Asset sales and proceeds disbursement (web content)

1. Purpose and intent of the policy

To ensure that the sale of council owned assets is subject to a fair and transparent process in accordance with this policy and relevant legislation.

2. Policy objective

This policy applies to any person or persons responsible for the identification of assets that are no longer ‘fit for purpose’ or excess to the current needs of council and / or community and require disposal or rationalisation. Effective application of this policy will ensure that any disposal of council’s assets is carried out in a transparent, fair, independent and open manner. All asset sale actions must adhere to the levels of authority delegations.

3. Who this policy applies to

This policy applies to sales of council land / property and assets in general. This policy does not apply to major plant.

4. Definitions of key terms and acronyms used within this policy

CEO – Chief Executive Officer

Council – Moyne Shire Council

DEECA – Department of Energy, Environment and Climate Action

DCG – Director of Corporate and Governance

Highest and best use – The most probable use of a property, which is physically possible, appropriately justified, legally permissible, financially feasible, and which results in the highest value of the property being valued.

LG Act – Local Government Act 1989/2020

MFP – Manager Finance and Property

Market value –  The estimated amount for which an asset should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s length transaction, after proper marketing, wherein the parties had each acted knowledgeably, prudently and without compulsion.

Open space reserve – A reserve set aside for any funds received from the sale of public open space which includes any land set aside in a plan or land in a plan zoned or reserved under a planning scheme:

• for public recreation or public resort; or
• as parklands; or
• for similar purposes

as defined in the Subdivision Act 1988.

Service Manager – Person responsible for the delivery of the service that relates to the lease, i.e. recreation, port, caravan park, quarry or miscellaneous.

Valuation - A valuation carried out in accordance with the General Concepts, Principles and Definitions of the Valuation and Property Standards Manual, excluding desktop assessments and restricted assessments.

5. Policy details

Responsibilities

The Director of Corporate and Governance has overall responsibility for policy implementation and compliance. Manager Finance and Property reviews recommendations and provides management level oversight of policy compliance.

Training requirements

Service managers should understand the specific requirements of the Local Government Best Practice Guidelines for the Sale and Exchange of Land 2009. Refresher training maybe required if significant changes in legislation, policy or procedures occur.

Quality records

Assets - General

All surplus council assets valued at $20,000 ex GST or greater are to be offered for sale initially by public auction or tender. Any variation to this policy can only be made by a specific council resolution.

All surplus council assets valued at less than $20,000 will be disposed of via the following principles:

(1) All minor plant and minor vehicles valued at $1,000 but less than $20,000 each are to be disposed of either by public auction or through a trade-in process, whichever gives the best outcome to council, subject to the total disposition not exceeding $75,000 for trade-ins. Minor plant and vehicles valued at less than $1,000 may be disposed of at the discretion of the Chief Executive Officer or if valued at almost worthless by the fleet supervisor then disposed of at the supervisor’s discretion to either scrap metal or waste.

(2) All surplus furniture, equipment or goods exceeding $5,000 but less than $20,000 in value, based on a 'reasonable judgement' valuation, shall be disposed of firstly through public auction or a public tender process. In the event of there being no response to the public auction or public tender process, the processes set out in (3) and (4) below shall be followed.

(3) At the discretion of the Chief Executive Officer, surplus furniture, equipment or goods reasonably considered being worth between $1,000 and $5,000 shall be offered at no cost to local community groups, service organisations or charities through a locally-advertised expression of interest process which may comprise either an expression of interest or be on a "first in, first served" response basis. The latter process will only apply where it is not reasonably practicable or efficient to dispose of such surplus items using the expression of interest process. Any items could be collected by groups at their cost from the nominated location at a time and date to be arranged (not less than 14 working days after the first public notice is given).

(4) Where an expression of interest process applies and more than one offer is received, a report shall be provided to council recommending the order of priority, with preference given to Moyne-based local community organisations wherever practicable.

(5) Where items are reasonably considered to be worth less than $1,000 (based on a reasonable judgement' valuation), the items can be offered to a registered charity organisation or community group; or disposed of at the discretion of the Chief Executive Officer; or appropriately disposed of through a waste collection service.

(6) Assets are not to be offered or sold to Moyne staff members unless through a transparent process open to parties external to Moyne Shire Council.

(7) The asset register shall reflect the disposal where applicable.

Assets – land

All sales of council land will be undertaken strictly in accordance with relevant legislation including, without limitation, the provisions of the Local Government Act 2020.

(1) Unless determined specifically by council in accordance with the provisions of clause (5) of this policy statement, all sales of council land be achieved by public auction or public tender/expression of interest process, with council to decide which method is to be used for each particular sale;

(2) A reserve price of at least the market valuation obtained by council officers in accordance with the Local Government Act 2020 be set, unless varied by resolution of council;

(3) Subject to clause (6), in addition to complying with council’s community engagement policy, a sign be prominently displayed on the land for at least 28 days prior to the sale;

(4) Notwithstanding clauses (1) to (3) above, by resolution council may determine that:

a. where a potential purchaser of a specific parcel of council owned land has provided evidence to the satisfaction of council that such sale would have significant social and/or economic benefits for the local community, the land be sold by private treaty at a price not less than the current market valuation, in accordance with the provisions of Local Government Act 2020

b. where a proposed sale of land comprises a parcel of land or discontinued road that would otherwise not be able to be lawfully utilised or developed in its own right, the land be offered for sale in the first instance private treaty to the adjoining registered freehold proprietor at a value not less than current market valuation, in accordance with the provisions of Local Government Act 2020 and achieving consolidation of title with adjoining freehold property. Should the adjoining registered freehold proprietor not proceed with purchase of the land, it may be offered for sale by private treated at a value not less than current market valuation, in accordance with the provisions of Local Government Act 2020; and

c. in the case of a proposed land sale to achieve a consolidation of allotments to fulfil a restructure of an inappropriate subdivision under the Planning Scheme, that the land be sold by private treaty to the adjoining registered freehold proprietor at a price not less than current market valuation, in accordance with the provisions Local Government Act 2020 and achieving consolidation of title with adjoining freehold property

(5) Where a sale of council land is by private treaty, the requirement to display advertising signage on the land be waived

(6) All valuation, surveying, legal and similar costs associated with a sale of council land be borne by the purchaser, unless determined otherwise by council resolution on community benefit or similar grounds

(7) Council is under no obligation to accede to any citizen request to purchase council land, with each request to be considered on its merits having regard to any community benefits / disbenefits, which would arise from the proposed sale

(8) In addition to the requirements under the Local Government Act 2020, council is required to comply with the Subdivision Act 1988 when selling public open space

The Subdivisions Act 1988 requires council to apply the proceeds from the sale of any public open space to:

• buy land for use for public recreation or public resort, as parklands or for similar purposes; or
• improve land already set aside, zoned or reserved (by the council, the Crown, a planning scheme or otherwise) for use for public recreation or public resort, as parklands or for similar purposes; or
• with the approval of the minister administering the LG Act, improve land (whether set aside on a plan or not) used for public recreation or public resort, as parklands or for similar purposes.

Proposed land and / or property sales will be based upon a business case that details the options, rationale, evidence and implications of sale and / or disposal for council and the community.

The business case must also include cost: benefit details for maximising proceeds from land and property sales. This may include rezoning of land, investment in supporting infrastructure, renewal works, contamination remediation, fencing, drainage, full or part demolition or other works.

Application of method of sale – Land

5.1 Public auction

(1) Fix date of sale and allow minimum four (4) weeks for advertising campaign.

(2) Valuation - if market value less than $700,000 obtain one valuation. If greater, obtain two valuations.

(3) Reserve price to be not less than the valuation. Must not be disclosed prior to auction. Where valuation is less than $20,000, fix reserve at valuation. Where valuation is more than $20,000, council to fix reserve.

(4) Auction to be conducted on-site.

(5) Sale if land passed-in, negotiate with highest bidder to achieve a sale at or above reserve – or readvertise.

5.2 Public tender / expression of interest process

(1) Fix date of sale and allow minimum four (4) weeks for advertising campaign.

(2) If market value less than $700,000 obtain one valuation. If greater, obtain two valuations.

(3) Reserve price to be not less than the valuation. Must not be disclosed prior to close of tenders. Where valuation is less than $20,000, fix reserve at valuation. Where valuation is more than $20,000, council to fix reserve.

(4) Lodgment of tenders -to be lodged at the council’s designated ‘tender box’ or online via the e-tender portal

(5) Highest conforming tender at or above reserve to be accepted. If no tender above reserve, negotiate with highest tenderer to achieve sale at or above reserve – or readvertise.

(6) Non-conforming tender/s will be considered if a conforming tender is also submitted by the same tenderer.

5.3 Conditions of sale

(1) Terms of settlement 10% deposit on signing and balance within:

a) if sale price less than $20,000 - 30 days

b) if more than $20,000 - 60 days.

(2) Section 32 statement to contain full and proper disclosure of all relevant matters.

(3) Determine whether rezoning should be put in place prior to sale or indicate support for rezoning.

(4) Determine whether any controls on the future use of the land are required, e.g. section 173 agreement, design guidelines, encumbrances.

(5) If land may be subject to contamination (e.g. fuel storage), conduct environmental audit. Decide whether to clean up site or sell in contaminated condition. Consider special conditions to limit liability.

(6) No back rates to be charged.

(7) If leaseback proposed, lease must be drawn in commercial terms and conditions, to ensure full market value is realised;

• specify use
• determine period
• fix rent (a percentage of sale price), payable monthly in arrears.

(8) Review whether any possible restrictions on development/use exist, e.g. heritage classification.

Responsibility for implementation and compliance

These management positions are responsible for implementation and compliance monitoring of the policy in their work areas.

Director Corporate and Governance

Overall responsibility for policy implementation and compliance

Manager Finance and Property

Review recommendations. Provide management level oversight of policy compliance

Property Officer

Facilitate requests for the sale of council land in accordance with policy, provide recommendations to council as appropriate

Privacy

All personal information collected by Moyne Shire council in connection with this policy will be handled in accordance with all applicable privacy legislation and will be held in strictest confidence, except where otherwise required by legislation.

This policy has been assessed as compliant with the obligations and objectives of the Victorian Charter of Human Rights and Responsibilities Act 2006.

Council has obligations under the Gender Equality Act 2020. A gender impact assessment may be required when asset sales could have a direct and significant impact on the community.

Disbursement of sale proceeds

The net proceeds from asset sales are to be submitted to council’s general revenue and be distributed as per council’s budgeting procedures:

• Council may also pass a resolution that directs full or part sale proceeds (excluding sale proceeds from open space reserves), towards a community project local to the sold land or property that demonstrates community need, benefit and support, and that aligns to council Plan objectives and strategies
• Full or part contribution towards a replacement asset, or for renewal or upgrade of an existing council owned community asset within the locality
• A future property investment reserve fund as part of organisational renewal gap management or an asset financing strategy.

Proceeds of sale cannot be used to offset a required community contribution to a community project or development or for uses or purposes that go contra to other council policies relating to asset and property management.

A recognised body may make application to council for the proceeds to be used as funds for a special project. Proceeds will not necessarily be allocated to related special projects unless there is a formal written council resolution agreeing and committing to do so.

All proceeds from open space reserve sales are required to be used in accordance with the Subdivision and Planning Environment Act 1987 and must be allocated to council’s open space reserve regardless of council’s abovementioned budgeting procedure.

6. Relevant legislation / references

Council related policies:

• IE-04 Property Management policy 2024-2028
• Asset Management policy 2022
• Asset Plan 2022
  
  

External References:

• Land Act 1958 (Vic)
• Local Government Act 1989/2020 (Vic)
• Local Government Best Practice Guidelines for the Sale and Exchange of Land 2009
• Subdivision Act 1988 (Vic)
• Planning and Environment Act 1987 (Vic)
• Gender Equality Act 2020
  
  

7. Gender impact assessment

A gender impact assessment was not undertaken for this policy.

8. Human rights commitment

It is considered that this policy does not impact negatively on any rights identified in the Charter of Human Rights and Responsibilities Act (2006).

9. Policy owner

Manager Finance and Property

10. Document history

Version 001

Policy created

Version 002

Reason for change - council review period

Version 003

Date endorsed – January 2024

Reason for change – council review cycle

It is recognised that, from time to time, circumstances may change leading to the need for minor administrative changes to this document. Where an update does not materially alter this document, such a change may be made administratively. Examples include a change to the name of a council department, a change to the name of a Federal or State Government department, and a minor update to legislation which does not have a material impact. However, any change or update which materially alters this document must be by resolution of Council.