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CITY COUNCIL AGENDA ITEM NO. 21

Meeting Date: June 24, 2003

Subject/Title: Discuss City Policy regarding the use of Real Estate Brokers for transaction of the lease or purchase of City and Agency owned real property. (H. Sword)

Submitted by: Howard Sword, Economic Development Director

Approved by: John Stevenson, City Manager

RECOMMENDATION

Discuss City Policy regarding the use of Real Estate Brokers for transactions of the lease or purchase of City and Agency owned real property.

PREVIOUS ACTION

• Many transactions involving the City or Agency regarding the acquisition or disposition of real property. The Engineering Department’s Right of Way Division, the City Attorney and other City Staff without the assistance of a Real Estate Broker or Agent typically administer these transactions.

• The Business and Technology Center rents full service office space to businesses. A finder’s fee was offered to Real Estate Agents when rental activity was very slow. The finder’s fee has been paid on one occasion and will be paid one more time if a perspective tenancy materialized. The finder’s fee was discontinued when the rental market improved and the rental activity no longer needed the service.

• The City is in the process of reviewing proposals for the purchase of property in the Sunset Industrial Complex. The proposals will be evaluated on a criterion that includes business type, present location, job generation and fiscal benefit to the City. A fixed price was established for the successful proposals. It does not seem to be appropriate for a Real Estate Broker or Agent to be involved in the City’s objective evaluation of these proposals.

BACKGROUND

A member of the public at the June 10, 2003 City Council Meeting requested that the City Council review the City policy regarding the use of Real Estate Brokers for transactions of the lease or purchase of City and Agency owned real property. Councilman Petrovich requested that this item be placed on a future Council Agenda.

The City regularly engages in transactions involving real property. These transactions usually involve the acquisition of property for the extension of infrastructure. The City and/or Redevelopment Agency do, however, from time to time engage in the disposition of real property by sale or lease. Generally these transactions have been accomplished with the internal assistance of our City Attorney and the Right of Way Division of the Engineering Department. There was a time period when rental activity at the Business and Technology Center was slow that a finders fee was offered to Real Estate Agents that brought in tenants. This practice was discontinued when general rental activity increased.

The use of Real Estate Brokers varies in the private sector. There are no rules that dictate the use of Brokers; it is a decision made by the owner of the property on a case-by-case basis and a listing with a Broker customarily has an active time period determining its validity.

FISCAL IMPACT

The use of Real Estate Brokers will increase the cost of real property transactions.

City Administration
City of Brentwood City Council
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E-mail allcouncil@brentwoodca.gov