HomeMy WebLinkAboutR12-Economic Development Agency
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RVILOPMI.r BIPARRlwr
OF rBI CIn OF SAlt R1!1III1IIntllO
U01lIsr FOR CCHlISSIOW/COUlICIL ACtIOW
From:
KENNETH J. HENDERSOR
Executive Director
Subject: JIBJ.L BSUtl
ACQUISITIORIBROltERJ.GB
SDVICBS POLICY
DATE:
April 27, 1992
SvnoDsis of Previous Camaission/Council/Co--ittee Action(s):
On March, 16, 1992 the Community Development Commission authorized staff
to initiate meetings with representatives of the San Bernardino Valley
Association of Realtors to complete development, of the Economic
Development Agency's Acquisition/Brokerage Services Policy.
Recommended Motion(s):
(C..-mitv Deve10llment Coaaission)
MOTION
That the Community Development Commission approve a real
estate acquiSition/brokerage services policy as set forth in
the attached staff report.
Adm~trator
~BRSON
Executive Director
.,
Contact person(s): Kenneth Henderson/John M. Wood
Phone:
5081
1-7
Project Area(s): All
Ward(s):
Supporting Data Attached:
Staff ReDort
FUNDING REQUIREMENTS: Amount: $
RIA
Source:
RIA
Budget Authority:
RIA
Commission/Council Notes:
KJH:JMW:0012g
COIftISSIOR MBBTIltG AGDDA
Meetlna Date: 5/4/1992
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Aaenda Itea No:
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DEVBLOPIIIIIT DEPhulluu; 0
or TIll CIn or SAlI BlUARDIBO
STAFF UPORT
leal Estate AcauisitionlBrokeraae Services
_Previously, the Community Development Commission stated it wanted staff to
establish another methodology to select real estate brokers acquiring
properties/land on behalf of the Economic Development Agency. The purpose was
to provide access to all qualified realtors to work with the Agency and,
simultaneously, assure hiring of professionals with the most desirable"
specialties and credentials.
Pursuant to direction from the Community Development Commission at its March
16, 1992 meeting, staff has met with Mr. Sam Henley, Executive Vice-President
of the San Bernardino Valley Association of Realtors ("Association"), to
complete the development of the Economic Development Agency's
Acquisit}on/Brokerage Services Policy ("Policy"). It was jointly decided that
the best approach, with regard to the establishment of a list of desirable
attributes for a broker to possess was to divide the list into a minimum
requirements section and a desirable qualifications section. The following
constitutes the minimum requirements to be possessed by auy real estate broker
seeking to provide professional real estate services to the Agency:
Minimum Reauirements:
1. Excellent negotiation skills, as verified and demonstrated by past
professional transactions.
2. Experience with the particular type of property in question.
3. Honesty, which includes a good reputation and a commitment to full
disclosure of all material facts, including broker's compensation,
affecting a given transaction.
4. General real estate experience - minimum of ten (10) years~ with
seven (7) years experience in brokerage activities within the Inland
~~. .
5. Valid, current California Real Estate Broker's license.
6. MinL.um of three (3) client references about similar property
transactions.
7. An absence of disciplinary actions by the State of California
Department of Real Estate against the Broker's real estate license.
8. Flexibility and reasonableness concerning compensation.
KJB:JMW:0012g
COI(IIISSIOK IlElTIBG AGIRDA
Meeting Date: 5/4/1992
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Agenda It_ Ko:
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DIVILOPIII.r DIPAlrlll.r
or t'III CIn or SAR BDlU.IDIBO
1I0UEsr FOI COIftISSIOK/COtJWCIL ACTIO.
From:
KENNETH J. HENDERSON
Executive Director
Subject: RIAL ISrAD ACQUISIrIOK/
BIODUGI SIRVICES
Date:
March 12, 1992
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SYnODS is of PreYioas CftMMfssionlCOuncil/C~ittee Action(s):
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 Motion(s):
(COIaUIlitv DeYe10mlent C--ission)
MOrIO.
rhat the Community Development Commission authorize staff
to initiate meeting(s) with representatives of the San
Bernardino Board of leal tors to complete development of
the Economic Development Agency's Acquisition/Brokerage
Services Policy.
~
Administrator
~~~OR
Executive Director
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Contact Person(s):
Ken Henderson/Stafford Parker
Phone:
5081
Project Area(s):
^
Ward(s):
1-7
All
Supporting Data Attached: Staff ReDort: Attornev Memoraftdum dated 11/22/91:
San Bernardino Board of la1tora Memorandum dated
March 11. 1992
FUNDING REQUIREMENTS:
Amount: $ N/A
N/A
Source:
Budget AuthO~:
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DBVELOPIIKIft' DIP~ STAFF aPORT
Real Bstate Acqui~onIBrokerage SerYices
April 27, 1992
Page Wuaber -2-
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The followina constitutes attributes which would be desirable, but not
mandatory, for any broker with whom the Agency is contemplating contracting:
Desirable Oualifications
1. Experience with and sensitivity to the specialized needs of public
entities. In this regard, some right-of-way acquisition and
relocation experience would be desirable.
2. Some appraisal/valuation experience would be preferred.
3. A general understanding and knowledge of toxic contamination
liability issues would be preferred.
4. Membership in relevant professional associations (e.g. National
Association of Realtors, California Association of Realtors, Society
of Industrial Realtors, etc.) desirable.
5. Bachelor's degree or the equivalent, in business economics, real
estate or a related field would be preferred.
6. Well versed in examining title reports and skilled in removing
clouds on title and other issues that affect the highest and best
use of the land.
Agreement was also reached with the Association that, while the Agency would
abide by this poliCY in those instances where the services of a real estate
broker are deemed necessary or desirable, the Community Development Commission
reserves the right, in its discretion, to utilize agency staff in lieu of an
outside real estate broker.
Attached for your reference are copies of the following background documents:
"
1. Most recent Community Development Commission agenda item 'bn this
SUbject, from the meeting of March,16, 1992.
..
2. Memorandum dated Rovember 22, 1991, from Sabo & Green, addressing
the obligations of the agency in selecting a real estate broker.
3. Letter dated March 11, 1992, from the Association, presenting
commentary on a broker selection criteria list developed by staff.
Staff recommends adoption of the form motion.
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DeveloPMllt Departllellt
ICJH:JMw:0012g
ClRIISSIO. KKBTIWG AGDDA
MeetiDa Date: 5/4/1992
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Agenda It_ 110:
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~VILOPMI.! DIPAR~I.!
or 'nIB CIn or SAI BIIllQRDIRO
surr UPORT
Real Istate AcauisitionlBrokeraae Serricea
The CClIIIIIlDlity Development CODIIIlsslon has expressed concern about the use
of real eatate brokerage serricea in connection with acquisitions of
property by the Iconomic Development Agency. A aentillent 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 IDlderstood that in typical real estate transactions there
are four (4) parties - the seller, hislher 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 thia 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 aeller'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. Essentially, 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 ~tent 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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XJB:SWP:lag:0626E
CCHIlSSIO. IIIBrIBG AGElIDA
MeetiDg Date: 3/16/1992
Agend& It_ lI1aber: 16-1
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DBVELOPMDf DlPAhn.n.. STAn' DPOIT
Real Istate ACQalaltloa1Brokeraae SerYlcea
lIarch 12, 1992
P&&e __ber -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
situatioDs may arise wherein a given broker, because of hislher
particular expertise, pre-existing involvement with the property in
question or familiarity with the other party to the tranaaction, 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 :
1) The staff has considerable 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
benefi~sl (b) ease and speed of communication ia 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 brokera 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 administrative control, least
cost and IIOSt flexibility. .
'.
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2) A list of "quslified" (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
brokersges which hsve 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.
KJB:SWP:1ag:0626E
COIlllISSIOIIlEErIIG AGEBDA
lleetlDa Date: 3/16/1992
AgeDda It. "'ber:
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DIVBLOPIIDT DIP~ SUFP uPOar
Real Istate AcvaisitioaJaroterace 'errices
"arch 12, 1992
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* Experience with and sensitivity to the specis1ized 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 him/her
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.
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 11, 19~ staff discussed the issue with the SBBOR
Executive Director and received a copy (attached) of its findings.
Essentially the board's comments echoed some 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 delsy 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.
~Ol' Executive Director
Developaellt DePartaeD.t
IJH: SWP: lag: 06261
COIIIISSIOII IIIITIlIG AGDDA
lleetiDe Date: 3/16/1992
Agencla It.. _ber: ~ - }
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SABO " GREEN
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to' 2 5 1991
A rao'--IONAI.. OORPOllAnoN
ATTORNEYS AT LAW
SUITE _
.:I" CANOGA A VI:NUIt
WOODLAND HILlA CALlJI'ORHIA e1M7
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TI:LIDOOPIBR .Ie, 7_ne
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1I.1I0RAIIDVII
'1'0 :
John ..Wood
Charles R. Green'"
Noveaber 22, 1991
Obligations of Redeveloplllent Agency in Selection of Real
Estate Broker; OUr FUe SBEO0001
FROII:
DATE:
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Pursuant to your request, we bave exuJ.ned the issue of
what leqa1 Obligations are iaposed upon a redevelopment agency in
connection with the selection of real estate brokers to represent
the agency in real estate transactions. OUr conclusion is that tbe
law iJlposes no specific requiruent upon a redeve10plllent agency
with reqard to the selection and retention of real estate brokers.
Bowever, you sbould be aware that Section 33422.1 of the Health and
Safety COde does iJlpose upon a redevelopment agency a general.
obligation to award contracts for work to be perforaed in'
connection with. any redevelopment project to business concerns.
located in, or owned in a substantial part by persons residing in,
the project' are., to the greatest extent feasible.
OUr evaluation of that requireaent 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 wbere the expertise and
ccmpetence 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 perforaecl in an efficient and econOJlical lIanner
cannot be ignored, even in favor of a 'business located in the
redeve10pllent p~oject area.
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In .ddition to .th. v.n.r.l r....rch on this is.u., you
bave reque.ted our co_.nt. with r.g.rd to possible guid.lin..
which could be utilized by th. R.developaent Agency in the
selecUon of real est.t. brok.r.. Accordingly, w. would off.r th.
following points for your con.ider.tion for inclusion in any .uch
guidelines:
1. !'be Agency .hould verify th.t the brok.r ..lect.d
bas a curr~~tly valid licen.. by contacting th. Departaent of Real
Estate. In addition, th. Agency .hould deteraine Whether or not
the Departaent of Re.l ..t.te bas ever cau.ed the licensee to be
diaciplined for any re.son.
2. !'be Agency should require that th. broker bave .
specified level of experience in the particuler type of re.l
estate. For exa~le, so_ brokers spend their careers speCializing
in residenU.l real estate .nd would be unfaaUier with other foras
of property. Even within non-residenU.l, there are
speci,liz.tions in industri.l, shopping center, .nd other kinds of
CCQmaercial properties. We would suggest"that .n experience level
of not less than five years be required.
3. !'he prospective broker .hould be r8CJUireci to infol'll
the Agency of any claiss filed by a client, either with the
Departaent of Real Est.te or in the context of the lavauit, and to
aclviBe the Agency regardinq the cirCWIs~nce. of any such claim.
4. The prospective broker .hould provide a ainiaua of
thr.. (3) references to client. whOll the broker represented in
.tadl.r property .cquisitions.
5. The Agency should determine whether the business is
located in the redevelopaent project area in Which the specific
project on which the broker is to be enqaged is located. In the
event that there are multiple Candidate. for perfol'llance of the
duties, preference .hould be given to the candidate Who is located
in the specific project area, assuaing that all other f.Ctors are
equal...
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? There is no requireaent of which we are aware in the
eo.aunity Redevelopaent Law wbich requires the Aqency to subait
.uch work for public bid or to provide public notice of the
.vailability of work. However, the general requir..ents of
Section 33422.1 would se_ to require that so.e effort be aade to
deterJaine whether there are businesses within the project area
wbich could be awarded contracts for any given service.
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