April 1, 2011





ENGROSSED

HOUSE BILL No. 1174

_____


DIGEST OF HB 1174 (Updated March 30, 2011 5:48 pm - DI 87)



Citations Affected: IC 36-1.

Synopsis: Sale of real property by local government. Provides that a local government disposing agent may hire a broker to sell real property directly rather than using the bid process if: (1) the disposing agent publishes a notice of the determination to hire the broker; and (2) the property has been up for bid for at least 60 days before the broker is hired, and either no bids were received or the disposing agent has rejected all bids that were received. Provides that a political subdivision may sell real property to an abutting landowner without using a competitive bid process if the real property has not been assessed and the property was previously part of a public right-of-way. Allows a local government disposing agent to sell real property for less than 90% of the appraised value as determined by the average of the two appraisals of the property (instead of as determined by a joint appraisal of the property). Allows a local government disposing agent to sell real property for purposes of an economic development project or to facilitate compatible land use planning for a value that is not less than the appraised value as determined by the average of the two
(Continued next page)

Effective: July 1, 2011.





Burton
(SENATE SPONSORS _ GLICK, WALKER)




    January 10, 2011, read first time and referred to Committee on Local Government.
    February 10, 2011, amended, reported _ Do Pass.
    February 14, 2011, read second time, amended, ordered engrossed.
    February 15, 2011, engrossed. Read third time, passed. Yeas 93, nays 0.

SENATE ACTION

    February 17, 2011, read first time and referred to Committee on Local Government.
    March 31, 2011, amended, reported favorably _ Do Pass.





Digest Continued

appraisals (instead of as determined by a joint appraisal of the property), if the agent publishes notice of the amount of the offer to be accepted. Allows a local government disposing agent to lease real property for a value that is less than 90% of the appraised fair market rental as determined by the average of the two appraisals (instead of as determined by a joint appraisal of the property), if the agent publishes notice of the amount of the bid to be accepted. Provides that if the disposing agent rejects all offers or bids, the agent must make a written determination for the rejection and explain why the bids or offers were rejected. Provides that a sale or transfer of property constituting a public easement or right of way under the statutes governing disposal of property by local government does not deprive a public utility of the use of the public easement or right of way if, at the time of the sale or transfer, the public utility is occupying and using all or part of that public easement or right of way for the location and operation of its facilities.



April 1, 2011

First Regular Session 117th General Assembly (2011)


PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana Constitution) is being amended, the text of the existing provision will appear in this style type, additions will appear in this style type, and deletions will appear in this style type.
Additions: Whenever a new statutory provision is being enacted (or a new constitutional provision adopted), the text of the new provision will appear in this style type. Also, the word NEW will appear in that style type in the introductory clause of each SECTION that adds a new provision to the Indiana Code or the Indiana Constitution.
Conflict reconciliation: Text in a statute in this style type or this style type reconciles conflicts between statutes enacted by the 2010 Regular Session of the General Assembly.


ENGROSSED

HOUSE BILL No. 1174



    A BILL FOR AN ACT to amend the Indiana Code concerning local government.

Be it enacted by the General Assembly of the State of Indiana:

SOURCE: IC 36-1-11-4; (11)EH1174.1.1. -->     SECTION 1. IC 36-1-11-4, AS AMENDED BY P.L.27-2008, SECTION 2, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2011]: Sec. 4. (a) A disposing agent who wants to sell or transfer real property must comply with this section, except as permitted by section 4.1, 4.2, 5, 5.5, 5.7, 5.9, 8, 14, or 15 of this chapter.
    (b) The disposing agent shall first have the property appraised by two (2) appraisers. The appraisers must be:
        (1) professionally engaged in making appraisals;
        (2) licensed under IC 25-34.1; or
        (3) employees of the political subdivision familiar with the value of the property.
The appraisers shall make a joint appraisal of the property.
    (c) After the property is appraised, the disposing agent shall publish a notice in accordance with IC 5-3-1 setting forth the terms and conditions of the sale and, when subsection (e) is employed, may engage an auctioneer licensed under IC 25-6.1 to advertise the sale and

to conduct a public auction. The advertising conducted by the auctioneer is in addition to any other notice required by law and shall include a detailed description of the property to be sold stating the key numbers, if any, of the tracts within that property. If the disposing agent determines that the best sale of the property can be made by letting the bidders determine certain conditions of the sale (such as required zoning or soil or drainage conditions) as a prerequisite to purchasing the property, the disposing agent may permit the bidders to specify those conditions. The notice must state the following:
        (1) Bids will be received beginning on a specific date.
        (2) The sale will continue from day to day for a period determined by the disposing agent of not more than sixty (60) days.
        (3) The property may not be sold to a person who is ineligible under section 16 of this chapter.
        (4) A bid submitted by a trust (as defined in IC 30-4-1-1(a)) must identify each:
            (A) beneficiary of the trust; and
            (B) settlor empowered to revoke or modify the trust.
    (d) A bid must be open to public inspection. A bidder may raise the bidder's bid, and subject to subsection (e), that raise takes effect after the board has given written notice of that raise to the other bidders.
    (e) The disposing agent may also engage an auctioneer licensed under IC 25-6.1 to conduct a sale by public auction. The auction may be conducted either at the time for beginning the sale in accordance with the public notice or after the beginning of the sale. The disposing agent shall give each bidder who has submitted a bid written notice of the time and place of the auction.
    (f) The disposing agent may, before expiration of the time set out in the notice, sell the property to the highest and best bidder. The highest and best bidder must have complied with any requirement under subsection (c)(4). However, the disposing agent may sell the property for less than ninety percent (90%) of the appraised value average of the two (2) appraisals of the tracts only after having an additional notice of the sale published in accordance with subsection (c). stating the amount of the bid to be accepted is published in accordance with IC 5-3-1. The disposing agent may reject all bids. If the disposing agent rejects all bids, the disposing agent must make a written determination to reject all bids explaining why all bids were rejected.
    (g) If the disposing agent determines that, in the exercise of good business judgment, the disposing agent should hire a broker or auctioneer to sell the property, the disposing agent may do so and pay

the broker or auctioneer a reasonable compensation out of the gross proceeds of the sale. However, the disposing agent must still comply with the procedural requirements of this section. A disposing agent may hire a broker to sell real property directly rather than using the bid process under subsections (c) through (f) if:
        (1) the disposing agent publishes a notice of the determination to hire the broker in accordance with IC 5-3-1; and
        (2) the property has been up for bid for at least sixty (60) days before the broker is hired, and either no bids were received or the disposing agent has rejected all bids that were received.

The disposing agent may hire one (1) of the appraisers as the broker or auctioneer.
     (h) The following apply if a broker is hired under subsection (g):
        (1) The property may not be sold to a person who is ineligible under section 16 of this chapter.
        (2) If the property is sold to a trust (as defined in IC 30-4-1-1(a)), the following information must be placed in the public record relating to the sale:
            (A) Each beneficiary of the trust.
            (B) Each settlor empowered to revoke or modify the trust.

SOURCE: IC 36-1-11-4.2; (11)EH1174.1.2. -->     SECTION 2. IC 36-1-11-4.2 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2011]: Sec. 4.2. (a) This section applies to a disposing agent who wants to sell or transfer real property not acquired through eminent domain procedures for any of the following purposes:
        (1) To promote an economic development project.
        (2) To facilitate compatible land use planning.
    (b) The disposing agent shall first have the property appraised by two (2) appraisers. The appraisers must be:
        (1) professionally engaged in making appraisals;
        (2) licensed under IC 25-34.1; or
        (3) employees of the political subdivision familiar with the value of the property.
The appraisers shall make a joint appraisal of the property.
    (c) Subject to subsection (d), the disposing agent may:
        (1) negotiate a sale or transfer; and
        (2) dispose of the real property;
at a value that is not less than the appraised value determined average of the two (2) appraisals under subsection (b).
     (d) The disposing agent may dispose of the real property for a value that is not less than the average of the two (2) appraisals under subsection (b) only after publishing a notice in accordance

with IC 5-3-1 stating the amount of the offer to be accepted. The disposing agent may reject all offers. If the disposing agent rejects all offers, the disposing agent must make a written determination to reject all offers explaining why all offers were rejected.

SOURCE: IC 36-1-11-4.3; (11)EH1174.1.3. -->     SECTION 3. IC 36-1-11-4.3 IS ADDED TO THE INDIANA CODE AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2011]: Sec. 4.3. Notwithstanding any provision of this chapter, a sale or transfer under this chapter of property constituting a public easement or right of way does not deprive a public utility of the use of all or part of the public easement or right of way that is sold or transferred if, at the time of the sale or transfer, the public utility is occupying and using all or part of that public easement or right of way for the location and operation of its facilities.
SOURCE: IC 36-1-11-5; (11)EH1174.1.4. -->     SECTION 4. IC 36-1-11-5 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2011]: Sec. 5. (a) As used in this section, "abutting landowner" means an owner of property that:
        (1) touches, borders on, or is contiguous to the property that is the subject of sale; and
        (2) does not constitute a:
            (A) public easement; or
            (B) public right-of-way.
    (b) As used in this section, "offering price" means the appraised value of real property plus all costs associated with the sale, including:
        (1) appraisal fees;
        (2) title insurance;
        (3) recording fees; and
        (4) advertising costs.
    (c) The disposing agent may proceed under this section if either of the following applies:
        (1)
The assessed value of a tract of real property to be sold is less than fifteen thousand dollars ($15,000), based on the most recent assessment of the tract or of the tract of which it was a part before it was acquired. the disposing agent may proceed under this section.
         (2) If the property has not been assessed and the property was previously part of a public right-of-way.
    (d) The disposing agent may determine that:
        (1) the highest and best use of the tract is sale to an abutting landowner;
        (2) the cost to the public of maintaining the tract equals or exceeds the estimated fair market value of the tract; or
        (3) it is economically unjustifiable to sell the tract under section

4 of this chapter.
    (e) Within ten (10) days after the disposing agent makes a determination under subsection (d), the disposing agent shall publish a notice in accordance with IC 5-3-1 identifying the tracts intended for sale by legal description and, if possible, by key number and street address. The notice must also include the offering price and a statement that:
        (1) the property may not be sold to a person who is ineligible under section 16 of this chapter; and
        (2) an offer to purchase the property submitted by a trust (as defined in IC 30-4-1-1(a)) must identify each:
            (A) beneficiary of the trust; and
            (B) settlor empowered to revoke or modify the trust.
At the time of publication of notice under this subsection, the disposing agent shall send notice by certified mail to all abutting landowners. This notice shall contain the same information as the published notice.
    (f) The disposing agent shall also have each tract appraised. The appraiser must be professionally engaged in making appraisals, a person licensed under IC 25-34.1, or an employee of the political subdivision who is familiar with the value of the tract. However, if the assessed value of a tract is less than six thousand dollars ($6,000), based on the most recent assessment of the tract or of the tract of which it was a part before it was acquired, the disposing agent is not required to have the tract appraised.
    (g) If, within ten (10) days after the date of publication of the notice under subsection (e), the disposing agent receives an eligible offer to purchase a tract listed in the notice at or in excess of the offering price, the disposing agent shall conduct the negotiation and sale of the tract under section 4(c) through 4(g) of this chapter.
    (h) Notwithstanding subsection (g), if within ten (10) days after the date of publication of the notice under subsection (e) the disposing agent does not receive from any person other than an abutting landowner an eligible offer to purchase the tract at or in excess of the offering price, the disposing agent shall conduct the negotiation and sale of the tract as follows:
        (1) If only one (1) abutting landowner makes an eligible offer to purchase the tract, then subject to section 16 of this chapter and without further appraisal or notice, the disposing agent shall offer to negotiate for the sale of the tract with that abutting landowner.
        (2) If more than one (1) eligible abutting landowner submits an offer to purchase the tract, the other eligible abutting landowners who submit offers shall be informed of the highest offer received

and be given an opportunity to submit one (1) additional offer. The tract shall be sold to the eligible abutting landowner who submits the highest offer for the tract and who complies with any requirement under subsection (e)(2).
        (3) If no eligible abutting landowner submits an offer to purchase the tract, the disposing agent may sell the tract to any person who submits the highest offer for the tract, except a person who is ineligible to purchase the tract under section 16 of this chapter.

SOURCE: IC 36-1-11-10; (11)EH1174.1.5. -->     SECTION 5. IC 36-1-11-10 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2011]: Sec. 10. (a) A disposing agent may lease property rather than sell, transfer, or exchange it under this chapter only if the disposing agent determines that a lease rather than a sale, transfer, or exchange would be in the best interest of the disposing agent's political subdivision or agency and the public. Except as provided in section 12 of this chapter, the disposing agent must proceed under this section in leasing property.
    (b) The disposing agent shall first have the property appraised in the manner prescribed in section 4(b) of this chapter, except that the appraisers shall determine the fair market rental value of the property.
    (c) The disposing agent shall receive bids in the manner prescribed in section 4 of this chapter and lease the property to the highest and best bidder. However, the disposing agent may lease the property for less than ninety percent (90%) of the appraised fair market rental value only after having an additional notice of the lease published in accordance with section 4(c) of this chapter. The disposing agent may reject all bids. If the disposing agent rejects all bids, the disposing agent must make a written determination to reject all bids explaining why all bids were rejected.
    (d) The disposing agent shall determine the terms and conditions of any lease under this section, which may include options to renew and options to purchase. The property may not be leased to a person who is ineligible under section 16 of this chapter.
    (e) The terms of a lease with option to purchase may provide that all or part of the rental payments under the lease apply to the purchase price. The purchase price must be equal to at least the minimum sale price determined under section 4(f) of this chapter.
    (f) Property owned by a political subdivision or agency may be leased for a term longer than three (3) years if the lease is approved by the fiscal body of the political subdivision.
     (g) The disposing agent may lease the real property under this section for a value that is less than ninety percent (90%) of the appraised fair market rental value as determined by the average

of the two (2) appraisals under section 4(b) of this chapter only after publishing an additional notice in accordance with IC 5-3-1, stating the amount of the bid to be accepted. If the disposing agent rejects all bids, the disposing agent must make a written determination to reject all bids explaining why all bids were rejected.