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HomeMy WebLinkAboutR-2009-001 Surplus Policy/Surplus Disposal; City Manager AuthorityRESOLUTION NO. R-2009-01 A RESOLUTION adopting the attached Surplus Policy and delegating authority to the City Manager to declare the City's personal property and rolling stock as surplus (other than real estate), which is valued at less than $15,000 and authorizing disposal of said surplus property in a manner which best benefits the City. WHEREAS, the City of Yakima owns personal property and rolling stock that, once their lifecycle has been completed, will become surplus property; WHEREAS, the City of Yakima is in need of an efficient and effective method of disposal for its surplus personal property and rolling stock; WHEREAS, the City of Yakima Purchasing Division has developed a Surplus Policy that will provide such a method; WHEREAS, State of Washington legislation allows the City Council to delegate authority to the City Manager, the task of declaring items surplus; WHEREAS, now, therefore, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF YAKIMA: The attached Surplus Policy is hereby adopted and the City Manager of the City of Yakima is hereby authorized and directed to declare surplus and dispose of the City's surplus personal property and rolling stock (other than real estate), which is valued at less than $15,000, in a manner determined by the City Manager to best benefit the City. ADOPTED BY THE CITY COUNCIL this 6th da ATTEST: X14. ttaz rr�i City Clerk of January, 2009. David Edler, Mayor • • • CITY OF / d/C[blit ADMINISTRATIVE POLICIES AND PROCEDURES POLICY NUMBER: ADM ??? DEPARTMENT: PURCHASING AUTHORIZED BY: DICK ZAIS, CITY MANAGER SUE OWNBY, PURCHASING EFFECTIVE DATE: 01/01/09 SUPERSEDES: NEW POLICY: DISPOSAL OF SURPLUS PROPERTY OTHER THAN REAL ESTATE PURPOSE The City of Yakima is in need of an efficient and effective method for disposal of its surplus property. The City has the statutory authority to dispose of property under RCW 35.22280(3) and City of Yakima Municipal Code, as currently enacted and hereinafter amended. POLICY This policy establishes procedures for disposition of property, other than real estate, which is surplus to the needs of the City. SCOPE AND APPLICABILITY All City officials and employees of the City of Yakima. RESPONSIBILITY FOR ADMINISTRATION The City of Yakima Purchasing Division is responsible for the administration of this policy. The Purchasing Division shall coordinate the disposition of surplus property, and shall aid the City Manager in determining the best method of disposal. The Purchasing Division shall dispose of the property in the manner specified, and shall ensure that net proceeds are deposited with the Treasurer's Office and distributed as revenue to the appropriate fund(s). Any cost incurred in the sale of surplus property shall then be paid from the receiving fund (i.e., auctioneer commission, advertising; etc.) Any cost incurred in the disposition of property shall be paid by the responsible department/division (i.e., recycling fees, transportation charges, etc.) DETERMINATION OF VALUE A department/division wishing to dispose of a single item of surplus property, or a group of items, shall make an estimate of the reasonable market value in "as is, where is" condition. If the department/division cannot make the estimate, the Purchasing Division shall determine the reasonable market value. The Washington Supply Chain Management Manual: Section 3.7 through 3.7.4 - Used Item Management, may be used as a guide to determine whether it is suitable to keep or to dispose of used property. When disposal is made to the general public through sealed bid or auction, final determination of value shall be the highest responsible bid or offer. :• 1 Where the Purchasing Division determines that specific supplies or equipment are of minimal value to the City due to spoilage, obsolescence or other cause or where the Purchasing Division determines that the cost of disposal of such supplies or equipment would exceed the recovery value, the Purchasing Division shall dispose of the same in such a manner as he or she deems appropriate and in the best interest of the City. INITIAL PROCEDURE ➢ The City department/division responsible for property it wishes to declare surplus shall provide the Purchasing Division with a detailed written description of the subject property, its location, condition and estimated value. The Purchasing Division shall then determine if any other City department/division has use for the property. > If another department/division has use for the property, the Purchasing Division shall facilitate the transfer of ownership. > All departments/divisions, excluding Police and Fire, wishing to transfer or dispose of surplus vehicles/rolling stock shall first make arrangements with the Equipment Rental Division's Fleet Manager. For all departments/divisions, vehicle replacement must be approved in the department/division's annual equipment replacement fund budget. All vehicles identified as needing replacement will be declared surplus when the annual equipment replacement fund budget (ERF) is approved. Departments/divisions must list the asset numbers of the vehicles scheduled to be replaced. • All fixed assets being transferred or disposed of shall be reported to the Department of Finance and Budget as required by City of Yakima Administrative Code Ch. 1.18.080. • If no other City department/division has use for the property, the following procedures shall apply: • Items that are unusable, obsolete, broken and would reasonably be considered garbage may be disposed of or recycled in an appropriate and legal manner. •, If the estimated value of the surplus property is $15,000 or less, the City Council shall delegate authority to the City Manager who may authorize disposal of the property in any manner deemed to be in the City's best interests without reporting the matter to the City Council. The property will be disposed of in one of the specifically approved methods listed herein below. - Public or web based (online) auction; - Solicitation of written bids; - Trade-in; - Return to manufacturer for buy-back or credit; - Transfer to another agency of government at "full value" as required by RCW 43.09.210 and defined by AGO 1997 No. 5; - Public yard sale; - Selling raw materials, such as metal, for scrap; Donation to a qualified non-profit organization; - Recycling; or Such other method as authorized by City Council. • If thesurplus property has an estimated value of $15,000 or more, the surplus property's disposition must be approved by the City Council. 2 • • RESTRICTIONS City employees shall not directly or indirectly use, take, or dispose of City property other than in their official duties. This includes, but is not limited to, uniforms, supplies, tools and vehicles. Items owned by the City found to be unfit for further service on the job shall be turned in to a designated point within the department. As the numbers of items turned in justifies, they will be declared surplus and sold or disposed of pursuant to the procedures contained herein. No City owned item shall be turned over to an individual (employee or other person) for his/her personal use. Employee and retired employee associated organizations shall not request and will not receive any preferential treatment in the disposal or sale of City surplus material unless authorized by the City Manager. Under the terms and conditions of the Yakima City Charter; City officials and employees are prohibited from purchasing City surplus items directly or otherwise as a buyer or buyer's agent. STATUTORY EXCEPTIONS & ADDITIONAL REQUIREMENTS Disposal by the Police Department of unclaimed and seized property and abandoned junk motor vehicles shall be governed by the Revised Code of Washington and City of Yakima Municipal Code as currently enacted. If the asset proposed as surplus is evidence released by the Court, seized assets or unclaimed property, the City Manager or designee shall review the appropriate statutes prior to asking the City Council to declare it surplus. If the value of the asset is estimated to be more than $50,000, and if the sale or conveyance is to another governmental entity, the provisions of RCW 39.33.020 shall apply. This includes several requirements, including a public hearing and certain notice provisions. If the asset was originally purchased for utility purposes, the provisions of RCW 35.94.040 shall apply. This includes several requirements, including a resolution and public hearing. This policy does not apply to certain personal property acquired under federal grants and contracts, if in conflict with special title provisions contained in such grants or contracts. Certain City ordinances and.provisions of the Revised Code of Washington impose special conditions for the disposition of municipal property. Where necessary, City officials shall comply with those laws, treating them as limited exceptions to this Policy. Exceptions include, but are not limited to, the following, as they may from time to time be amended: ➢ RCW 35.21.088 - Equipment rental fund ➢ RCW 35.21.660 through .690, and .725 through .755 - Transfer to municipally charted corporations ➢ RCW 35.21.820 - Ride -sharing vehicles ➢ RCW Ch. 35.94 - Surplus utility property ➢ RCW Ch. 39.33 and .34 - Intergovernmental agreements; alternate method for intergovernmental disposition of property ➢ RCW 46.52.145 - Disposition of abandoned junk motor vehicles ➢ RCW 46.55230 - Junk vehicles - Removal, disposal, sale = Penalties - Cleanup restitution payment 3 DEFINITIONS Quaked Non -Profit Agencies And Organizations - ➢ State Agencies (including universities and colleges). ➢ Any other tax -supported educational agencies. ➢ Tax -supported agencies, municipalities, or political subdivisions within the State of Washington. ➢ Public benefit nonprofit corporations (501c3). ➢ Qualified emergency shelters providing assistance to homeless persons. Surplus -Any tangible personal property owned by the City, which is not needed at present, or for the foreseeable future, or that is no longer of value or use to the City. REFERENCE DOCUMENTS AND PROCEDURES RCW 35.22.280(3) - Specific powers enumerated RCW 42.23.030 - Interest in contracts prohibited - Exceptions RCW 43.19.1919 - Surplus personal property - sale, exchange - Exceptions and limitations RCW 43.19.19191- Surplus computers and computer-related equipment - Donation to school districts or educational service districts RCW 43.19.1920 - Surplus personal property - Donation to emergency shelters RCW 35.94.040 - Lease or sale of land or property originally acquired for public utility purposes Washington Supply Chain Management Manual: Section 3.7 through 3.7.4 Washington State Constitution Article VIII, 7 - Credit not to be loaned City of Yakima Legal Opinion - Surplus Property Disposal - 08/26/1985 City of Yakima Legal Opinion - Disposal of Surplus Property- 02/24/1994 MRSC - Municipal Research and Services Center of Washington: Sample Disposal of Surplus City Assets Policy MRSC - Statutes - Sale of Surplus City Property City of Bellingham Policy - ADM 10.07.01: Disposal of Surplus Property other than Real Estate City of Kennewick Policy -.17-04-140: Surplus Property Resolution No. 08-04: A Resolution of the Board of Directors of the Snohomish County Public Transportation Benefit Area Corporation (SCPTBAC, DBA Community Transit) which authorizes the Chief Executive Officer to donate surplus property to qualified organizations as an alternate means of disposal AGO 1997 No. 5 Relationship of Intergovernmental Disposition of Property Act to RCW 43.09.210 RCW 39.33.010 - Sale, exchange, transfer, lease of public property authorized RCW 39.33.020 - Disposal of surplus property -Hearing—Notice WAC 236-48-190 - Surplus Property Disposal Priorities ATTACHMENTS Attachment A Memo Re: Disposal of Surplus Property Attachment B Washington Supply Chain Management Manual: Section 3.7 to 3.7.4 4 ❖ 0 • • • MEMO TO: Dick Zais, City Manager FROM: Maria Mayhue, Buyer SUBJECT: Disposal of Surplus Property DATE: November 6, 2008 Attachment A BACKGROUND Purchasing is responsible for coordination of the surplus auction and Department Directors/Divi- sion Managers are responsible for determining when an item has no foreseeable use to their operat- ing divisions. For over a decade,. the City of Yakima has used public auction asa means of disposal for surplus property not necessary for the foreseeable needs of City of Yakima. Auctions are normally held twice a year and require many hours of labor to document, tag, and move items to storage until the next auction and then again to the auction site prior to each auction. When items are moved from storage to the auction site, help from D.O.C. work crews or jail trustees is sought, but is not always available. In addition, employee labor is required to oversee the crews, to make sure that surplus items are documented correctly and at times when no extra help is available, to load items onto a truck to take to auction. The actual cost of the storage unit along with the loss of valuable storage space in City facilities also has an impact. STATUS The City of Yakima is in need of a more effective and efficient method for disposal of its surplus property Recent auction reports show that various surplus items such as computers, radios, and office furniture sell for extremely low prices. Furthermore, handling and transportation fees for these items may gen- erate higher administrative costs than the proceeds realized by their sale. In some cases the items do not sell, and City of Yakima incurs additional expense for the items to be retumed or disposed of. In the past, revenues have justified the many hours of labor that go into preparing for an auction. Over the last couple of years, revenues have gone down by more than 88%. This is due in part to the City's responsible re -use of items, keeping items in use for a longer period of time, thereby increas- ing each item's lifecycle. The City no longer has a large number of items going to auction. Another major reason for the decrease in revenues is that the majority of the City/County narcotics seized vehicle sales are no longer being reflected in the City's auction proceeds. In 2006, our auction service provider decided that they could no longer accept computers. Because they pose an environmental hazard, computers must be disposed of in a legal manner. Computers comprise the majority of the surplus items that we have in storage. They overflow into the hallways of City Hall and the Police Department and take up valuable space. The majority of them are obso- lete, unusable and posses no value. ❖ 5 All computers are tracked by Information Systems by asset number, serial number, device number, model/make, and manufacturer. The tracking system allows Information Systems staff to log when each computer is deemed to be surplus. Security is maintained by washing the hard drives or by drilling the hard drives of computers that contain sensitive information. After extensively researching the available methods of disposal for computers, the Purchasing and Information Systems Divisions have determined that the most effective method of disposal is recycling. Because the City of Yakima's computers generally have a 5-7 year lifecycle, we very rarely have any surplus computers that would be desirable to a qualified nonprofit organization, but ask to have that option available. There is a reasonable fee to recycle computers. Computers are broken down into their various components and disposed of in a legal manner. Recycling is the most cost effective method of disposal and also the least labor intensive. The City of Yakima also periodically accumulates used lumber and building materials, salvaged from various remodel projects over the years, for which the City has no immediate or foreseeable use and are surplus to the needs of the City. Qualified non-profit organizations have shown an interest in receiving these salvaged materials to use for their community improvement projects that aid the poor and infirm. It is in the best interest of the City to donate the salvaged building materi- als to such qualified non-profit entities, due to inadequate storage and because they have little to no resale value. Over the past two years, the Purchasing and Equipment Rental Divisions have been directing the majority of surplus sales to online auctions, such as eBay, Public Surplus.com and the State of Wash- ington Surplus Program through eBay. We have realized great success with this approach, with 2007 sales totaling $97,348.78 in online auctions alone. Most of these online auctions have been for the sale of rolling stock. Sales for 2008 are following this same trend. BUDGET IMPACT The process for disposing of surplus City Property will be streamlined and many hours of staff time and resources will be saved. The storage unit rates have increased from $1,200 per year to $2,040 per year in 2008. This money can be saved, as we will be able to dispose of surplus property before it accumulates. Valuable stor- age space within City facilities can also be saved. STAFF RECOMMENDATION That the City of Yakima Council approves the proposed Surplus Policy. 6 ❖ • • • General Administration Your essential opera tions partner The Washington Supply Chain Management Manual EXCERPT: 3.7 TO 3.7.4 Attachment B 3.7. USED ITEM MANAGEMENT Excess used items are collectively the largest occupiers of storage space in state government. While there are clearly reasons for keeping and storing used items, most agencies would benefit by per- forming a cost of ownership analysis in determining whether to keep or surplus used items. What are excess used items? Excess used items are considered to be any purchased product or equipment item that is not cur- rently in service or use. Generally, excess used equipment has been fully depreciated. Examples include system furniture, office furniture,, computer hardware and peripherals, forms, publications; and equipment Value of used items? Determining the value of excess used items is necessary in order to perform a cost of ownership analysis, but can be complicated when there is a difference between the perceived value to the own- ing agency and the perceived value outside the agency. The first question to ask regarding used items is "Does the condition of the item make it suitable for continued use or service in the future?" Obviously a "no" answer indicates that the item should be sent to state surplus or otherwise disposed. NOTE: The State Surplus Property Program operates under the statutory authority of Revised Code of Washington 43.19.1919. For more information go to www.ga.wa.gov/surplus If the used item is suitable for continued use or service, then determine the fair market value. This value will range between the cost of a like used item on the open market and the cost of a new re- placement item. There is a tendency to over -value used items. According to the GA Division of State Surplus, sales of used items will bring the following as a per- centage of the current cost of alike, new item: office furniture less than 20%; systems furniture less than 10%; and personal computers & monitors less than 5%. 3.7.1. WHAT DOES IT COST To KEEP USED ITEMS? Add up the costs associated with owning and storing the used items. These may include the cost of storage space, administrative costs, costs of moving an item, and costs of warehouse or storage management. If you have difficulty determining the cost of owning and storing the item, OSP estimates that the total cost of keeping an item averages about 27 cents per cubic foot per month. Multiply the size (volume) of an item in cubic feet by $.27 to estimate the cost of keeping an item. For example, an of- fice desk that is 3 feet high, 4 feet wide and 5 feet long has a volume of 60 cubic feet, and multiplied by $.27 equals a cost of about $16 per month. + 7 Estimate the length of time (in months) that will pass before you put the used item back into use or service. Multiply this by the estimated cost of keeping the item to arrive at the estimated cost of keeping the item. 3.7.2. COST OF OWNERSHIP ANALYSIS FOR USED ITEMS Compare the fair market value you give the used item with the cost of keeping the item. If the cost of keeping the item until it will be returned to use or service is less than the value of the item, then keep it. Example 1: Continuing with the desk example above, you have determined that since this used desk is in excellent condition, it has a fair market value equal to the cost of a new desk, or $400. Further, you anticipate you will need the desk in 6 months fora summer intern. The cost of keeping the desk is estimated at $96 (6 months times $16 per month). You will save your agency $304 ($400 -$96) by keeping the item for 6 months and not purchasing a new replacement desk. If the cost of keeping the item will exceed the value of the item before you plan to return it to use or service, then you should not keep it. Example 2: You have determined the desk, while in good condition, is much like dozens of other desks available from State Surplus for about $50. You are not sure how long it will be until the desk is put back into use. You compare the value of $50 with the cost of keeping it of $16 per month. You decide not to keep the desk and you will save your agency a cost avoidance of $16 per month. 3.7.3. GETTING RID OF JUNK What if an agency has used items that are not suitable for surplus or salvage? Or, in other words, items that are junk or trash. A check with State Surplus reveals that as of January 1, 2000, state agen- cies have authority to dispose of unusable and broken surplus property items themselves by dump- ing them in a dumpster or transporting them to a landfill. A 267-A is not required but the agency should keep internal documentation. This action should not be confused with scrap metal that is collected for recycling. This material is generally sold on site or picked up on state contract. For more information on scrap metal recycling, please contact Neil House (253) 333-4900 ext. 229 - nhouse@ga.wa.gov. 3.7.4. KEEPING USED ITEMS — CONCLUSION The main factors influencing a decision on whether or not to keep used items should be l) the value of the item and 2) the amount of time before the item will be returned to use. We recommend not keeping a used item if it is of low value and you do not know when it will be put back into use or service. 8 .;. • • BUSINESS OF THE CITY COUNCIL. YAKIMA, WASHINGTON AGENDA STATEMENT Item No. /o For Meeting of January 6, 2009 ITEM TITLE: Resolution adopting the attached Surplus Policy and delegating authority to the City Manager to declare the City's personal property and rolling stock as surplus (other than real estate), which is valued at less than $15,000, and authorizing disposal of said surplus property in a manner which best benefits the City. SUBMITTED BY: Dave Zabell, Assistant City Manager CONTACT PERSON/TELEPHONE: Maria Mayhue, Buyer, 575-6094 BACKGROUND: For over two decades, City of Yakima has used public auctions as a means of disposal for surplus property and rolling stock no longer usable or necessary for the foreseeable needs of City of Yakima. Purchasing . is responsible for coordination of surplus disposal and. Department Directors/Division Managers are responsible for determining when an item has no foreseeable use to their operating divisions. Note: Under the terms and conditions of the Yakima City Charter, City officials and employees are prohibited from participating in the surplus auction directly or otherwise as a buyer or buyer's agent. Continued Resolution X Ordinance Other (Specify) Contract Mail to (name and address): Phone: Funding Source APPROVED FOR SUBMITTAL:City Manager STAFF RECOMMENDATION:. Staff respectfully requests that Council adopt this Surplus Policy Resolution. BOARD/COMMISSION RECOMMENDATION: • COUNCIL ACTION: SU MARY EXPLANATION: The City of Yakima is in need of a more efficient and effective method of disposal for its surplus personal property and rolling stock. The proposed Surplus Policy will provide such a method. This Surplus Policy will l apply to personal property and rolling stock valued at less than $15,000. • Please see attached Memo dated November 6, 2008 for a detailed summary. BUDGET IMPACT: The storage unit rates have increased over the years from an initial $1,200 to $2,040 per year. There is potential f ` r this money to be saved if we can dispose of surplus property before it accumulates. Valuable storage space within City facilities will be made available for better use. The process for disposing of surplus property and rolling stock will be streamlined and many hours of staff time and administrative costs will be saved.