HomeMy WebLinkAboutRS01-Economic Development Agency
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DEVELOPMEKT DEPARTMEKT
OF t'IIII: CIn OF SD BBRKARDIIIO
RBOUBST FOR COIMISSIOK/COUlICIL ACTIOK
From:
KENllETII J. HENDERSON
Executive Director
Subject: IllW. ESTATE ACQUISITIOW/
BRODRAGE SERVICES
Date:
March 12, 1992
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SvnoDsis of Previous CnBBfssionlCouncil/Committee Actionls):
On March 2, 1992 staff prepared a progress report to advisory the
subject report was drafted and sent to the San Bernardino Board of
Realtors for review and comment. A board presentation was rescheduled
to March 19, 1992.
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Recommended Motionls):
lCo_itv Develo_ant C--lssion)
MOTIOW
That the Community Development Commission authorize staff
to initiate meeting(s) with representatives of the San
Bernardino Board of Realtors to complete development of
the Economic Development Agency's Acquisition/Brokerage
Services Polley.
~
Administrator
~~~OW
Executive Director
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Contact Person(s):
Ken Henderson/Stafford Parker
Phone:
5081
Project Area(s):
All
Ward(s):
1-7
Supporting Data Attached: Staff ReDort: Attornev Memorandum dated 11/22/91:
San Bernardino Board of Raltors Memorandum dated
March 11. 1992
FUl'/DING REQUIREMENTS:
Amount: $ NI A
N/A
Source:
Budget Authority:
N/A
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Commission/Council Kotes:
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KJH:SWP:lag:0626E
COIlMISSIOK MEETDG AGERDA
Meeting Date: 3/16/1992
Agenda Itt!ll w-ber:
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DB9BLOPMB.T DBPARTR.T
OF TIIB CITY OF SO BBIlWmIltO
STAFF REPORT
Real Bstate AcauisitianlBrokeraae Services
The Community Development COllllllission has expressed concern about the use
of real estate brokerage services in connection with acquisitions of
property by the Economic Development Agency. A sentiment was voiced
that certain brokers are used too frequently and, in the interests of
fairness and Obtaining the most appropriate services for any particular
acquisition, other real estate brokers should be identified that could
competently represent the Agency.
It should be understood that in typical real estate transactions there
are four (4) parties - the seller, his/her broker (also referred to as
the listing broker), the buyer and his/her broker (also known as the
selling broker). A fifth party is the neutral escrow agent, which holds
all funds and documents until all of the transaction obligations have
been fulfilled. In some instances, one broker will represent both the
seller and the buyer, but this creates a "dual-agency" situation which
is undesirable, because it is difficult if not impossible for a broker
to fairly represent both parties to a real estate transaction. The
point of this explanation is that the Agency will never have any control
over the seller's (listing) broker. If we are interested in acquiring a
given property, we will have to deal with whatever broker the seller has
chosen (or wait for the broker's listing contract to expire, at Which
time we can then deal with the seller's new broker or perhaps the seller
him/herself) .
The Agency does, however, have some control over what entity negotiates
on its behalf. Bssentially, there are two possibilities - staff or a
broker with whom the Agency has contracted for representation (a selling
broker).
In the case of a broker, Sabo & Green have advised (see attached copy of
memorandum dated 11-22-91) that, to the greatest extent feasible, the
Agency should seek to award contracts to brokerages located in the
project area (if, in fact, the property to be acquired is located in a
project area) or owned substantially by a person residing in the project
area. This applies to those situations Where the expertise and
competence of the broker, as well as the economic cost of the services,
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KJH:SWP:lag:0626E
COIMISSIa IlEBTIG AGDDA
Meeting Date: 3/16/1992
Agenda It_ "'her: J:5-1
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DBVELOPIIBIIr DlPAluwn: STAFF IIPORr
Real Batate AcquisitionlBrokeraae Services
March 12, 1992
Pqe llUllber -2-
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are equivalent to those which could be obtained from brokerages outside
the project area. Any such guidelines should, however, recognize that
situations may arise Wherein a given broker, because of histher
particular expertise, pre-existing involvement with the property in
question or familiarity with the other party to the transaction, may be
uniquely suited to represent the Agency. In such instances selection of
the broker should be focused on increasing all opportunities to assure a
successful transaction for agency negotiations and purchase.
The following are three (3) alternative approaches to acquisition
negotiations:
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1) The staff has considersb1e experience in transacting real estate
acquisitions and there is no reason not to use this professional
expertise to accomplish agency goals. Interestingly, utilizing
staff often affords advantages not available in the open market,
such as (a) staff is knowledgeable of related agency programs and
benefits; (b) ease and speed of communication is facilitated between
the Agency and its negotiating representative; (c) problems in
rotating business to the private sector to obtain equal distribution
of Agency contracts are eliminated; (d) and lastly, the costs
related to the acquisition are normally cheaper when staff handles
the negotiations. Staff would not handle an acquisition when it is
apprehensive that the seller will be more reluctant to negotiate
realistically and fairly if he knows the City/Economic Development
Agency is the buyer. A review of the practices of California
Redevelopment Agencies would reveal a mixed situation in that they
have used "in-house" staff and private brokers to acquire real
property. However, when staff has the expertise, it normally
acquires property with its own personnel. On balance and in
summary, this option affords the most administlative control, least
cost and most flexibility.
2) A list of "qualified" (those meeting established criteria) real
estate brokers could be developed. The Agency has done this in the
past for civil engineers and real estate economists. Those
brokerages which have been preapproved by meeting the minimum
qualifications would be placed on an eligibility list for use in
property acquisitions. If desired, they could be used on a rotating
basis. The following is a suggested list of desirable attributes
which should apply to any real estate broker with whom the Agency is
contemplating contracting:
* Excellent negotiation skills.
* Experience with the particular type of property in question.
* Honesty, a good reputation and a commitment to full disclosure of
all material facts, including broker's compensation, affecting a
given transaction.
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KJH:SWP:1ag:0626E
COIMISSIO. IlEBTIlIG AGDDA
Reeting Date: 3/16/1992
Agenda It. __ber:
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DIVELOPIIIlIr DBPAiwIaIu SUFI' REPORT
leal B8tate AcqaisitiODlBrokerage Services
llarch 12, 1992
Page ltuIaber -3-
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* Experience with and sensitivity to the specialized needs of
public entities. In this regard, some right-of-way acquisition
and/or relocation experience would be desirable.
* General real estate experience - minimum of fifteen (15) years,
with ten (10) years experience in brokerage activities.
* Current California real estate license.
* An absence of disciplinary actions against the broker'S real
estate license.
* Broker to advise Agency of any legal claims filed against himlher
and the circumstances of any such claim(s).
* Minimum of three (3) client references about similar property
transactions .
* Some appraisal/valuation experience would be preferred.
* A working knowledge of toxic contamination liability issues.
* The availability of adequate brokerage office staff support.
* Membership in relevant professional associations (e.g. National
Association of Realtors Society of Industrial Realtors or
California Association of Realtors).
* Flexibility and reasonableness concerning compensation.
* Bachelor's degree in business, economics, real estate or a
related field preferred.
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3) Rely on neither staff nor a broker from an approved list. Instead,
have the freedom to choose whatever real estate brokerage is best
suited for handling the particular transaction in question. This
option is the least restrictive of the three listed, but does not
allow the degree of prequalification present in the other two
options.
As referenced in a February 26, 1992 progress report to the Commission,
staff noted it completed a draft Acquisition/Broker Policy and forwarded
same to the San Bernardino Board of Realtors (SBBOR) for review and
comment. On March II, 1992 staff discussed the issue with the SBBOR
Executive Director and received a copy (attached) of its findings.
Essentially the board's comments echoed 80me concerns of the staff and
surfaced issues worthy of additional consideration. While the SBBOR
realizes the Commission may opt to vote on and resolve the issue
quickly, they state their preference for delay in order to establish an
Agency/SBBOR working group that can meet and discuss various
considerations in greater detail. Staff concurs with this more
deliberate approach, which would allow it to take advantage of different
perspectives from practictioners in the real estate field.
Staff recommends adoption of the form motion.
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~Ol" Executive Director
Deve10J,a8llt DePartaent
IJH:SWP:lag:0626B
CCMlISSIOI' IIBBTII'G AGBI'DA
lleetins Date: 3/16/1992
Aaeuda Ita. l'uaber: ~ - )
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SABO &: GREEN
A P~IONAL CORPOltATlON
A'I'TORH1CYS AT LAW
SUJTE400
-- CANOGA AVENUE
WOODLAND HILLS. CALlI"ORNlA 81887
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_181706-01"
TELIIOOPlBR _18. _7ft
...ORa.DU.
TO:
John Wood
Charles R. Green tP^
Noveaber 22, 1991
Obliqations of Redevelopment Aqency in Selection of Real
Estate Broker; OUr File SBEO0001
FROM:
DATE:
0:
Pursuant to your request, we have exllllined the issue of
what leqal obliqations are iIIposed upon a redevelopment aqency in
connection with the selection of real estate brokers to represent
the agency in real estate transactions. OUr conclusion is that the
law imposes no specific requirnent upon a redevelopment agency
with regard to the selection and retention of real estate brokers.
However, you should be aware that Section 33422.1 of the Health and
Safety Code does illpose upon a redevelopment agency a general
Obligation to award contracts for work to be performed in
connection with any redevelopment project to business concerns
located in, or owned in a substantial part bY persons residing in,
the projecrr area, to the greatest extent feasible.
OUr evaluation of that requir_ent would be that the
phrase "to the greatest extent feasible" would require the Agency
to seek to award contracts to business concerns located in the
project area, or owned substantially by a person residing in a
project area, in those situations where the expertise and
COlIpetence of the business concern, as well as the economic cost of
the services, were equivalent to those which could be obtained from
business concerns outside the project area. In other words, we
believe that the Agency's general responsibility to the public to
have services performed in an efficient and economical manner
cannot be ignored, even in favor of a business located in the
redevelopment project area.
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In addition to the venera 1 research on this issue, you
bave requuted our ~ents with revard to possible quidelines
which could be utilized by the Redevelopllent A9ency in the
selection of real utate brokers. Accordinvly, we would offer the
followinq points for your consideration for inclusion in any such
quidelines:
1. The Agency should verify that the broker selected
bas a currently valid license by contactinv the Deparblent of Real
Estate. In addition, the AVency should deteraine whether or not
the Departaent of Real Estate bas ever caused the licensee to be
disciplined for any reason.
2. The Agency should require that the broker bave a
specified level of experience in the partiCUlar type of real
estate. Por eXlUlple, scae brokers spend their careers specializinq
in residential real estate and would be anf_iliar with other foras
of property. Even within non-residential, there are
specializations in industrial, shoppinq center, and other kinds of
co.aercial properties. We would suqqest that an experience level
of not less than five years be required.
3. The prospective broker should be required to inf01"lll
the Aqency of any claas filed by a client, either with the
Departaent of Real Estate or in the context of the lawsuit, and to
advise the A9ency r~ardinq the cirCWl8~ances of any such claim.
4. The prospective broker should provide a .inaua of
three (3) references to clients whoa the broker represented in
si.ilar property acquisitions.
5. The Aqency should deteraine whether the business is
located in the redevelop.ent project erea in which the specific
project on which the broker is to be enqaqed is loca~ed. In the
event that there are multiple candidates for perforaance of the
duties, preference should be qiven to the candidate who is located
in the specific project area, assuainq that all other factors are
equal.
There is no requir_ent of which we are aware in the
Co-.unity Redevelopllent Law which requires the Agency to subait
such work for public bid or to provide public notice of the
availability of work. However, the qeneral requirnents of
Section 33422.1 would seem to require that some effort be ..de to
determine whether there are businesses within the project area
which could be awarded contracts for any qiven service.
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Any such lJUidelines lIhould recogniae that soae 8ituations
-y arise in which a given broker, becauae of his or her particular
expertise, pre-existing involv_ent with the proparty or
f_Uiarity with the other party in the transaction, would be
uniquely qualified to represent the RecSevelopaent Agency.
ee: '1'iaothy C. steinhaus
Kenneth J. Benderson
Dennis Barlow, Esq.
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3B45434 P. 81
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SAI\ BERNARDINO VA9,ey
ASSOCIATION OF &ALTORS~
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REALTOR'
1798 NORTH 0 STREET. SAN BERNARDINO. CA 92405
P.O. BOX 2183. SAN BERNARDINO. CA 92408
(714) 888.5031
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. complete, or if anything is not clearly legible.
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SAR BERNARDINO VALLey
ASSOCIATION Of' REALTORS.
L.~
REALTOR-
1798 NORTH D STREET' SAN BERNARDINO, CA 92405
P.O. BOX 2183 . SAN BERNARDINO, CA 8240e
(714) 886-5031
MarCb 11, 1992 .
~ Bendar.on, Executive Director
Developll8llt. DepartMnt
201 N. "B" street
Third Floor
San Bernardino, Ca 92401-1501
Dear Ken:
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The San Bernardino Valley AslJOCiation of ltDLTORS ~
you tor the opportunity to comaent on the statt
~e.entation on 'the topic ot obtainin9 l'rof..iCllUll bal
B.t.te Services tor di.position and aequi8ition of
properties by the City.
We OOIlvenecl a meeting of .everal "senior" Real ..tate
Broker _~. of our organbation to couider the start
proposals, an4 thb lJX'OUP c1evelopecS _ COU.lunts an4
r~tione 'that I have beW1 authorized to traD8IIit to
the city tor consideration.
First, the group would prefer the opportunity to ......-he
the i.sue in gr_ter depth tban that ~ordad by one rushed
_tinq. w. would 1J1'9. the city to e.tabli.h a workin9
group, inclUding those RBALmRS Who ba_ already _t to
canaider this _tter, to develop the ))eat approaCb tor the
City to ua. when it neeck 1:11. .ervices ot the Real Estate
CClIIIIIIuoity.
It 1:be city cannot take 1:be tiae to l7Ur8Ue tbie _tter ..
ra<:OIIIIen4ec1 above, and 1:I1e only optiODll to H oonsi.cierec1
are 1:bo.. brOU9ht forward by 8tatt in the propollal we
reviewed. briefly, then our group ,wouJ.d reo-.n4 Option
Nullbered 2. in tbat report, with .everal aodit!oatione.
We would urq. 1:110 City to r..trict the li.t of
qualifications to the follovin9 it_:
* Excellent negotiation akille
* Experience wi1:l1 the particular type of property in
qlWStion
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MAR-11-1992 16:14 FROM
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Honuty, a goo4 reputation and a ......4taent to full
dbclos_ of all uteria1 fac1:tl, inc:l\1eU.ft9 broker's
coapenaation, affecting a given tranAction
General Real btate lXPerienoe - a1Jlt.a (15) years,
with (10) years __1- in brokerap activiti..
within the Inland _ire
Valid current Qllifomia ...1 Estate Broker Liettl1lJe.
*
*
The reaainder of the it... rec ...me<< by IIt&ft in the RBAL
ZSTATZ ACQUISUIOH/BROKDAGB SIIR'IIClS .-0, dated January
" 1992, for the BBDBYBLOIIIIMT COIIIIIT'l'BI, were OIIitte4 tor
a variety of r_lJODB bue4 on the principal COII8ideratioD
that it wa. the aClZ1l1sitiOll of Real htate Brokerage
swvic.s, as opposed to other Real Zstate Related Services,
that the City was considarinq.
The Depart.ent of Real Dtate, State of Qllifornia,
maintains a record Of coaplainte against liceNl... that can
be accessed by the public.
It MY appaar that a Collage Degree or ll8Uerabip in a
Prof...ional <>r9aniution .. valuable att.riblat. for an
individual to po....., wt neither are nec...ary
prerequisites to the practictl of Real I:8tata, in the St8t:a
of california, and therefore ooulcl be viewe4 by __ in the
comauftity a. di.cri.in.t~ if use4 to exclud8 an
individual fro. conaideration a. a "Qualifie<<" Real Bstate
Broker .
When it i. nece..ary to addr... toxins (or other
COfttaainanta), or to appral.. or valuate a property, .ueIl
dete:l:llinaticms sbOQld and INSt be ..de by CC~ experts
in the area of conoern. A Real Batate Br<*er does Dot Dead
.uch ~i.. to practice the profession, uacI the value of
an individual Who i. to function as a Real btate BroQr
shou14 not be deterained by the possessIon of, or lack of,
knowledge in another field of .pecialty.
Option NtnWw: 1. in the __ report was not r~
beoau_ of a concern that the expertise, outline<< in those
oriteria r.COIIIlElDded in Option 1fUIIber 2. (,.....t~ied) allove,
does not necessarily exist in each Ii.Ph L..a.at within the
City. Bxperience haa sbown it to be quite difficult to
a.Hable froa several depar1:aate in one place at one t1ae
and the need to frequently as.Bble sudh a teaa IRigbt
becoae a barrier to conducting I:lwainess in a tillely and
etfective .anner.
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MRR-11-1992 16:14 FROM
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The 1aa't option, tha1; ot "lNsin... _ _1" t. the .yat:em
that h_ 91WD rille to tbe concern of the ~
COHIIITrD, Il8 well .. to concerneG citizen. wbo bave c:ome
forward 1;0 the City an4 to our Jl.ssoci.Uon _ _11.
Sincerely,
~~~~~~~~
by Talbott
1992 h.-Went
TOTA.. P. B4
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