Disposal of Non-Land Assets

Type
Policy
Number
F-2024-03
Adopted

FINANCE DEPARTMENT POLICY

Policy number: F-2024-03

Policy name: Disposal of Non-Land Assets

Adopted on: Sept 9, 2024

By-Law number: 104-2024

1. POLICY STATEMENT

This policy establishes the guidelines and procedures for the sale and disposal of non-land municipal assets by The Corporation of the Nation Municipality (The Corporation) to ensure a systematic, transparent, and accountable method for the disposal of Corporation-owned non-land assets in accordance with all appropriate laws, regulations, and accounting standards.

2. PURPOSE

  • The Corporation is committed to ensuring its assets are safeguarded, tracked, and disposed of effectively and efficiently. This policy has been established to:
    • Provide oversight to the transfer, sale or disposal of assets;
    • Encourage reuse and recycling of assets;
    • Ensure that the environmental impact of disposal is considered;
    • Ensure that disposals are documented and that proceeds are appropriately distributed;
    • Ensure that disposals comply with the requirements of external funding agencies and donors;
    • and Achieve maximum benefit from assets which are of no further use to The Corporation.
  • Property disposal may be initiated when an asset is deemed surplus or no longer required by The Corporation.

3. SCOPE

This policy applies to capital and non-capital non-land assets belonging to The Corporation.

4. LEGISLATIVE AUTHORITY

Municipal Act, 2001, S.O. 2001, c.25, as amended.

5. DEFINITIONS

"Act" - the Municipal Act, 2001, S. O. 2001, c .25, as amended.

"Appraisal" - a written opinion/letter of opinion as to the consideration that the Assets might be expected to realize if sold on the open market by a willing seller to a willing buyer.

"Asset" - Any tangible item of economic value owned by the municipality with a life expectancy greater than one year required for conducting normal operations.

"As Is - Where Is" A condition of a sale where an asset is being sold in its existing state and condition and the buyer accepts it with all its faults and defects, whether immediately apparent. No warranties are expressed or implied by the seller.

"Chief Administrative Officer" (CAO) - the Chief Administrative Officer of The Corporation.

"Clerk" - the Clerk of The Corporation.

"Council" - the Council of the Corporation of the Nation Municipality.

"Disposal" - the sale or exchange for other assets, or the lease of assets for a term exceeding 21 years, of any portion of The Corporation's surplus assets but does not include the granting of an easement or a right-of-way.

"Local Board" - a local board as defined in the Municipal Act, 2001, S. O. 2001, c.25, as amended.

"Non-Capital Asset" - The following items are considered non-capital assets:

  • Furniture, equipment, computers, books, and vehicles valued at less than $3,000 (including net HST)
  • An operating lease where ownership of the equipment will never transfer to The Corporation
  • Software licenses and maintenance agreements subject to renewal usually on an annual basis
  • Items purchased for resale Items whose useful life is less than 2 years

"Obsolete Assets" - Equipment in working order but no longer adequate to meet current operating

"Sale" - includes the sale, transfer, or conveyance of assets by The Corporation. Sale does not include a Quit Claim Deed made by The Corporation for the purpose of correcting or clarifying title or boundaries of its assets or of assets not owned by The Corporation.

"Salvaged Materials" - Re-claimed building materials from construction, renovation or demolition projects.

"Scrap" - Damaged or unusable equipment valued for its basic material content (eg, vehicle valued for metal content).

"Surplus Assets" - Equipment in good working order but no longer required by The Corporation.

6. RESPONSIBILITIES

Council- Approves this Policy and any amendments.

CAO - Oversees the implementation of the policy and reports to council.

Treasurer - In conjunction with the CAO, oversees the implementation of this policy and manages the financial aspects of the asset disposal.

Department Head - Determines which assets should be disposed of and assesses their value whenever feasible.

7. EXEMPTIONS

This policy does not apply to the following classes of asset disposals:

A Disposal of Assets pursuant to Section 110 of the Municipal Act, 2001, (municipal capital facilities).

A Disposal of Assets to be used for the establishment and carrying on of industries and industrial operations and incidental uses.

Disposals as part of a municipal tax sale pursuant to Part XI of the Municipal Act, 2001 (Sale of Assets for Tax Arrears).

Disposals conducted pursuant to a Planning Act application or approval, which Disposal is governed by a consent agreement, subdivision agreement, or site plan agreement.

Disposals to the Crown in the Right of Ontario or Canada, or any government agency or authority; and

Disposals of an easement to a public utility.

Disposals of municipal land.

8. SALE OF ASSETS PROCEDURES

The Municipality may dispose of assets when they are deemed surplus or no longer required.

When a Department declares an asset surplus or no longer required, it shall first be offered at to the other departments at fair market value or a price agreed upon by both departments as reasonable and fair.

When purchasing a comparable item, it will be permitted to give the item as a trade-in, subject to a reasonable credit from the supplier.

If equipment, furniture, machinery or other similar items become surplus to the needs of the Department and no other Department requires it and/or it cannot be given in as trade-in, the head of the Department shall submit for the CAO's approval a form that will provide:

A full description of the item;

  • The price and date of purchase (if known)
  • The reasons why the item is no longer required
  • The suggested selling price
  • The proposed disposal method

8.1 Consideration Prior to Disposal of Assets

A decision to dispose of an asset should only be made after a benefit and risk analysis of the proposed disposal, including consideration of the following factors with regards to the asset:

  • The current market value;
  • The usefulness;
  • The remaining useful life;
  • Any alternative future use;
  • The annual cost of maintenance;
  • Any duplication of the asset or service provided;
  • The benefits of community organization ownership compared to those resulting from the asset remaining in the Corporation's ownership; Any cultural or historical significance;
  • The long-term plans and strategic direction of the Corporation (for example, meeting the objectives of the Council Plan, Strategic Resource Plan, and Asset Management Plans);
  • The results of any community consultation process;
  • Any restrictions on the proposed disposal; and
  • Any other relevant policies.

Before deciding whether to sell buildings, the Corporation's council will receive and consider a report from the CAO, the Treasurer and/or the Head of Department involved. The report will include an assessment of relevant factors including those outlined above.

8.2 Preparing the Asset for Disposal or Sale

An inspection must be carried out to ensure assets do not contain:

Additional items not intended for sale;

  • Confidential documents (records, files, papers);
  • Documents on municipal letterhead or which may be used for fraudulent purposes;
  • Hard drives which have contained Corporation-operated software (which could lead to a breach of licenses or contain private or confidential data) are to be physically destroyed; and
  • Hazardous materials.

9. SURPLUS ASSETS

Department Heads may submit to the Finance Department from time to time and upon request, a list of furniture, vehicles, equipment, stocks, and other assets, which are obsolete, damaged, or surplus to that Department 's needs ("Surplus Assets").

All Surplus Assets shall first be offered to other Departments within the Corporation. Upon this first step, surplus assets to be offered outside the Corporation must be approved by the CAO.

All Surplus Assets not required by any Department of the Corporation may then be offered to public sector agencies and charitable organizations within the Township prior to any public disposal procedure, donation, or sale to area municipalities.

Subsequent to subsection (a) ii, surplus assets may be donated to non-profit agencies or nonprofit institutions for educational or teaching purposes only. Donated items shall not be resold.

Department Head shall have the authority to sell or dispose of all Surplus Assets, by sealed Bid or public auction through the municipal website or any other online classified site(s).

The respective Department shall be credited with the net proceeds, if any, from the Disposal of its Surplus Assets unless otherwise agreed.

Surplus Assets shall not be sold directly to an Employee or to a member of Council, although this does not prohibit any Employee or member of Council from Purchasing Surplus Assets being sold through a public process.

10. VALUATION, ASSETS OTHER THAN LAND

Where assets need to be valued, the CAO or the Treasurer shall select a method of valuation from the following, including but not limited to:

  • An Appraisal or an opinion by an independent qualified appraiser.
  • Such other means as may be specifically determined as appropriate in the circumstances.

All such values shall be determined by an independent third party who does not have an interest in the disposal or purchase of the assets.

11. NOTICE

The CAO shall review the Department's request and provide instructions as to the disposal of goods.

The disposal methods may include but are not limited to a public auction, a garage sale, newspaper advertisement, posting notice on the Municipality's website.

This notice shall be given at least fourteen (14) days prior to the council meeting which includes this item on the agenda.

The notice shall include the following:

  • A description of the asset including its age and condition;
  • Specifications as to where to submit comments;
  • Final date for submitting comments;

When the CAO and the Treasurer are of the opinion that the disposal method does not have to be opened to the public, a sale price shall be determined, and the item may be offered in the following priority order:

  • To non-profit community agencies;
  • To the public.

To address potential conflicts of interest, any staff interested in purchasing surplus assets must participate in the public disposal process.

Notwithstanding, the above order in which the item may be offered, cellular phones deemed surplus or no longer required shall first be offered for purchase at fair market value to the employee who previously used the device. Should the employee refuse to purchase the phone, disposal methods and procedures laid out in this policy will apply.

If the item cannot be sold for any reason, it may be offered free of charge to a non-profit community agency, as approved beforehand by the CAO.

If the item cannot be sold or given away, it may be discarded as approved by the CAO.

12. COSTS

The municipality may require the purchaser to be solely responsible for the municipality's costs incurred to dispose of any Property, which costs may include but are not limited to legal, survey appraisal, removal of encumbrances, advertising and improvements, and administration fees.

13. METHODS OF SALE

Assets may be sold by public tender, by public auction, or assets exchange, or in such other appropriate manner as may be determined by the CAO.

13.1 SALE BY PUBLIC TENDER

If Assets are to be disposed of by public tender, the following shall apply:

Costs incurred or anticipated to dispose of the Assets such as legal fees, survey, Appraisal, encumbrances, administrative fees, advertising, and improvements shall be determined.

An estimated bid amount shall be determined which shall not be less than the appraised value plus the additional costs referred to in Section 10 above. Notwithstanding the foregoing, Council may accept an amount less than or higher than the estimated bid.

An advertisement shall be placed on the Municipality's website and social media channels. The advertisement shall include a brief description of the asset and shall specify the final date that offers will be accepted and shall include the following statement "the highest or any offer may not necessarily be accepted".

The tender documents shall be delivered in person to the Clerk's office by the date and time specified on the notice. Tenders will be opened in public at the time prescribed on the last date for receiving tenders.

The tender documents shall be accompanied by a deposit of at least 20 per cent of the tender amount, which deposit shall be made by way of money order or by way of bank draft or cheque certified by a bank, trust corporation or Province of Ontario Savings Office.

A proposed Sale or Disposal of Assets will not proceed to Council for consideration until after twenty-one (21) days from the date on which the advertisement required by Section 11 above is made.

13.2 SALE BY PUBLIC AUCTION

If Assets is to be Disposed of by public auction the following shall apply

  • Costs incurred or anticipated to dispose of the Assets such as legal fees, survey, Appraisal, encumbrances, administrative fees, advertising, commission, and improvements shall be determined.
  • An estimated bid amount shall be determined which shall not be less than the appraised value plus the additional costs referred to in the clause above. Notwithstanding the foregoing, an amount less than or higher than the estimated bid may be accepted.
  • An advertisement shall be placed on the public auction website and by posting notice on the Municipality's website and social media channels. The advertisement on the public auction website shall include a brief description of the asset and shall specify the minimum bid and the final date that offers will be accepted. The advertisement on the municipal website and social media channels will provide the link to the public auction website.
  • The bill of sale will be provided by the public auctioneer at time of sale and a copy must be retained by the municipality as evidence of the sale.

14. TERMS OF DISPOSITION

Upon approval or acceptance of the terms and conditions of a disposal by the CAO, the agreement of purchase and sale and any ancillary documents shall be prepared in consultation with the Municipality's solicitor, as required.

15. ERRORS OR OMISSIONS

It is acknowledged that any error or omission in following the procedures and policies, which error or omission was not the result of bad faith on behalf of the Municipality, will not render such Disposal invalid or void.

16. POLICY REVIEW

The CAO and/or Treasurer shall review the effectiveness of this policy at least every five (5) years to ensure that it is aligned with current best practices and legislative requirements. The result of this review, along with any recommended changes, will be reported to Council for approval. Unless circumstances indicate that a review is required.

17. EFFECTIVE DATE

This amended Disposal of Non-Land Assets Policy shall take effect on August 12, 2024 and shall replace any former policies in place.