Request By:
Mr. O. J. Simpson
City Coordinator
402 W. Main Street
Cumberland, Kentucky 40823
Opinion
Opinion By: Steven L. Beshear, Attorney General; By: Walter C. Herdman, Assistant Deputy Attorney General
This is in response to your letter of January 6, in which you relate that the City of Cumberland has closed an alley in the city pursuant to KRS 82.405 and declared it to be excess property. You enclosed a copy of the circuit court judgment closing said alley. In disposing of this property you relate the following facts and question:
"Sealed bids were advertised for and two bids were received, one for $2,500.00 and one for $809.00. The city council determined the bid of $2,500.00 was too high and requested of the two defendants, the only ones who bid, get together and submit a common bid to divide the property. The two property owners did submit a joint bid which was accepted by the council unanimously.
QUESTION: Was the joint bid, a legal bid, as the property was not advertised a second time."
Every city is authorized to sell surplus real and personal property pursuant to KRS 82.081 and 82.082. There is no statute detailing the procedure for the sale of municipal property as is the case with the purchase of material, equipment, supplies, services, etc., under KRS 424.260. In other words, there is no requirement that the sale of the property must be on a bid basis. Referring to McQuillin Municipal Corporations, Vol. 10, § 28.44, we find the following statement:
"If no provision is made by statute as to the procedure for disposing of municipal property, and the conditions of the conveyance, such matters are within the reasonable discretion of the appropriate municipal authorities."
Next referring to § 28.45, we quote the following excerpts:
". . . It is fundamental that sales of public property must be openly and fairly conducted, . . ."
* * *
. . . Unless, however, the applicable laws expressly so provide, a municipal corporation is not required to use competitive bidding or otherwise seek the highest obtainable price in selling its property. . . ."
It is clear from the above that the city may sell its property in any feasible manner that is in the best interest of the city, and we have suggested that such sale be either by auction or by bidding, though neither mode is required. As a matter of fact, there is law to the effect that in the absence of a competitive bid requirement but where the public authority voluntarily advertises the bids, they may reject all bids as they see fit and enter into private negotiations with one of the bidders in order to secure the best possible price, whether it be in connection with the purchase of property or the sale of property. See 43 Am.Jur., Public Works and Contracts, § 49, and OAG 67-119.
The factual situation you have presented appears to be rather unusual, in that the city has rejected the high bid simply because they thought it was too high, which raises the question of whether or not the public interest of the city was sufficiently considered, that being to obtain the highest possible price for the property. On the other hand, there is no question that the bids could normally be rejected for a valid reason and either new bids requested or the city enter into private negotiation in order to get the best possible price for the property. However, the fact that the city rejected the high bid and requested a common bid between the two original bidders would appear to this office to have been improper; first, because it failed to seek new bids through appropriate advertisement which is normally required if the city is going to utilize the bidding process, and, secondly, by rejecting the high bid, the city turned down the sale price that would have most benefited the city's interest.
Under the circumstances, we believe that the joint bidding procedure described should be rejected and either new bids requested pursuant to appropriate advertisement, or the property be sold at public auction.