Procedure 6.7.1 Acquisition and Disposition of Real Estate

System Procedures
Chapter 6 - Facilities Management

Part 1. General Information

The State of Minnesota, by and through the Board of Trustees of Minnesota State Colleges and Universities (Minnesota State), owns state college and university real estate. Board Policy 6.7 Real Estate Transactions and Management provides a procedure to govern all acquisition and disposition of Minnesota State real estate, regardless of funding source. The Carpentry program real estate acquisition and disposition process is governed by System Procedure 6.7.4 Carpentry Program Administration.

The system office provides system-wide leadership of Minnesota State real estate and advises institutions on all real estate management issues including tactics and strategies used in acquiring and disposing of real estate, leasing, and negotiating easements, licenses, and permits. Minnesota State also has responsibility for the system’s real estate inventory and mapping of real estate assets.

Part 2. Acquiring Real Estate

Board Policy 6.7 delegates authority to the chancellor to review and approve all real estate transactions and includes the authority to execute and deliver all documents relating to the acquisition of real property. Board approval is required for the acquisition of real estate when it meets the requirements set forth in Policy 6.7, Part 3, Subp.A.

Real estate to be acquired using bond proceeds will not require additional board approval if the acquisition was explicitly identified in the capital budget request or Revenue Fund bond sale approved by the board. Board approval is required if the terms and conditions differ materially from those presented during the capital budget request or bond sale review and approval process.

Subpart A. Authority

The chancellor has delegated to the Vice Chancellor for Finance and Facilities approval authority of all real estate transactions and signature authority for all necessary transaction documents.

Subpart B. Request to the System Office

The institution begins the acquisition process by submitting a letter to the Minnesota State Real Estate Manager. The letter must include the following:

Property description including:

a legal description of the property to be acquired;

a sketch or map depicting the real estate;

any known or available information about buildings and improvements on the property;

an owner’s and encumbrances report describing any known or suspected encumbrances on the property such as utility easements or access rights; and

the size of the parcel and improvements.

Sale Price. Sale price and purchase price being considered.

Financial proforma: Outline of planned revenues and expenses for the real property over a minimum of a 10-year period, including operating expenses such as utilities, landscape maintenance, snow removal, and maintenance; repair and replacement (R&R); and capital investment in asset preservation, renovation, and upgrade.

Funding source.

Identify the anticipated source of funding for the purchase. If the institution anticipates using its operating funds to buy the property, state whether the expected purchase price would exceed 1% of the institution’s fiscal year operating budget.

Outline revenue streams to address expenses in the financial sustainment model (Part 2, Subp. B 3 above.)

Comprehensive Facility Plan ("CFP") confirmation. Confirm whether the property to be acquired is part of the latest version of the institution's CFP, including the following:

reference to the relevant section(s) of the CFP identifying the acquisition parcel;

the CFP illustration showing the proposed acquisition and highlighting the property, and

if the acquisition was not included in the latest institution Comprehensive Facilities Plan, include a short explanation regarding the circumstances and rationale for the acquisition.

Planned use. Identify the expected short- and long-term use(s) of the real estate by the institution (e.g., future parking, student housing, land banking for future campus expansion, etc.).

Institution Student Association consultation. Documentation that the institution’s student association was consulted regarding the planned purchase of real estate in accordance with Procedure 2.3.1. Student Involvement in Decision-Making.

Environmental condition of property. Identify general conditions of property, including whether Seller has provided any environmental reports about the property. Provide documentation (third-party) that the property is in acceptable environmental condition, and the acceptance will not unnecessarily expose Minnesota State to environmental liability.

Other details. Any other relevant details such as an expected closing date or any special circumstances pertaining to the property.

Subpart C. Appraisals, environmental investigations, and condition assessments
Minnesota State shall review the information provided, and if appropriate, provide a notice to proceed with appraisal(s) and a Phase I environmental investigation.

Real Estate Appraisal. An appraisal must be obtained from an independent real estate appraiser, preferably an appraiser with Members of Appraisal Institute (MAI) status, for every parcel to be acquired. The institution shall:

obtain at least two appraisals when the real estate value is anticipated to exceed 1 million;

obtain at least one appraisal when the real estate value is anticipated to exceed $50,000, but is less than $1 million;

obtain at least one appraisal or use recent sale or appraisal data from similar properties when the value is anticipated to be less than $50,000.

Phase I Environmental Assessment. The institution shall obtain a Phase I environmental assessment to evaluate the condition of the property to be acquired, including any buildings, structures or improvements on the property, prior to acquisition. If environmental contamination is suspected or identified, the institution shall complete additional investigation, and may enter the property into a Minnesota Pollution Control Agency program for voluntary investigation and cleanup to obtain assurance letters limiting Minnesota State’s liability related to the real estate to be acquired.
The system office maintains a Master Roster including a list of Environmental Consultants. Following the instructions set up for the list, consultants can be used for environmental investigation work expected to cost less than $50,000.

The institution shall undertake additional investigations for all improved properties where typical environmental hazards are expected, including asbestos assessments, fuel tank evaluations, and other environmental conditions requiring special handling or disposal methods.

Facilities Condition Assessment for Improved Property. The institution shall obtain a Facilities Condition Assessment to determine the level of deferred maintenance and renovation costs required to adapt the facility to an appropriate or desired use.

Subpart D. Prepare purchase agreement
Minnesota State shall assist the institution in negotiating business terms for the transaction, and shall prepare and approve all purchase agreements. The purchase agreement shall be in a form acceptable to the Attorney General’s Office. At a minimum, acquisitions shall be conditioned upon:

Marketable title satisfactory to Minnesota State

Acceptable environmental condition

Closing subject to funding availability

Legislative consultation as required by Minn. Stat. § 136F.60

Any required approvals by the Board of Trustees and Minnesota State.

Subpart E. Evaluation and investigation period.
Upon finalizing the terms of the purchase agreement, the Vice Chancellor for Finance and Facilities shall either sign the purchase agreement or delegate signature authority to an appropriate designee. After the agreement is signed, the institution shall initiate due diligence, which includes:

Approvals. Obtaining necessary Minnesota State administrative approval including but not limited to surplus real property designation and Vice Chancellor for Finance and Facilities or board approval.

Title Work. Providing the Vice Chancellor for Finance and Facilities with an abstract and a title commitment from a title insurance company for the real estate for review.

Survey. Providing an American Land Title Association (ALTA) survey to the Vice Chancellor for Finance and Facilities identifying the real estate to be acquired, including the legal description, boundary lines, and all encumbrances or restrictions impacting the real estate.

Environmental Investigations. Providing the Vice Chancellor for Finance and Facilities with the environmental reports as may be required (such as a Phase II investigation, indoor air quality or asbestos evaluation).

Legislative Consultation Letters Sent. The Vice Chancellor for Finance and Facilities shall send legislative consultation letters advising the legislature of the acquisition, consistent with Minn. Stat. § 136F.60.

Any additional investigations or approvals, as needed.

Subpart F. Closing the acquisition. After all terms and conditions of the purchase agreement have been fulfilled, including receipt of the legislative consultation responses from the respective House and Senate committee leadership, either the system office or institution shall close the transaction, utilizing a local title insurance company for closing services. If the institution closes the transaction, they shall provide Minnesota State with copies of the deed, closing statement, title policy, survey, and any additional relevant documents. Minnesota State shall maintain and update the real estate inventory with the new acquisition and report the acquisition in its annual report to the board as required Board Policy 6.7.

Part 3. Selling Real Estate

Board Policy 6.7 Real Estate Transactions and Management requires board approval for all sales of real property valued at or greater than $350,000. The system office shall review and prepare each real estate disposition for board consideration. The disposition and sale must be placed on the Finance and Facilities committee of the Board of Trustee agenda for consideration and approval.

Subpart A. Authority
The board shall approve all sales of real estate valued at or greater than $350,000. Easement grants shall be approved by the Vice Chancellor for Finance and Facilities. All sales of real estate require the Vice Chancellor for Finance and Facilities signature on transaction documents. The Vice Chancellor for Finance and Facilities shall sign all deeds for the sale of real estate.
Subpart B. Identification of real estate as "surplus"
Before being offered for sale, real estate must be identified as surplus real property by the board or Vice Chancellor for Finance and Facilities.

Subpart C. Obtain a real estate appraisal
Surplus Real Estate with an anticipated value of more than $50,000 must have a current appraisal from an independent real estate appraiser, preferably an appraiser with Member of Appraisal Institute status. Surplus Real Estate with an anticipated value of less than $50,000 must be valued through the use of an appraisal, recent sale, appraisal data from similar properties, or other acceptable valuation methods in consultation with legal counsel.

Subpart D. Offer surplus real estate to local governmental entities
Minnesota State shall offer the Surplus Real Estate to the city, county, town, school district, and any other local public body corporate (“Local Governmental Entities”) where the Surplus Real Estate is located before offering it for public sale. See Minn. Stat. § 136.60, Subd. 5. Minnesota State shall provide a written notice to the Local Governmental Entities, which then have two weeks from receipt of notice in which to express interest in acquiring the property. A Local Governmental Entity may purchase the Surplus Real Estate for no less than the appraised value plus costs incurred for appraisals and surveying.

Subpart E. Public sale offering.
If Local Governmental Entities decline or fail to express interest in acquiring the Surplus Real Estate within two weeks after receipt of notification, then the property must be offered to the public. Public sales must be for no less than the appraised value plus costs incurred for surveying and appraisal reports..

Advertisement. Minnesota State shall advertise the real estate for sale at least once a week for four consecutive weeks in a legal newspaper and newspaper of general distribution in the city or county in which the Surplus Real Estate is situated. Minnesota State may also advertise the real estate for sale electronically on Minnesota State websites and authorized social media accounts.

No acceptable offers. In the event that no acceptable offers are generated, Minnesota State may hire a real estate broker to market the real estate, auction the property, reappraise the property, or withdraw it from sale. The Surplus Real Estate may be sold to anyone agreeing to pay the appraised value plus costs.

Subpart F. Acceptable Offer and Purchase Agreement
Upon receipt of an acceptable offer, Minnesota State shall assist the institution in finalizing business terms and preparing a purchase agreement. A purchase agreement must be in a form acceptable to the Attorney General’s office for all sales. The terms of any sale must include:

Earnest Money. Buyer shall submit earnest money in the amount determined by Minnesota State.

Payment Terms. Buyer shall pay the balance due at closing, plus fees and costs as appropriate.

Reservation of Minerals. Minnesota State reserves all minerals and mineral rights on all sales of Surplus Real Estate.

Confirmation of required Board of Trustees and Minnesota State approvals.

Subject to Payoff of Bond-Financed properties. The sale shall be conditioned on meeting the conditions of Minn. Stat. §16A.695, regarding the payment of any and all share of state bonding monies used to acquire or improve the Surplus Real Estate.

Subpart G. Sale Proceeds

Minnesota State shall verify whether any state bonding monies remain outstanding on Surplus Real Estate for sale and ensure that bonding obligations are paid off at the time of closing consistent with Minn. Stat. §16A.695. Sale proceeds, after expenses and bonding obligations are paid, are directed to the board for use in capital projects at the institution that was responsible for the management of the land.

Part 4. Gift Real Estate

The board, on behalf of Minnesota State, may acquire real estate by gift, grant, bequest, devise or endowment. Minn. Stat. §136 F.80. Board Policy 7.7 Gift and Grants Acceptance governs all acquisitions by gifts, grants, bequests, devises, or endowments of real property and requires board acceptance. All gifts, grants, bequests, devises, or endowments must be consistent with the applicable college’s, university’s, or system’s mission.

Before acceptance of any gift of real estate, the board shall be provided evidence that the property is in acceptable environmental condition as detailed in Part 2, Subpart B above, and the acceptance will not unnecessarily expose Minnesota State to environmental liability, nor shall Minnesota State accept real estate with outstanding debt.

All taxes and special assessments constituting a lien on any real property received and accepted by the board under this section must be paid in full before title is transferred to Minnesota State. See Minn. Stat. § 136F.80, Subd. 1.
Minnesota State shall obtain an environmental evaluation of donated property prior to board consideration of acceptance.

Part 5. Easements and Permits

Minn. Stat. § 136F.60, Subd. 3 provides that the board may grant easements, licenses, and permits on, over, under and across Minnesota State-owned real estate. Board Policy 6.7 Real Estate Transactions delegates authority to the Vice Chancellor for Finance and Facilities to review and approve all easements, licenses, and permits.

Subpart A. Definitions
For the purposes of this procedure only, the following words and terms are defined as follows.

Easement
A right given to individuals or entities other than the owner to use a property for a specific purpose. An easement can be granted by deed, by separate agreement, or by plat, and is often recorded in the county’s land records. Easements are commonly granted for utility lines or roads.

License
A short-term agreement typically granted to a utility company or municipality for the installation, occupancy, and ongoing maintenance of equipment or infrastructure, such as a road. A license typically is not recorded in the county recorder's office against the property.

Permit
A permit is typically for a shorter period of time than an easement, is for limited, non-exclusive uses, and is not meant to be recorded with the county recorder. Permits may be used in lieu of a lease or easement, where limited use of the real estate is needed (such as for temporary construction staging, geotechnical or environmental investigations).

Termination provision
Minnesota State may terminate any easement, license, or permit for any reason during the term of agreement upon providing 90-days notice to the easement, license, or permit holder. This right to terminate must be included in all agreements. See Minn. Stat. § 136F.60, Subd. 3(b).

Subpart B. Authority

The Chancellor has delegated to the Vice Chancellor for Finance and Facilities approval and signature authority for all real estate transactions including easements, licenses, and permits.

Subpart C. Requirements when an easement, license, or permit is requested to use Minnesota State real estate

A party requesting an easement, license, or permit should provide the following:

Fee. The institution or system office may charge a one-time, non-refundable administrative fee to cover the cost of review of the easement, license, or permit, including staff time, attorney’s fees, and consultation with a surveyor or other professionals. The fee shall be based on reasonable expenses incurred.

Survey. A survey prepared by a registered land surveyor that identifies the area to be impacted by the easement, license, or permit. At a minimum, the survey must identify

The campus impacted,

Legal description of the easement, license, or permit area(s), and

Acreage or square footage of the easement, license, or permit area.

Complete legal descriptions must be provided for all easements. Minnesota State may consult with a registered land surveyor to confirm the survey and legal description provided. Minnesota State may waive the survey requirement for licenses, or permits, but a sketch that identifies the license or permit area is required.

Valuation and Payment.

Easement. The recipient of an easement shall pay the fair market value for any easement granted, which must be based on at least one current appraisal if the anticipated value is expected to exceed $50,000. The appraisal should be no more than 6 months old. The institution may obtain its own appraisal.

Licenses. The recipient of a license may be charged a license fee.

Permits. The recipient of a permit may be charged a permit fee.

Subpart D. Acceptable Form.
The easement, license, or permit must be in a form acceptable to the Attorney General’s Office. Minnesota State, as grantor, executes all easements, licenses, and permits under the name of the corporate body: The State of Minnesota, by and through its Board of Trustees of the Minnesota State Colleges and Universities.

Description of purpose. The grantee shall supply a description of purposes and planned use of the easement, license, or permit (for example: a 30’ wide easement for the installation, repair, maintenance, and replacement of a 10” gas pipeline).

Proceeds. The institution responsible for the management of the property must be the recipient of the net proceeds generated from an easement, license, or permit.

Part 6. Closing Activities

The system office and institution ensure that all relevant conditions outlined in the purchase agreement have been satisfied prior to closing, such as environmental investigations, surveys, title reviews, building evaluations, and necessary legislative, municipal and board or system office approvals.

The system office may represent Minnesota State at the closing of a purchase or sale of real estate. In coordination with the Attorney General, deeds and any supplemental documents are prepared. At Closing, Minnesota State verifies payment or receipt of sale proceeds, ensures payment of appropriate real estate taxes and special assessments due at closing, and ensures conveyance instruments are recorded.

Following the closing, Minnesota State ensures that the tax exempt status is properly reflected on the county tax records, which includes a Statement of Owner of Real Estate Claimed to be Exempt from Taxation. Minnesota State shall maintain a record of the yearly real estate transactions, and report completed transactions to the Board of Trustees on an annual basis.

Part 7. Reporting Obligations

When an institution closes a transaction, the institution shall provide Minnesota State with a copy of the deed, survey, closing statement and title documentation (either abstract, torrens certificate, title commitment or title policy).

Part 8. Checklists

Acquisition and disposition checklists are incorporated by reference.

Real Property Conveyance (Sale) Checklist
Real Property Acquisition (Purchase) Checklist

Procedure History:

Date of Adoption: 11/18/05
Date of Implementation: 11/18/05
Date of Last Review: 01/22/26

Date and Subject of Amendments:

01/22/26 – Full Review. Amendments include technical edits, updated position titles, and the application of new formatting and writing standards. Amendment increases threshold amounts for acquisition or sale of property. Amended to require financial proforma for operating costs associated with any property acquisition.

1/25/12 - The Chancellor amends all current system procedures effective February 15, 2012, to change the term "Office of the Chancellor" to "system office" or similar term reflecting the grammatical context of the sentence.

Additional HISTORY

Procedure 6.7.1 Acquisition and Disposition of Real Estate

Related Documents:

Procedure History: