Featured Inquiry (02/25/08)

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Question

The city is considering doing a land swap or exchange with a private developer. What are the legal issues to consider? 

Answer

With regard to negotiating for the sale or disposition of property, state law does not require a specific process in this situation for your city, other than the process in RCW 35.94.040 that applies when the property involved was “originally acquired for public utility purposes.” The process in RCW 35.94.040 requires a public hearing and a council resolution regarding the conveyance of the property.

With regard to real property exchanges generally, the key legal consideration is that the city receive fair market value for the property it is exchanging. We recommend that both pieces of property be appraised by an independent, qualified appraiser. If the value of the property owned by the city exceeds to any significant extent the value of the property it is receiving, additional cash or other consideration should be a part of the transaction. The values do not have to be identical but there should not be a significant disparity in the value of the property conveyed by the city or the State Auditor may question the transaction.

The city council would declare the property being traded by the city to be surplus to the needs of the city. The city may then negotiate with various parties concerning the proposed exchange. It is not necessary that the city use a bid procedure with regard to the sale or exchange of the property.