Could the Town of Lexington sell Barr Pond without an appraisal or public bidding, and did it need an ordinance?

Official title

Determining whether the Town of Lexington followed proper legal procedure in entering into a contract to sell Barr Pond a/k/a Wildlife Pond and in accepting $60,000.00 as the sales price.

Requester

The Honorable Katrina F. Shealy, Senator, District No. 23

Plain-English summary

In 2013, the Attorney General explained the rules for a municipality's sale of land in response to questions about Lexington's Barr Pond contract. State law required an ordinance to sell or contract to sell municipal land and required two readings on separate days at least six days apart. It did not require an appraisal or public bidding. A municipality still had to receive reasonably equivalent value. The office could not decide whether Lexington followed all applicable procedures or whether the stated price was adequate, because it had not reviewed local ordinances and those questions depended on facts.

Currency note

This opinion was issued in 2013. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Q: Did a municipality need an ordinance to sell land?
A: The opinion said state law required council action by ordinance for a sale or contract to sell municipal land.

Q: Did state law require an appraisal or public auction?
A: The opinion said state law required neither an appraisal nor public bidding before a municipality sold real estate. It had not examined Lexington's local ordinances for additional requirements.

Q: Did the Attorney General approve the Barr Pond sale price?
A: No. The opinion said the adequacy of the price and whether it represented reasonably equivalent value were factual matters it could not decide.

Q: Did the Attorney General decide whether Lexington followed its own procedures?
A: No. It observed that two readings appeared to have occurred, but had not reviewed the town's ordinances and did not determine whether the sale was procedurally valid.

Background and statutory framework

The opinion quoted the municipal property statute, the ordinance requirement for land sales, and the ordinance adoption rule. It also described prior opinions and court decisions requiring reasonably equivalent value when local officials transfer municipal property. The office left the Barr Pond facts to the municipality and, ultimately, a court.

Citations and references

• Sections 5-7-40, 5-7-260, and 5-7-270 of the South Carolina Code, as discussed in the opinion.

Source

• Landing page: https://www.scag.gov/opinions/opinions-archive/july-8-2013/
• Original PDF: https://www.scag.gov/wp-content/uploads/2013/07/shealy-k-os-9638-7-8-13-sale-of-municipal-land.pdf

Original opinion text

ALAN WILSON

ATIORNEY GENERAL

July 8, 2013

The Honorable Katrina F. Shealy
Senator, District No. 23
PO Box 503
Lexington, SC 29071
Dear Senator Shealy:
This Office received your request for an opinion determining whether the Town of Lexington followed proper legal procedure in entering into a contract to sell Barr Pond a/k/a Wildlife Pond and in accepting
$60,000.00 as the sales price. Our understanding of the facts you presented is that you have reviewed the Town of Lexington Minutes that are online, relating to the sale of the Town 's Property Interest at Barr Pond, and it appears that there was a contract entered into by the Mayor which had a provision that states "approval shall be deemed granted shoufd no notice be given to the Purchase r after the expiration of said s ixty (60) day period." The sixty days expired on May 3, 2013, and the final reading was on May 20, 2013, after the contract evidently was automatically valid. Please be aware that whether or not the Town of Lexington followed proper legal procedure in its sale of the property and whether or not the Town acted properly in accepting $60,000.00 for the sale can not be determined in this Opinion because such are factual matters beyond the scope of an opinion. See Op. S.C. A.tty, Gen., December 12, 1983 . The decision to sell the property rests with the Town of Lexington and only a Cou1t could interfere with such sale. However, thi s Office can assist you by providing yo u with the law regard ing such matters.

LAW/ANALYSIS
Municipality Entering into a Contract to Sell Land
Section 5-7-40 of the South Carolina Code states that:
All municipalities of this State may own and possess prope1ty within and without the ir corporate limits, real, personal or mixed, without limitation, and may, by resolution of the council adopted at a public meeting and upon such terms and conditions as such council may deem advisable, sell, alien, convey, lease or otherwise dispose of personal property and in the case of a sale, alienation, conveyance, lease or other disposition of real or mixed prope1ty, such council action must be effected by ordinance.

REMBERT C . D ENNIS B UILDING

•

POST OFFICE B ox 11549 •

COLUMBIA, SC 292 11 -1549

• TELEPHONE 803-734-3970 •

FACSIMILE 803-253-6283

The Honorable Katrina F. Shealy
Page 2
July 8, 20 13

S.C. Code Ann. Sec. 5-7-40 ( 1976 Code, as amended).
The South Carolina Code fmiher states that " In addition to other acts required by law to be done by ordinance, those acts of the municipal council shall be by ordinances which ... (6) Sell or lease or contract to sell or lease any lands of the municipality ... S.C. Code Ann. Sec. 5-7-260 (1976 Code, as amended). South Carolina law makes it clear that a municipality can own land and that it must effect an ordinance to sell or contract to sell the land. South Carolina law explains the form and procedures for municipalities introducing ord inances. Section 5-7-270 of the South Carolina Code says that "Every proposed ordinance shall be introduced in writing and in the form required for final adoption. Each municipality shall by ordinance establish its own rules and procedures as to adoption of ordinances. No ordinance shall have the force of law until it shall have been read two times on two separate days with at least six days between each reading." S.C. Code Ann. Sec. 5-7-270 (1976 Code, as amended). It appears that the Town of Lexington held the two mandatory readings on the proposed ordinance. This Office has not examined any ordinances of the Town of Lexington and thus is unaware of any further requirements by the township for the adoption of an ordinance.

Sales Price of Land
The next issue is whether or not the Town of Lexington acted properly in accepting $60,000.00 as the sales price for the property. ''[N]o state law requires an appraisal before a city council may buy or sell real estate.'' See Op. S.C. Atty. Gen., No. 86 - 54, May I, 1986 (1986 WL 192014). Similar to that Opinion, this Office has not examined any ordinances of the Town of Lexington and thus is unaware of any possible local requirements for appraisal. However, as stated in Op. S.C. Any. Gen., No. 89 - 140, December 12, 1989 ( 1989 WL 406229) (quoting Op. S.C. Atty. Gen., No. 85 - 91 , August 27, 1985 (1985 WL 166061)), "We caution that the applicable law requires that a public entity receive ' reasonably equivalent value' of the sale of public prope1iy. Haesloop v. City Council of Charleston, 123 S.C. 272, 115 S.E. 596, 600 (1923). In this context we have previously said that: Article III, sec. 31 [Constitution of South Carolina, 1895, as amended], provides that 'lands belonging to or under the control of the state shall never be donated, directly or indirectly, to private corporations or individuals ... ' While our Coutt has clearly stated that neither this provision nor the Due Process Clause in themselves require public bidding or a maximum price for the sale of property, Elliott v. McNair, 25 0 S.C. 75, 156 S.E. 2d 421 (I 967), it is also clear that the consideration from such a sale must be of 'reasonably equivalent value ... ' or 'adequately equivalent ... ' Haesloop v. City of Charleston, 123 S.C. 272, 115 S.E. 596, 600 (1923). In determining ' what is a fair and reasonable return for disposition of its properties,' a public body ' may properly consider indirect benefits resulting to the public ... ' McKinney v. City of

The Honorable Katrina F. Shealy
Page 3
July 8, 2013
Greenville, 262 S.C. 227, 242, 203 S.E.2d 680 (1974). But such benefits must not be 'of too incidental or secondary a character ... ' Haesloop, supra. In short, when public officials sell the state' s land, they are acting in a fiduciary relationship with the public and are thus held to the
·standard of diligence and prudence that [persons] ... of ordinary intelligence in such matters employ in their own like affairs.' Haesloop, 123 S.C. at 284."' " While our Supreme Court has held that Art. III, sec. 31 is inapplicable to political subdivisions, see Haesloop, supra, the Court has clearly recognized that public officials at the local level act in a fiduciary capacity with respect to the subdivision's property. Accordingly, local officials may not transfer municipal property to a private use, but must receive ' in return some consideration of reasonably equivalent value .. .' Haesloop, 123 S.C. at 282-283, 115 S.E. 596." Op. S.C. Any. Gen., January 12, 2012 (2012 WL 440539). A municipality can sell property without an appraisal and without a public bidding process. But the sales price must be for reasonably equivalent value. The consideration which the Town of Lexington should receive for the property is a factual question based upon the factors listed above and can not be determined in this opinion.

CONCLUSION
In conclusion, a municipality must effect an ordinance to sell or contract to sell land. However, each municipality can establish its own procedures regarding adoption of ordinances. This Office is unaware of any possible local requirements of the Town of Lexington but we have not reviewed its ordinances. A municipality is allowed to sell property without an appraisal and without a public bidding process. But the sales price must be fair and reasonable and for reasonably equivalent value. Ultimately, the decision to sell real property and the sales price rests with a municipality and only a Court can interfere with such sale. Thus this Office can only offer an opinion. Sincerely,

Elinor V. Lister
Assistant Attorney General
REVIEWED AND APPROVED BY:

&P.00-Robert D. Cook
Solicitor General