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HomeMy WebLinkAboutCOM 0739.001 2004-2006 Harry Kim ~ Lincoln S.T. Ashida Mayor Corpora[um Counsel ! • • Gerald Takase i" r .Assistant Carpxatum Counsel COUNTY OF HAWAII OFFICE OF THE CORPORATION COUNSEL 101 Aupuui Street, Suite 325 Hilo, Hawaii 96720-4262 ~ (808) 961.8251 ~ Fax (808) 961.8622 Apri13, 2006 Councilman Stacy Higa Hawaii County Council 25 Aupuni Street Hilo, Hawaii 96720 Dear Councilman Higa: Re: Resolution 279-06 Hawaiian Telcom Easement Pursuant to Councilwoman Virginia Isbell's request, attached are the pros and cons of the County's sale/lease/easement of real property. If the County is going to consider itself as a land managerlowner, it should not be tied to outdated business practices. Instead, land managers/agents (none currently allocated) should be given some leeway to pursue proven commonsense, business-like practices and techniques to manage property holdings. Some of the reforms should include: 1) Promoting the sale/exchange of real property when the exchange or transfer could be made as a means of acquiring property better-suited to the County's purposes. 2) Allowing the acquisition of property in distress situations for future County expansion or use. 3) Allowing the subleasing of vacant County property. 4) Sale/leasehold to allow public/private partnerships, especially for underdeveloped, excess or poorly located facilities. Such property could be leased to promote full use and optimal performance. County could benefit from private sector resources and expertise to repair, renovate and construct facilities. 5) The sale of underused or undesirable property could provide a cash resource for further other-facilities needs. Stop the cash drain by underused or unproductive properties. 6) Whether thresholds for when appraisals are required should be revised. Comm. No. Ref. To: ~res~eW' Hawaii County is an Equal Opportunity Provider and Employer Ruf. date ~ Councilman Stacy Higa Page -2- Apri13, 2006 Additionally, land management reforms are also needed: I) Strategic plan for County properties-what are they being held for? Are there any current uses? 2) Consolidation of services. 3) Ability to meet market demands. Sincerely, Gfi~AKASE Assistant Corporation Counsel GT:de Encs. s:\dept\council\gt mist\pros & cons\GTde.doc PROS & CONS OF SALE/LEASE EASEMENT SALE LEASE EASEMENT Ownership Transfer upon sale. Retained Retained Use Exclusive Exclusive Shared Money/Value Fair market value. Lease rent based on fair Proportional rent based on fair market value. mazket value (typically based on 10-40%). Liability Transferred to new Usually covered by Lessee; Usually shared based on use. owner. owner may still have exposure. Real property tax Paid by new owner. Typically paid by Lessee. Usually paid by owner. Ability to Yes. With Lessor's consent. With Grantor's consent. convey/transfer Control over property. All in owner. In compliance with lease. In compliance with easement. Length Permanent Term of lease. Term ofeasement/use. Legal lot Separate lot. Separate lot. Single lot. ADVANTAGES SALE LEASE EASEMENT Coun Coun Coun Cashed out-no further Long-term lease provides Still able to use land-usually ownership or liability. steady income stream. provides equitable solution. Prevents loss of ownership. Government is typically Property preserved for future ill-equipped to manage use as asset. property-better to sell. Hawn Tel: Potential long-term gain. Provides capital for other Depending on the type of improvements and capital Keep in land inventory under easement, it can provide a projects. County control. revenue stream. Many government buildings Some private/public are old and poorly partnerships have advantages maintained may pose (GAO looking to enter environmental hazard. partnerships). Hard for government to use County wishes to maintain land to full potential (highest some control over land. and best use due to regulations). Hawn Tel: Upkeep and liability may outweigh worth of ownership. Process is provided for in the County Code--reverter to Sell unused property stop County if use is terminated. cash drain. Public utility is charged with upkeep and maintenance of Hawn Tel: site. No County efforts required for fiscal and In rare instances, the eventual physical management of the revenue might justify the long site. County plays a role in wait for subdivision process supporting providing basic versus granting or leasing an utility services to people living easement. in extensive rural areas. DISADVANTAGES SALE LEASE EASEMENT Coun Count Coun Property no longer available. Government is usually a poor manager of land (laws prevent Not party of inventory it from becoming an effective owner/manager. Sale process can be cumbersome and no money County Code is poorly set up for additional costs. to allow County to be an effective land manager. If property, County may have future use for it. Hawn Tel: Hawn Tel: Hawn Tei: Costs are exorbitant. One-time payment. Process is Requires County's fiscal and Preparation and processing of provided for in the County physical management of lease. the subdivision application Code. Revenue stream may not can take up to a year and costs support costs to maintain in term of County and private fiscal management efforts. sector man hours are Total surrender of property to extensive. Public utility the specific use. subdivisions are supposed to be exempt from the County's subdivision code (Sec. 23-11), but our experience has been that the Planning Dept. is reluctant to validate this exemption and it still is a long and ex ensive rocess.