Request By:
Mrs. Pamela Todd Robinette
Assistant County Attorney
Pike County Attorney's Office
P.O. Box 231
Pikeville, Kentucky 41501
Opinion
Opinion By: Steven L. Beshear, Attorney General; By: Charles W. Runyan, Assistant Deputy Attorney General
By deed of September 18, 1975, the Commonwealth conveyed some 70 acres of land to Pike County. The land was found to be surplus to the highway needs of the state under KRS Chapters 45 and 56.
The deed was executed, subject to five conditions, (A) through (E). Condition (B) provides that Pike County must develop the property for commercial or industrial purposes within a period of 7 years from date, otherwise the title reverts to the state. Businesses or industries displaced because of the proposed highway construction (state) within the 7 year period were given priority for relocating on the subject property. Condition (C). Any sale or transfer of the property by Pike County requires the prior written approval of the Commissioner of the Kentucky Bureau of Highways and the Federal Highway Administration of the U.S. Department of Transportation. Condition (D). In the event of a transfer of all or any portion of the land by the county, the Kentucky Bureau of Highways shall be reimbursed in a sum equal to the current fair market value of the land.
A private developer has expressed interest in building a shopping center on part of the property.
Question No. 1:
"Can a county transfer property to a private individual?"
You are really asking whether the county can transfer a portion of the land to a private individual or corporation.
The language on the face of the deed, together with the various conditions relating to the developing of the property for "commercial or industrial purposes", and the provision about a transfer requiring certain approvals, and reimbursement of the Bureau of Highways upon a transfer, all clearly contemplate that while the property does not have to remain as public property [title in the government], the use to which the transferred land is put must involve a commercial or industrial purpose.
The key to the transfer in question lies in the broad provisions of KRS 45.360(7). That subsection permits the State Finance Department to sell land owned by the state under one or more of these conditions: (1) where the land is surplus to state needs or; (2) where the land is unsuitable for state use; or (3) where the land is more suitable, in the public interest, for some other use.
The determination of the disposal of the property is made by the Secretary of the Finance Department in an order, after he has reviewed the written request of an agency for disposal. The request must describe the property and state the reasons why the agency believes disposal should be effected. Instruments of such conveyance have to be signed by the Secretary of Finance and approved by the Governor. Unless the Secretary of Finance deems it in the best interest of the state to proceed otherwise, such property shall be sold by invitation of sealed bids or by public auction. However, the selling price of any real estate shall not be less than the appraised value thereof as determined by the Department of Finance, or by the Department of Transportation where the land involves that department. The exercise of the sound discretion of the Secretary of Finance under this subsection would not be reversed by the courts in the absence of an abuse of his discretion. In 67 C.J.S., Officers, Section 201, p. 657, it is written that "A discretionary duty must be exercised with reason as opposed to caprice or abritrary action, since the term 'discretion' imports the exercise of judgment, wisdom, and skill, as contradistinguished from unthinking folly, heady violence, and rash injustice." The Secretary here cannot act arbitrarily. See Section 2, Kentucky Constitution.
The deed from the Commonwealth to Pike County of September 18, 1975, declares that the subject land is surplus to state highway needs and in effect surplus to state needs, and that it would be more suitable, consistent with the public interest, for public use by Pike County in assisting the relocating of businesses or industries which were displaced because of the state highway construction. Under condition (c) of that deed such displaced businesses or industries are to be given a priority for relocating on the property in the event of a sale of the land by Pike County.
Under the broad powers of the Secretary of Finance, under KRS 45.360(7), we find no abuse of discretion on its face in connection with the deed from the Commonwealth to Pike County. In addition, the proposed transfer of a part of the property to a private developer for a shopping center appears consistent with the broad policy expressed in KRS 45.360(7). The deed to Pike County in legal effect made Pike County an agent of the state in carrying out the disposal policy of the state under KRS 45.360(7).
In our opinion a portion of the land can be sold to a private individual or corporation for the purpose of a shopping center, since the statute [45.360(7)] does not require that the land continue to be publicly owned property, and since a commercial purpose would be involved.
The proposed use would appear to carry out the rather broad intention expressed in KRS 45.360(7), relating to the state's disposal of surplus property "for some other use", consistent with the "public interest" . The court observed in Gastineau v. McCoy, 190 Ky. 463, 227 S.W. 801 (1921) 803, that "The rule for construction of statutes is that they should be given that interpretation which will carry out the intention and purpose of the legislature in enacting them." It can reasonably be said that a commercial or industrial purpose would tend to promote the public interest in connection with the economic and employment implications.
Question No. 2:
"If a county can transfer property to a private individual, what procedure must be followed for such a transfer?"
We see no reason why the sale to the developer for commercial purposes cannot be negotiated. The applicable conditions of the deed would have to be observed, including the condition that the property sold will be used as a shopping center, a commercial purpose, and including the condition (D) that any sale or transfer of the property, or any portion thereof by Pike County will require the prior written approval of the Commissioner of the Kentucky Bureau of Highways and the Federal Highway Administration of the U.S. Department of Transportation. The property would have to be sold for not less than the current fair market value, as determined by an appraisal made by the Kentucky Bureau of Highways, as specified in Condition (E). Further, the Bureau of Highways would have to be reimbursed in a sum equal to the current fair market value of the land sold. In addition, the fiscal court would have to enter an appropriate order authorizing the sale under the applicable terms as outlined above, and authorizing the county judge/executive to execute the deed for the county. See KRS 67.080.
Question No. 3:
"Can the county choose between several parties as to whom the property may be sold?"
As we said above, we see no reason why the sale cannot be negotiated, except that condition (C), if applicable, would have to be observed [priority of businesses displaced by the highway construction].
The nondiscrimination covenants of the deed must be observed.