Del. Code 14, § 1057 : Education — Reorganization Of School Districts — School Boards Of Reorganized School Districts — Sale or lease of property; disposition of proceeds

  • Date:

Current through 2016 Legislative Session, Act 399

(a) When any real property, title to which is held by a reorganized school district, is no longer needed for school purposes, it may be sold by the school district subject to the following:
(1) The board of education of the school district shall receive documented recommendations from the superintendent of schools of the district showing why the property is no longer needed for school district purposes;
(2) The board shall take action to consider such recommendations;
(3) The board shall release the recommendations for public review and shall announce by 10 days' notice in a news release to print and electronic media covering the district the time and place of a public hearing on the recommendation to dispose of the property in question;
(4) The board shall conduct the public hearing as announced;
(5) The board shall within 60 days of said hearing take action to accept, reject or modify the recommendation and proceed according to the terms of the recommendation in its current status. If the recommendation was rejected, no further action is required pending any future recommendation;
(6) Except for property acquired or constructed with 100% state funds upon affirmative decision to sell a property the board shall retain the services of 1 or more licensed real estate brokers or realtors who are not associated with any member of the board of education of that district and who shall determine a minimum price at which the property is to be offered for sale. In the event the property was acquired or constructed with 100% state funding, then this paragraph shall not apply;
(7) The property for sale shall be offered to other state agencies at the price determined in paragraph (6) of this subsection. Such offer to other state agencies shall be made through the Director of the Office of Management and Budget who shall in turn confer with the Department of Education. Together, they shall approve a purchase or release the district to proceed with another sale within 30 days of the offer by the board of education to the Director of the Office of Management and Budget;
(8) A state agency may negotiate to the extent feasible and practical to assume the state share in such property by transfer of the debt service obligation to the account of that agency without payment of cash for that share of the price set;
(9) If no other agency of state government declares its intent to purchase the property, the Board of Education shall proceed to offer said property to the local government in whose jurisdiction the property is located. Such an offer shall be made to the chief elected official of that local government. If the offer is not accepted within 30 days, the Board may proceed to sell the property on the open market;
(10) A public hearing for the sale of the property on the open market must be advertised at least once a week for 2 consecutive weeks in a newspaper published or circulated in each county of the State. Any proposal to purchase the property shall be delivered to the office of the Executive Secretary of the Board, or to such other place as shall be specified in the advertisement, no later than 5:00 p.m. on the last working day preceding the day fixed for the hearing, and the Board shall not consider any proposal submitted subsequent to that time. The Board shall act upon the proposals no sooner than 7 days and no more than 14 days following the hearing, during which period residents of the district may review the proposals at the office of the district during regular business hours and submit comments on the proposals. The Board shall consider such comments in acting upon the proposals. In its discretion, the Board may reject all proposals or accept a proposal subject to such modifications, except as to price, as the Board determines are appropriate;
(11) A sale on the open market may be conducted by the board and administrative staff of the district or through a licensed realtor or agency who is not associated with the appraiser or any member of the board of education of that district. Any final contract for such sale shall be approved within a period of 60 days by the Director of the Office of Management and Budget, who shall confer with the Department of Education. Approval will not be withheld unless the contract is found by the Director to be unreasonable, in which event the Director shall disapprove the sale and make specific written findings for such disapproval;
(12) When an offer to purchase the property at a price not less than fixed pursuant to paragraph (6) of this subsection is accepted by the board, the Facilities Management of the Office of Management and Budget shall direct that an appraisal be prepared by 2 independent appraisers licensed in Delaware who are from different firms. The amount of this confirmatory appraisal will be the average of the 2 appraisals. Any offer to purchase the property, including offers from state agencies or local governments, at a price not less than that fixed pursuant to paragraph (6) of this subsection may be accepted by the board provided that the purchase price specified in the offer is either not less than the amount established by the confirmatory appraisal or is amended to increase to the amount established by the confirmatory appraisal;
(13) The rights of bond holders shall not be jeopardized through such sale. This section shall be construed so as not to impair the rights of any bondholder, and all bonds outstanding shall remain in full force and effect according to the terms thereof;
(14) No sales agreement shall be entered into until it can be demonstrated that the purchaser of the property will use the property for purposes authorized according to the zoning requirements, if any, for the area in which the property is located. If any modification of zoning requirements is necessary, those modifications must be certified to by the appropriate zoning authority prior to the conclusion of the sale;
(15)
a. The proceeds of sale of school district property financed, in whole or in part, with the proceeds of bonds issued by the State shall be paid to the State less costs incurred in selling the property after such costs have been met or provision for their payment has been made. The proceeds of sale attributable to the State financing of the property shall be deposited in the School Bond Reversion Account of the State in an amount that bears the same proportion to total net sale proceeds as the State's contribution to meet the cost of the property bears to the total cost of the property.
b. The remaining proceeds shall be deposited in a special fund of the State for the benefit of the selling school district. The money in those special funds shall be invested by and subject to the guidelines established by the Cash Management Policy Board separate and apart from other money invested by the Board. Interest earned, but not profit realized, from the investment of such proceeds shall be paid by the State Treasurer, not less than once nor more than 4 times in each fiscal year of the State, to the school district for which the proceeds are held, for any lawful school purpose, or reinvested pursuant to a written request to the State Treasurer from the school board for such school district. If the school board directs the reinvestment of the interest earnings, they shall become part of the corpus of such special fund.
c. The corpus of the special funds shall, at the direction of the appropriate school board, be applied to retire bonds issued by the school district or to meet the school district's local share of construction required by any school construction bond authorization act, as defined in Chapter 75 of Title 29, as amended.
d. Notwithstanding any other provisions of the above subparagraphs, when it can be documented that all or a part of the property was a gift to a reorganized school district, or its antecedent, the portion of the residual representing the gift shall be assigned to the school district to be used in conformance with paragraphs (a)(15)b. and c. of this section. That portion not identifiable as a gift shall be distributed and deposited in conformance with paragraphs (a)(15)a. and b. of this section.
(b)
(1) Notwithstanding § 1056 of this title, when any real property or part thereof of any reorganized school district is not then deemed necessary for school purposes, temporarily or permanently, the board of education of the district may lease such property or part thereof to any person or organization. The leasing person or organization may be required to pay a rental or fee to be determined by the board and to assume sole responsibility for the complete maintenance and preservation of the property, including compliance with all applicable building and housing codes, so that there will be no cost or obligation to the school district for the continued ownership of such property.
(2)
a. Any funds raised from rent or charges collected by the school district during any lease term of 10 years or less shall be retained by the school district to be used as local funds for any permissible educational purpose. Any funds raised from rent or charges collected by the school district during any lease term of more than 10 years shall be applied to the costs of maintaining and operating the leased property, if any, with the balance to be turned over to the State Treasurer to be assigned to the State and the school district according to paragraph (a)(15) of this section.
b. Notwithstanding paragraph a. of this subsection, in the event that there is any outstanding, unpaid, bonded indebtedness held by the State with respect to the building or grounds leased by a local district in accordance with this section, or any identifiable portion thereof, a pro-rated portion of the lease proceeds in excess of the cost of custodial salaries and utilities associated with the lease shall be turned over to the State Treasurer during any period of the lease that the bonded indebtedness held by the State remains outstanding and unpaid. The amount of such excess lease revenues payable to the State shall be equal to the lesser of:
1. The actual debt service payable by the State during any period covered by the lease; or
2. The amount of the excess revenues generated by the lease during any period that the bonded indebtedness held by the State remains outstanding and unpaid, multiplied by a fraction equal to the State share in the major capital project or projects for which the outstanding, unpaid, bonded indebtedness was originally issued.

In the event that the outstanding, unpaid, bonded indebtedness relates only to an identifiable portion of the leased facility, the amount payable to the State Treasurer shall be the amount calculated in accordance with the preceding sentence, multiplied by a fraction, the numerator of which shall be the gross square footage of the identifiable portion of the leased facility which is included in the lease and the denominator of which shall be the gross square footage of the entire identifiable portion of the leased facility to which the outstanding, unpaid, bonded indebtedness relates.

(3) Before leasing such property or part thereof to any person or organization for any period in excess of 12 months, and before renewing any existing lease where the original term was for 12 months or less but the original term or terms together with the proposed renewal period or periods will exceed 12 months:
a. The school district board of education shall first offer to lease the property to state agencies. If, as a result of the public hearing, sufficient objections to the use of the property by a state agency have been raised, then the school district board of education may refuse to lease to a state agency.
b. If no agency of state government declares an intent to lease the property within 30 days of the offer, or if the lease by a requesting state agency is denied, the school district board of education shall offer to lease the property to the local government in whose jurisdiction the property is located. If, as a result of the public hearing, sufficient objections to the use of the property by the local government have been raised, then the school district board of education may refuse to lease to the local government.
c. If such local government does not declare an intent to lease the property within 30 days of the offer, or if the lease by a requesting local government is denied, the school district board of education may proceed either to offer to lease the property on the open market or enter into an agreement with a lessee, the terms of which are supported by an independent appraisal. If, as a result of the public hearing, sufficient objections to the use of the property by such third party lessee have been raised, then the school district board of education may refuse leasing to such third party lessee.
(4) No lease of property pursuant to this subsection shall be negotiated until the school district board of education has complied with the procedures set forth in paragraphs (a)(1) through (5) of this section.
(5) No lease of property pursuant to this subsection shall be entered into unless the proposed use of the property is compatible with the characteristics of the neighborhood in which the property is located.
(6) Should a school district contract with any person or organization to lease a classroom building during the regular school year, and specifically during normal operating hours, the State shall not be obligated to build or construct any additional space that may be needed by the school district as a result of entering into such lease.
(c) No sales agreement, lease or donation of real property described within this section shall be negotiated when such property contains or is an integral part of recreational facilities, such as athletic fields or playgrounds, unless and until the board has made specific findings with respect to such facilities after discussion thereof in public forum as described in paragraph (a)(3) of this section. In the event the property was acquired or constructed with 100% state funding, then this subsection shall not apply. Assignment of funds to bond payment shall occur according to the priority schedule in paragraph (a)(15) of this section.
(d) Any purchases, leases or donations not finalized as of April 8, 1982, shall be subject to all the terms and conditions described herein.
(e) Notwithstanding any provision of subsection (a), (b), (c) or (d) of this section, any real property:
(1) To which title is held by a reorganized school district free of any recorded liens;
(2) Which was originally purchased and paid for by 100% local district funds;
(3) Which is no longer needed for school purposes; and
(4) From the sale of which all proceeds would be retained by the local school district

may be sold by the district without first following the procedures set forth in subsection (a), (b), (c) or (d) of this section.

(f) Notwithstanding any provisions of subsection (a), (b), (c), (d) or (e) of this section, a school district may sell timber located on the real property of the school upon an affirmative vote of a majority of the members of the Board. Sixty percent of the net proceeds (after the expenses relating to the sale and any replanting of trees determined appropriate by the Board) from the sale shall be assigned to the school district to be used in conformance with paragraphs (a)(15)b. and c. of this section. The balance of the proceeds may be utilized by the Board as part of their general fund.
(g) Notwithstanding any provision of § 1056 of this title or subsection (b) of this section, when any real property or part thereof any reorganized school district is not then deemed necessary for school purposes, the board of education of the district may lease such property or part thereof to any person or organization for agricultural use. Such a lease may be in excess of 12 months without requiring the district to first offer to lease the property to State agencies, the local government in whose jurisdiction the property is located, or on the open market. The person or organization leasing such property for agricultural purposes shall be required to pay fair rental value of the property. Any funds raised by the school district for such purpose shall be retained by the school district to be used as local funds for any permissible educational purpose.
Del. C. § 1057
14 Del. C. 1953, § 1057; 56 Del. Laws, c. 292, § 6; 62 Del. Laws, c. 351, §13; 63 Del. Laws, c. 191, §4; 63 Del. Laws, c. 209, §§2 - 5; 63 Del. Laws, c. 387, §45; 64 Del. Laws, c. 81, §1; 64 Del. Laws, c. 254, §1; 66 Del. Laws, c. 155, §1; 69 Del. Laws, c. 10, §1; 70 Del. Laws, c. 227, § 1; 71 Del. Laws, c. 6, § 3; 71 Del. Laws, c. 180, § 51; 71 Del. Laws, c. 371, §§ 1, 2; 75 Del. Laws, c. 88, §§ 16(2), 21(7), 30, 31, 32.;
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