Surplus Sales Process Overview
The disposition of surplus state-owned real property is conducted pursuant to Government Code Section 11011 et seq. Once a state-owned real property has been identified as excess to the programmatic needs of the controlling department, DGS proceeds to dispose of the property per the following steps which are listed in priority order:
Determine if there is another state use for the property. If so, DGS may transfer the jurisdiction of the property to the other department upon terms and conditions deemed by the Director of DGS, with the concurrence of the Department of Finance, to be in the best interest of the state.
If there is no state use for the property, the property is included in the annual omnibus surplus bill which upon enactment authorizes the Director of DGS to dispose of the property by sale, lease, exchange, a sale combined with an exchange, or other manner of disposition as authorized by the Legislature.
Once a property has been authorized for disposition as surplus and upon DGS posting the property on the surplus property web page, local governmental agencies and affordable housing sponsors have ninety (90) days to notify DGS of their interest in the property.
Local agencies may acquire surplus property for open space, public parks, development of local government-owned facilities, or affordable housing. Local agencies pay fair market value as determined by a DGS-approved appraisal. Property that is being acquired for parks or open space may be sold at less than fair market value at the discretion of the Director of DGS.
If there is no local agency interest, then affordable housing sponsors may acquire the property for development of housing for persons of low or moderate income. The Director of DGS may sell the property for less than fair market value if it is determined that a discount will allow for the provision of affordable housing for families of low or moderate income.
Local agencies and affordable housing sponsors are required to execute a purchase and sale agreement within sixty (60) days of receiving notice from DGS that they have been selected to receive the property and must close escrow within sixty (60) days of the execution of the agreement by DGS.
Property not acquired by a local agency or affordable housing sponsor is then offered for sale on the open market pursuant to a public bidding process designed to obtain the highest and most certain return which is deemed to be the fair market value.
For more information on Surplus Property for Sale please visit the DGS Real Estate Surplus Property page.