AG 1998 12 21 - Laserfiche WebLink

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Disposal of Fixed Assets A unit may not dispose of an asset which continues to have a public purpose. Under the North Carolina Constitution, it is generally unconstitutional for local governments to dispose of property for less than its fair market value. A gift of property or a sale at well below market value constitutes the granting of an "exclusive privilege or emolument" to the person receiving the property, which is prohibited by Article I, Section 32 of the Constitution. Most of the procedures by which a local government is permitted to sell or otherwise dispose of property are competitive, and the NC Supreme Court has indicate that the price resulting from an open and competitive procedure will normally be considered appropriate unless strong evidence indicates that it is so significantly below market value as to show an abuse of discretion. It is not always constitutionally necessary that a local government receive any monetary consideration when it conveys property. A contract with the receiving party to put the fixed asset to some public use constitutes sufficient consideration for the conveyance. (The receiver is usually, but not always, another government) G.S. 153A- 176 provides that a local government may lease, sell, or convey with or without monetary consideration, land or interest in land to a volunteer fire department or to a volunteer rescue squad for the purpose of constructing or expanding volunteer fire department or rescue squad facilities. G.S. 143A-176 provides that "whenever a county is authorized to appropriate funds to any public or private entity which carries out a public purpose, the county may, in lieu of or in addition to the appropriation of funds, convey by private sale to such an entity any real or personal property which it owns." G.S. 153A-176 sets out three competitive methods of sale, each of which is appropriate in any circumstance: sealed bid, negotiated offer and upset bid, and public auction. Privately negotiated exchanges of property are also permitted, so long as property of equal value is exchanged between two governmental entities; and, privately negotiated sales or other disposition of property is permitted when the property is valued at $5,000.00 or less. In undertaking any of them, a local government must remember that the statutory procedure must be exactly followed or the transaction risks invalidation by a court.