Challenges can be significant when closing a school building |
On Board Online • August 9, 2010
By the New York Association of School Attorneys
Boards of education are authorized by law to close school buildings. Although often unpopular, such action may be needed to cope with changes in the school-age population or other local concerns.
State law provides a recommended – but not required – procedure. Unless the board faces a dire circumstance that requires swift action, it is advisable to follow the procedure outlined in Education Law section 402-a, which “authorizes and recommends” that boards establish advisory committees to investigate the impact of closing school buildings.
The steps set forth in the law provide a sound mechanism and provide for public input. Following the process should put the district in a better position to defend itself against legal challenges as well as minimize the rancor that often arises when a district considers such a decision.
Section 402-a calls for boards to appoint an advisory committee at least six months in advance of a proposed closing. The advisory committee must prepare an educational impact statement that considers a number of factors, such as pupil enrollment, prospective need for the building, initial costs and savings, the potential disposability of the closed school, the effect on personnel needs, maintenance and energy costs, and special features of the building.
Once the committee completes the statement, there are various procedural requirements for giving notice and holding public hearings.
It is sound practice for boards to consider more than one option for redistricting and document discussions with the community regarding each option. The board then determines whether the building will be closed.
Even if the district decides to close a building in complete opposition to community sentiment, the fact that the school board heard and weighed the public’s concerns will be significant if a decision is appealed to the commissioner of education or a state court.
Although important, community support is only one factor that boards must consider. Boards have broad discretion in assigning students to a particular school and the commissioner has held that he “will not set aside school district reorganization decisions unless arbitrary, capricious or contrary to sound educational policy.”
Leasing, selling and donating property
Once a building is closed, school districts will want to consider what to do with such real property. Options include finding a new use for the building, leasing, selling or donating the property. Or the district may want to “mothball” the property in anticipation of a future use or an anticipated improvement in the marketability of the property.
A board may lease a building by adopting a resolution that the building is not currently needed for school district purposes and that leasing is in the best interest of the district. The board must determine the terms and conditions that are likely to provide the most benefit to the district.
The board has discretion to determine the “appropriate” terms and conditions, the “fair market value,” the “best interest” of the district, the “most benefit” and the appropriate lease term. These determinations will be unique to every district and can change annually, or even more frequently. Although a lease can provide immediate financial benefits and a temporary solution for an unneeded building, the effects may be long-lasting. The district should thoughtfully consider all terms and conditions so that the lease does not unnecessarily restrict the district.
The board must ensure that the lease meets certain conditions, including that the rent payments must equal or exceed fair market value and the term must be for 10 years or less. Also, the lessee must agree to restore the property to its original condition. The lease may contain conditions for cancellation for any change which substantially affects the needs of a district or the community, such as if there is a considerable increase or decrease in enrollment. Notably, neither the lease itself nor the specific terms involved need to be approved by the voters.
If the district is looking for a permanent disposition of the building, and no longer uses the property, it may sell the building.
A sale must be “authorized by a vote of the qualified voters” except in large city school districts or central school districts that have been centralized for at least seven years, both of which can sell real property without voter approval. Voters may file a petition for a referendum in these school districts, but if no petition is filed, the sale can be made without voter approval.
The Education Law does not otherwise regulate the sale price or procedure for the sale; however, courts have held that when selling or disposing of school district property, school boards have a fiduciary responsibility to obtain the best price possible.
Another option is that the district may donate the land and/or building to a public corporation (that is, another governmental entity) pursuant to various provisions of the Education Law. The New York State Comptroller has held that real property may be conveyed to a public corporation without voter approval (unless a petition is filed) in accordance with Education Law section 1804(6)(c) as long as the district receives consideration that is more than nominal.
There are many potential challenges to a district’s decision to sell or donate property. For instance, a district resident might appeal to the commissioner of education if the board accepts an offer that is lower than the appraised value or lower than another offer the board received.
In Matter of Ross, the New York Court of Appeals held that a school board could not accept a $2,000 bid and reject a $3,000 bid; however, in Matter of New City Jewish Center, the Second Department held that it was proper for a school district to accept a smaller offer where that purchase would provide beneficial tax consequences. Therefore, a board has some flexibility in determining that the highest offer may not be the best, but it should prepare to explain why a lower offer is more beneficial.
Consult with your school attorney if your district is considering closing a school building.
Members of the New York State Association of School Attorneys represent school boards and school districts. This article was written by Douglas Gerhardt, a partner in Harris Beach PLLC, and Marnie Smith, an associate in that firm.