONFERENCE SEPTEMBER 8-10, 2014 Lindsay A. Thorson, Atkinson, Andelson, Loya, Ruud & Romo Margie Padron, Long Beach Community College District SUMMARY OF SURPLUS PROPERTY PROCEDURES These materials provide community college districts with an overview of practical issues to consider before using or disposing of community college district property, as well as the options available and information necessary to better assess current real property use agreements, and make fiscally responsible plans for future use agreements or disposition of community college district properties. We will discuss the disposition of surplus real property by way of sale or lease and the options available to community college districts for sharing facilities with both public and private entities. 1. What are the community college district s goals/expectations? 2. What limitations (legal, political, etc.) exist on the property? 3. How will these goals, expectations, and limitations be communicated to the governing board and to the community? 4. What does the community college district desire to do with the funds it receives and is this an allowable use of those funds? 5. With what type of entities (public, private, and individual) is the community college district dealing? 6. What type of relationship, if any, does the community college district have with these entities? 7. What political/community issues will be involved in the community college district s decision about the disposition of the property or its ultimate use? 8. Does the community college district have a master facilities plan with which the use/disposition of the property must conform? 9. How will the disposition of the property affect the use of other community college district facilities? 10. Has the community college district considered disposing of other properties that may be better suited? 2014 Atkinson, Andelson, Loya, Ruud & Romo
I. PRELIMINARY MATTERS A. Asset Management Planning. Asset management, as a term, is often confusing because it means different things to different people. In the context of California community college districts, asset management simply means treating surplus real property -- property no longer needed for programmatic, administrative, or operational use -- in a businesslike way. A community college district does this by taking a holistic look at the need for its real estate over the next ten or twenty years and deciding, based on policy goals, demographic analysis, and economic analysis, what properties may be declared surplus and can generate revenues and how all other community college district properties are best used. A well-run business treats any of its assets in a manner which secures the most value for its shareholders. Similarly, a prudent community college district, in dealing with its surplus real estate, will be responsible for securing value from these assets for the benefit of its constituents. Acting like a business in handling its surplus real property carries significant benefits for a community college district. A community college district engages in proper asset management by planning for the long-term use of all its real property assets. For a property which it determines it may not need for the longterm, the community college district should first inventory it in order to fully understand what it owns. Second, a community college district should engage in planning for disposition to ensure that it will not be shortchanged if and when the property were to be put on the market. It does this by recognizing that there are various methods to achieving value for a piece of surplus property. In this context, a community college district should analyze the pros and cons of each approach to disposition - sale or lease of property, exchange or joint venture, sale of property as is or with zoning or development entitlements in place, etc. In this way, a community college district comes to understand the relationship of risk to reward; in the marketplace greater reward almost always carries with it the assurance of greater risk. The question is how does a community college district knowledgeably and prudently find the right balance between that reward and that risk? A recommended way to approach asset management with the goal of ensuring an ultimately successful disposition is to undertake an Asset Management Planning Report. Although this plan can take different forms, essentially an Asset Management Planning Report should provide the community college district with the following information and can do so by carrying out the following tasks: 1. Inventory each potentially surplus property (including reference to each property s characteristics and constraints, such as size, zoning and General Plan designations, title issues, current use, and lease and other encumbrances). 2. Summarize lease obligations and other commitments for use by non-district entities of each property, if any. 3. Discuss constraints and opportunities for each property. 4. Memorialize discussions with the local jurisdiction so the community college district can avoid surprises (and possibly create compromise). 2014 Atkinson, Andelson, Loya, Ruud & Romo 2
5. Articulate real-world disposition options for each property and, working with an appraiser, develop value ranges for each option. 6. Look at all potentially surplus properties holistically with reference to all of the real estate owned by the community college district; i.e., use this process to discover and act on opportunities to resolve all potential land use issues with the local city or county in which the community college district operates. 7. Summarize legal and procedural requirements for sale or lease or exchange of public community college district real property. 8. Present recommendations to community college district for the preferred manner of disposition for each property and the priority in which they should occur. It should be remembered that the final version of any good Asset Management Planning Report will be the result of discussions undertaken among community college district staff, the governing board, the staff of the local city or county, and members of the public. In this way, the Asset Management Planning Report will be able to lead to wide acceptance by the community in any disposition of the community college district s real property. B. Notice to Local Planning Agency. Government Code section 65402(c) requires a community college district to submit a report to its local planning agency before disposing of any real property. The planning agency must report on the disposition s conformity with the applicable general plan within forty days. If the planning agency fails to report on the disposition of such property within forty days, such failure to submit a report is deemed a conclusive finding that the proposed disposition conforms to the general plan. If the planning agency disapproves of the disposition, such disapproval may be overruled by the community college district. C. California Environmental Quality Act. Prior to disposing of the property, community college districts must comply with the California Environmental Quality Act ( CEQA ). Community college districts may seek a categorical exemption for the sale of surplus property pursuant to CEQA Guidelines section 15132. D. Deed Restrictions. Prior to selling any surplus property, a review of the real property deed should be made to discover any possible restrictions. II. SALE OF SURPLUS PROPERTY A. Resolution Declaring Property Surplus and Intent to Sell. Before ordering the sale of any property, the governing board, in a regular open meeting, by a twothirds vote of all its members, must adopt a resolution, declaring its intention to sell the property. The resolution must describe the property proposed to be sold in such manner as to identify it and shall specify the minimum price and the terms upon which it will be sold and the commission, or 2014 Atkinson, Andelson, Loya, Ruud & Romo 3
rate thereof, if any, which the governing board will pay to a licensed real estate broker out of the minimum price. The language of this resolution is very important as it must contain the terms and conditions upon which the community college district will sell the property. Often, it will be practical to adopt a detailed resolution prior to engaging in the notice and negotiation process with public agencies, as set forth above, thereby providing a minimum standard of deal points from which all such negotiations must begin. The resolution must fix a time not less than three weeks thereafter for a public meeting, at which sealed bids to purchase will be received and considered. The resolution should also delegate authority to administration to send public notices, solicit bids for the sale of the property and advertise a bid hearing. If the date of the bid auction meeting is not known, the resolution can indicate that the meeting date will be established at a future date and noticed accordingly. B. Offer to Public Agencies and Nonprofits. The next step is to offer the property for sale in accordance with the following priorities and procedures. First, the property must be offered for park or recreational purposes pursuant to Government Code section 54220 et seq., in any instance in which such article is applicable. These entities include the city parks and recreation department, county parks and recreation department, regional park authority, State Resources Agency, and any school district in whose jurisdiction the property is located, and, if the property is in an enterprise or infill zone to nonprofit neighborhood enterprise association corporation or public transportation agency, or housing authority. Second, the property must be offered for sale, at fair market value as follows: (1) In writing, to the Director of General Services, the Regents of the University of California, the Trustees of the California State University, the county and city in which the property is situated, and to any public housing authority in the county in which the property is situated; and (2) By public notice to any public district, public authority, public agency, public corporation, or any other political subdivision in this state, to the federal government, and to nonprofit charitable corporations existing on December 31, 1979, and organized pursuant to Corporations Code section 10200 et seq. then in effect or organized for charitable purposes on or after January 1, 1980, under Corporations Code section 5110 et seq. Public notice must be published in a newspaper of general circulation within the community college district s boundaries. The notice must specify that the property is being made available to all public districts, public authorities, public agencies, and other political subdivisions or public corporations in this state, and to other nonprofit charitable or nonprofit public benefit corporations. Publication of notice pursuant to this section must be once each week for three successive weeks. Three publications in a newspaper regularly published once a week or more often, with at least five days intervening between the respective publication dates not counting such publication dates, are sufficient. The written notices must be mailed no later than the date of the second published notice. The entity desiring to purchase the property must, within sixty days after the third publication of the notice, notify the community college district of its intent to purchase the property. If the entity desiring to purchase the property and the community college district are unable to arrive at a mutually satisfactory price during the sixty-day period, the District is not obligated to continue 2014 Atkinson, Andelson, Loya, Ruud & Romo 4
negotiations. In the event the community college district receives offers from more than one entity, the governing board may, in its discretion, determine which of the offers to accept. C. Public Bid Auction. If no noticed entity purchases the property, then the community college district must give notice of the adoption of the resolution and of the time and place of holding the bid auction by posting copies of the resolution signed by the governing board, or by a majority thereof, in three public places within the community college district s boundaries, not less than fifteen days before the date of the meeting, and by publishing the notice not less than once a week for three successive weeks before the bid auction in a newspaper of general circulation published in the county in which the community college district, or any part thereof, is situated. At the same time we recommend preparing and distributing a bid package, which typically includes a letter to potential bidders outlining the bid process, a bid form, a proposed purchase agreement and any other material relevant to the property (such as appraisal or title information). Interested bidders may submit sealed bids to the community college district prior to the date of the bid auction. At the time and place fixed in the resolution all sealed bids must be opened and examined by the governing board. The highest bid submitted that conforms to all the terms and conditions specified in the resolution that is made by a responsible bidder must be excepted unless a higher oral bid is accepted or the governing board rejects all the bids. In the event that there are no written or oral bids made at or greater than the purchase price that comply with all material terms set forth in the purchase agreement and in the bid package, the community college district may entertain counteroffers and choose among them. Please note that the governing board by majority vote may adopt a rule delegating to an officer or employee of the community college district the authority to conduct the bid hearing. The final acceptance by the governing board may be made either at the same session or at any adjourned session of the same meeting held within the ten days. The governing board may, if it deems it would be for the best public interest, reject any and all bids, and withdraw the property from sale. D. Exceptions or Alternatives to Sale Process. 1. Sale to Public Entities for Open Space Use (Education Code section 81190 et seq.) Notwithstanding the provisions described above and in addition to the requirements placed upon community college districts pursuant to Section 54222 of the Government Code, the governing board of the community college district may sell, for less than fair market value, any school site that is deemed to be surplus property of the community college district, to any park district, city, or county in which the community college district is wholly or partially situated for use or partial use as park or recreational purposes or open-space purposes if the governing board adopts a resolution specifying that it will sell or transfer such property for less than fair market value to such an entity for such a purpose. The offer to sell must be made in writing, but the terms by which the property may be sold need not be specifically provided. The sale may be made for cash and other valuable consideration, or only for other valuable consideration, as deemed appropriate by the governing board of the community college district. 2014 Atkinson, Andelson, Loya, Ruud & Romo 5
The community college district s offer to sell the property must be made to all park districts, cities, and counties in which the community college district is wholly or partially situated pursuant to this section and shall remain open for not less than sixty days. The sale must be made to whichever public entity first accepts the offer, or whichever public entity can negotiate satisfactorily for the purchase of such surplus land. 2. Orange County Community College Districts (Education Code section 81371.5). A provision unique to Orange County community college districts states that if the governing board has unsuccessfully attempted the bid process two or more times, then the Board of Governors may authorize entering into a negotiated sale for the property. 3. Historic Building (Education Code section 81380). Upon approval of the County Board of Supervisors, the community college district may sell property, without complying with the requirements set forth above, if (1) the property contains a historic building, (2) the sale is to a specific type of tax-exempt community organization, (3) the building is not suitable for school purposes, (4) the sale is for fair market value and (5) the sale documents adequate protect the community college district from any liability regarding the use of the property. 4. Between Public Agencies (Education Code section 81430 et seq.). The governing board of any community college district may sell, exchange, grant or quitclaim to the federal government or its agencies, to the state, or to any county, city and county, city or special district, or to any school district, any real property belonging to the community college district, and which is not or will not at the time of the lease be needed for classroom buildings by the community college district. Any agreement may be upon such terms and conditions as the parties thereto may agree and may be entered into without complying with any other surplus property requirements, except as required by Education Code section 81430 et seq. The governing board shall not enter into an agreement unless the following conditions have been met: a resolution authorizing such action and prescribing the terms of the agreement has been adopted by the unanimous vote of all the governing board members; and such resolution has been published in a newspaper published within the community college district s boundaries and having a general circulation there; or if there is no such newspaper, then in a newspaper having a general circulation within the community college district s boundaries; or, if there is no such newspaper, then in a newspaper having a general circulation in a county in which the community college district or any part thereof is situated. Notice must be published no less than once a week for three weeks prior to the execution of the agreement by the governing board. E. Use of Proceeds. The funds derived from the sale of property must be used for capital outlay or deferred maintenance; provided, however, that the proceeds of property sold in accordance with subdivision (a) or (b) of Education Code section 81363.5 may be deposited in the general fund of the community college district if, prior to the sale, the governing board has determined that the community college district has no anticipated need for additional sites or building construction for the five-year period following the sale. 2014 Atkinson, Andelson, Loya, Ruud & Romo 6
III. LEASE OF PROPERTY A. Resolution Declaring Property Surplus and Intent to Sell. Before ordering the lease of any property the governing board, in a regular open meeting, by a twothirds vote of all its members, must adopt a resolution, declaring its intention to lease the property. The resolution must describe the property proposed to be leased in such manner as to identify it and shall specify the minimum price and the terms upon which it will be leased and the commission, or rate thereof, if any, which the governing board will pay to a licensed real estate broker out of the minimum price. The language of this resolution is very important as it must contain the terms and conditions upon which the community college district will lease the property. The resolution must fix a time not less than three weeks thereafter for a public meeting, at which sealed bids to lease will be received and considered. The resolution should also delegate authority to administration to send public notices (if any), solicit bids for the lease of the property and advertise a bid hearing. If the date of the bid auction meeting is not known, the resolution can indicate that the meeting date will be established at a future date and noticed accordingly. B. Offer to Public Agencies and Nonprofits. Education Code section 81363.5 applies only to sale and lease with option to purchase, so the community college district does not need to send notices to specific entities as with a sale. Please note, however, arguments have been made that Government Code section 54222 applies to any lease even though Education Code section 81363.5 identifies only the sale or lease with option to purchase of real property as subject to Government Code section 54220 et seq. While certain factspecific issues in some transactions render compliance with this statute impractical, until a court determines this issue definitively, we recommend that community college district offer leases in accordance with Government Code section 54222, as a best practice. C. Public Bid Auction. The community college district must give notice of the adoption of the resolution and of the time and place of holding the bid auction by posting copies of the resolution signed by the governing board, or by a majority thereof, in three public places within the community college district s boundaries, not less than fifteen days before the date of the meeting, and by publishing the notice not less than once a week for three successive weeks before the bid auction in a newspaper of general circulation published in the county in which the community college district, or any part thereof, is situated. At the same time we recommend preparing and distributing a bid package, which typically includes a letter to potential bidders outlining the bid process, a bid form, a proposed lease agreement and any other material relevant to the property (such as appraisal or title information). Interested bidders may submit sealed bids to the community college district prior to the date of the bid auction. At the time and place fixed in the resolution all sealed bids must be opened and examined by the governing board. The highest bid submitted that conforms to all the terms and conditions specified in the resolution that is made by a responsible bidder must be excepted unless a higher oral bid is accepted or the governing board rejects all the bids. In the event that there are no written or oral 2014 Atkinson, Andelson, Loya, Ruud & Romo 7
bids made at or greater than the lease price that comply with all material terms set forth in the lease agreement and in the bid package, the community college district may entertain counteroffers and choose among them. Please note that the governing board by majority vote may adopt a rule delegating to an officer or employee of the community college district the authority to conduct the bid hearing. The final acceptance by the governing board may be made either at the same session or at any adjourned session of the same meeting held within the ten days. The governing board may, if it deems it would be for the best public interest, reject any and all bids, and withdraw the property from lease. D. Exceptions or Alternatives to Lease Process. 1. Leases Valued at Less than Fifty Dollars per Month (Education Code section 81369). Whenever it is proposed to lease real property and the governing board unanimously determines in the resolution that in its opinion, the monthly rental value of the property does not exceed the sum of fifty dollars, the resolution need not be posted and may, before the date of the meeting, be published in two successive issues of a weekly newspaper or in five successive issues of a daily newspaper. The newspaper in which the notice is published shall be one published within the community college district s boundaries and having a general circulation there; or if there is no such newspaper, then one having a general circulation within the community college district s boundaries; or if there is no such newspaper, then in one having a general circulation in a county in which the community college district or any part thereof is situated. 2. Leases not Exceeding Fourteen Days within a Fiscal Year (Education Code section 81378). The governing board of a community college district, without complying with any other surplus property disposition requirements, may lease any buildings, grounds, or space therein, together with any personal property located thereon, not needed for classroom buildings upon terms and conditions agreed upon by the governing board and the lessee for a period not exceeding fourteen separate or consecutive calendar days, or portions of those days, in each fiscal year. 3. Leases under Five Years (Education Code section 81378.1). The governing board of a community college district may, without complying with any other surplus property disposition requirements, let any buildings, grounds, or space therein, together with any personal property located thereon, not needed for academic activities, upon the terms and conditions agreed upon by the governing board and the lessee for a period of more than five days but less than five years, as determined by the governing board. Prior to executing the lease, the governing board must include in an agenda of a meeting of the governing board open to the public a description of the proposed lease and an explanation of the methodology used to establish the lease rate and for determining the fair market value of the lease. The governing board must give public notice prior to leasing property pursuant to this Education Code section 81378.1. The notice must include a description of the governing board s intended action. The notice must be printed once a week for three successive weeks prior to the governing board meeting in a newspaper of general circulation that is published at least once a week. The governing board must include as a condition in any agreement a provision that the agreement shall be subject to renegotiation and may be rescinded after sixty days' notice to the lessee if the 2014 Atkinson, Andelson, Loya, Ruud & Romo 8
governing board determines at any time during the term of the agreement that the buildings, grounds, or space therein subject to the agreement are needed for academic activities. Any revenue derived pursuant to the agreement shall be retained for the exclusive use of the community college district whose buildings, grounds, or space therein are the basis of the agreement and shall be used to supplement, but not supplant, any state funding. Any buildings, grounds, or space therein, let by the community college district must be included as space actually available for use by the college in any calculations related to any plan for capital construction submitted to the Board of Governors pursuant to Chapter 4 (commencing with Section 81800) or any other law. This option does not apply to the letting of an entire campus. The use of any buildings, grounds, or space let by the governing board pursuant to this Education Code section 81378.1 must be consistent with all applicable zoning ordinances and regulations. 4. Property Having a Residence (Education Code section 81379). The governing board, by a two-thirds vote of its members, may lease, for a term not exceeding three months, any community college district property with a residence on the property if the property cannot be developed for community college district purposes because of the unavailability of funds. The lease can be on the terms and conditions the parties agree to and may be entered into without complying with other surplus property provisions. 5. Historic Building (Education Code section 81380). Upon approval of the County Board of Supervisors, the community college district may lease property, without complying with the requirements set forth above, if (1) the property contains a historic building, (2) the lease is to a specific type of tax-exempt community organization, (3) the building is not suitable for school purposes, (4) the lease is for fair rental value and (5) the lease documents adequate protect the community college district from any liability regarding the use of the property. 6. Between Public Agencies (Education Code section 81430 et seq.). The governing board of any community college district may lease for a term not exceeding ninety-nine years, to the federal government or its agencies, to the state, or to any county, city and county, city or special district, or to any school district, any real property belonging to the community college district, and which is not or will not at the time of the lease be needed for classroom buildings by the community college district. Any lease may be upon such terms and conditions as the parties thereto may agree and may be entered into without complying with any other surplus property requirements, except as required by Education Code section 81430 et seq. The governing board shall not enter into a lease unless the following conditions have been met: a resolution authorizing such action and prescribing the terms of the lease has been adopted by the unanimous vote of all the governing board members; and such resolution has been published in a newspaper published within the community college district s boundaries and having a general circulation there; or if there is no such newspaper, then in a newspaper having a general circulation within the community college district s boundaries; or, if there is no such newspaper, then in a newspaper having a general circulation in a county in which the community college district or any part thereof is situated. Notice must be published no less than once a week for three weeks prior to the execution of the lease by the governing board. 2014 Atkinson, Andelson, Loya, Ruud & Romo 9
E. Use of Proceeds. It is interesting to note that use of proceeds from the lease of surplus property is not specifically addressed in the Education Code sections governing the disposition of surplus property. This lack of clarity has led many community college districts to take a conservative approach over the years and apply the same restrictions that apply to proceeds from a sale or lease with option to purchase. It is now generally accepted that such proceeds may be expended without the limitations imposed on the proceeds from a sale or lease with option to purchase; however districts should be aware that there is no case law on this issue. IV. WAIVER Pursuant to Education Code section 81250 et seq., the governing board of a community college district may, after a public hearing on the matter, request the Board of Governors of the California Community Colleges to waive all or part of any section of Education Code Title 3, Division 7, Part 49, Chapter 2. If a waiver request involves the sale or lease of community college district real property, the governing board of the community college district must provide written notice of the public hearing at least thirty days prior to the hearing, to any city, county, park or recreation district, regional park authority, or public housing authority within which the property may be situated. The Board of Governors may not approve any request for waiver unless the community college district demonstrates all of the following: (1) The community college district has provided the written notice referenced above; (2) The community college district, after making a good faith effort, was unable to reach agreement with any public agency that sought to acquire the property pursuant to Education Code section 81363.5; (3) The waiver will not substantially increase state costs or decrease state revenues; and (4) The waiver will further the ability of the community college district to meet the educational needs of the community. Once this information is forwarded to the Board of Governors, a response is typically received within a few months. V. EXCHANGE A community college district may exchange one or more of the properties rather than selling or leasing them pursuant to Education Code section 81470 et seq., which provides as follows: The governing board of a community college district may exchange any of its real property for real property of another person or private business firm. Any exchange shall be upon such terms and conditions as the parties thereto may agree and may be entered into without complying with any of the provisions in this code [including surplus property procedures applicable to the selling and leasing of surplus property] except as provided in this article. Education Code section 81470 (emphasis added). Before ordering any exchange of real property the board shall adopt, by a two-thirds vote of its members, a resolution declaring its intention to exchange the property. The resolution shall describe the properties to be exchanged in a manner to identify them, and the terms and conditions, not including the price, upon which they will be exchanged. 2014 Atkinson, Andelson, Loya, Ruud & Romo 10
Education Code section 81471 (emphasis added). In order to determine the value of the properties, the community college district and the other party must each appoint an appraiser to a board of appraisers and a third appraiser must be selected by the county superintendent of schools. The community college district and the other party must split the cost of the three appraisers. The board of appraisers must make a report to all parties that determines the value of the properties. If the county superintendent of schools approves the report of the appraisers and the terms and conditions set forth in the resolution, the governing board shall publish at least once a week for two weeks in a newspaper of general circulation, circulated in the county, the resolution and a notice stating the time and place within the community college district s boundaries at which a public meeting of the governing board will be held to consider the report of the appraisers and the exchange of the real properties described in the resolution. At the time and place fixed in the published notice, the governing board shall meet and consider the report of the appraisers. It then may order the exchange pursuant to the terms and conditions set forth in the resolution and the report of the appraisers. VI. JOINT OCCUPANCY A community college district may enter into leases and agreements relating to real property and buildings to be used jointly by the community college district and any private person, firm, or corporation. The community college district must own a site upon which a building to be used by the community college district and private entity may be constructed. The term of any lease or agreement entered into by a community college district pursuant to Education Code section 81390 et seq. shall not exceed 66 years. The lease or agreement must require the entity to construct on the property, or provide for the construction of, a building or buildings for the joint use of the community college district and the private entity during the term of the agreement; provided that title to that portion of the building to be occupied by the private entity shall remain exclusively the personal property of the private party during the term of the lease and the title to such portion of the building to be occupied by the community college district shall vest in the community college district upon completion and acceptance by the community college district. Any lease of real property by a community college district to a private entity pursuant to Education Code section 81390 et seq. shall be upon such terms and conditions as the parties may agree and may be entered into without complying with other surplus property procedures; however, before entering into a joint occupancy lease or agreement a community college district shall comply with the following requirements. The governing board must, in a regular open meeting, adopt a resolution declaring its intention to consider proposals. The resolution shall describe the proposed site on which the building to be jointly occupied is to be constructed in such a manner as to identify said site, shall specify the intended use of that portion of the building which is to be occupied by the community college district and shall fix a time not less than 90 days thereafter for a public meeting of the governing board to be held at its regular place of meeting, at which meeting the governing board shall receive and consider all plans or proposals submitted. 2014 Atkinson, Andelson, Loya, Ruud & Romo 11
Notice of adoption of the resolution and the time and place of holding the meeting shall be given by publishing the resolution at least once a week for three weeks in a newspaper of general circulation published within the community college district s boundaries if there is one, or if none is published within the community college district s boundaries, in a newspaper published in the county. At the time and place fixed in the resolution for the meeting of the governing board, the governing board shall meet and consider all plans and proposals submitted for the joint occupancy of the building to be constructed on the proposed school site. After considering all proposals submitted, the governing board has the authority, to select the plan or proposal which best meets the needs of the community college district and to enter into an agreement with the selected proposer. The private entity will need to file either a bond or an irrevocable letter of credit issued by a state or national bank, or federal or state credit union, for the performance of the lease or agreement. Lastly, any building constructed for the use of a community college district pursuant to this Education Code section 81390 et seq. is subject to all provisions of the Education Code relating to the physical structure of school buildings. VII. JOINT USE AGREEMENTS A community college district may enter into a lease or agreement with a city, county, or city and county for the joint occupancy, or a private education institution for its sole occupancy, of the real property and buildings of the community college district. Prior to entering into a lease or agreement pursuant to Education Code section 81420 et seq., the community college district governing board shall determine that the proposed joint occupancy and use of community college district property or buildings will not interfere with the educational program or activities of any school or class conducted upon the real property or in any such building. No such lease or agreement shall exceed a term of five years, but may be renewed on the same or different conditions at the end of such term. VIII. EASEMENTS AND DEDICATIONS The governing board of a community college district may, pursuant to Education Code section 81310 et seq., dedicate or convey to the state, or any political subdivision or municipal corporation thereof, for public street or highway purposes, either with or without consideration and without a vote of the electors of the community college district first being taken, any real property belonging to the community college district, either in fee or any lesser estate or interest therein, including abutter s right of access to any public street or highway; and may dedicate or convey to any public corporation, or private corporation engaged in the public utility business, without a vote of the electors of the community college district first being taken, an easement to lay, construct, reconstruct, maintain, and operate water, sewer, gas, or storm drain pipes or ditches, electric or telephone lines, and access roads used in connection therewith, over and upon any land belonging to the community college district, upon such terms and conditions as the parties thereto may agree. Before ordering the dedication or conveyance of any property, the governing board shall in regular open meeting by a two-thirds vote of all its members adopt a resolution declaring its intention to dedicate or convey the property. The resolution must describe the property proposed to be dedicated or conveyed in such manner as to identify it, and shall specify the purposes for which and the terms upon which it will be dedicated or conveyed, and shall fix a time not less than 10 days 2014 Atkinson, Andelson, Loya, Ruud & Romo 12
thereafter for a public meeting of the governing board to be held at its regular place of meeting for a public hearing upon the question of making the dedication or conveyance. Notice of adoption of the resolution and of the time and place of holding the meeting shall be given by posting copies of the resolution signed by the members of the governing board, or by a majority thereof, in three public places in the community college district not less than ten days before the date of the meeting, and by publishing the notice once not less than five days before the date of the meeting in a newspaper of general circulation, published within the community college district s boundaries, if there is one, or, if there is no such newspaper published within the community college district s boundaries, then in a newspaper published in the county in which the community college district or any part thereof is situated and having a general circulation within the community college district s boundaries. At the time and place fixed in the resolution for the meeting of the governing board the public hearing shall be held, and the governing board may at the meeting, or at any other meeting of the governing board held within 60 days thereafter, unless a protest is entered, adopt a resolution by a two-thirds vote of all its members authorizing and directing the president of the governing board, or any other presiding officer, or the secretary, or the members thereof, to execute a deed of dedication or conveyance of the property and to deliver it. A petition protesting against the proposed dedication or conveyance signed by at least 10 percent of the qualified electors of the community college district, as shown by the affidavit of one of the petitioners, may be filed with the governing board at the meeting held at the time and place fixed in the resolution. If a protest is filed, the governing board, before taking any further action on the proposed dedication or conveyance, shall submit the question of whether the proposed dedication or conveyance should be made, to the Board of Governors whose decision is final. If the Board of Governors approves the proposed dedication or conveyance, the governing board may proceed with the dedication or conveyance. If the Board of Governors does not approve the proposed dedication or conveyance, no further proceedings shall be had thereon. Whenever community college districts are required to improve and dedicate real property to the centerline of streets or highways adjacent to a school site or forming an intersection at a school site location, and when such street or highway rights-of-way are being conveyed to the city or county or by the city or county to the community college district, the requirements of Education Code section 81310 et seq. shall be deemed satisfied solely by posting a notice of intention to convey in an appropriate location before conveyance IX. LICENSE AGREEMENTS A license is a grant of permission to another party to use community college district property for some defined purpose. It is, in many respects, similar to an easement or a lease. However, the granting of a license does not require the same cumbersome procedures as the dedication of an easement or the surplus property procedures necessary for a lease. An increasingly prevalent example of private use of community college district property is wireless communications facilities. Wireless carriers must install towers throughout the state to relay signals for wireless phones. School sites often prove ideal locations for these facilities. 2014 Atkinson, Andelson, Loya, Ruud & Romo 13
A community college district governing board may approve a license agreement for a wireless communications facility as a standard governing board meeting agenda item. A license agreement with a wireless carrier should address all significant terms of the agreement, including the following: 1. License fee; 2. Term of the agreement and renewal provisions; 3. Precise identification of the location and dimensions of the facility; 4. Language obligating the carrier to obtain any necessary permits and approvals and pay for utilities and taxes for the subject property; 5. Insurance and indemnification requirements; 6. Termination provisions; 7. Language addressing interference to, or caused by, existing and future communications facilities; 8. Profit sharing for assignment and subletting of tower space; 9. Access and coordination requirements; and 10. Exhibits detailing the planned facility and the work to be done on school property. X. CIVIC CENTER ACT; USE OF FACILITIES The Civic Center Act establishes a civic center at each community college district site to provide space for citizens to engage in recreational, educational, political, economic, artistic and moral discussions and activities. Under Education Code section 82542(a), the governing board of a community college district must allow use of community college district facilities and grounds by various organizations, such as nonprofit organizations and clubs and associations organized for general character building or welfare purposes, when an alternative location is not available. For organizations and activities other than those described in section (a), the governing board of a community college district may charge an amount not to exceed its direct costs or not to exceed the fair rental value of its facilities and grounds. The governing board must adopt a policy specifying which activities shall be charged an amount not to exceed direct costs and which activities shall be charged an amount not to exceed fair rental value. Direct costs were previously limited to the share of the costs of supplies, utilities, janitorial services, services of any other district employees, and salaries paid to community college district employees necessitated by the organization s use of the college facilities and grounds of the district. The amended section 82542 of the Civic Center Act expands the definition of direct costs to include the share of the costs for maintenance, repair, restoration, and refurbishment, proportional to the use of the college facilities or grounds by the entity using them. These charges only apply to the use of non-classroom space and grounds, which includes, but is not limited to, playing fields, athletic fields, track and field venues, tennis courts, and outdoor basketball courts. They do not 2014 Atkinson, Andelson, Loya, Ruud & Romo 14
apply to classroom based programs that operate during after-school hours (e.g. tutoring or child care programs) or organizations retained by the college or community college district to provide instruction or instructional activities during school hours. AB 1906 also requires that funds collected for maintenance, repair, restoration and refurbishment be deposited into a special fund designated only for those purposes. Although effective January 1, 2015, the amendment specifically gives the Chancellor of the California Community Colleges until December 31, 2015 to develop and adopt regulations to be used by community college districts in determining the proportionate share and the specific allowable costs to be included as direct costs for use of its facilities or grounds. Community college districts will need to ensure that their policies are consistent with these regulations. XI. CONCLUSION As shown above, community college districts have a myriad of options available regarding the use and disposition of their assets. By selecting the appropriate vehicle for the community college district s goal, and by taking advantage of each of the benefits that a vehicle may offer, community college districts can maximize their income and eliminate unnecessary expenses. 2014 Atkinson, Andelson, Loya, Ruud & Romo 15