KMTG continues our series of updates on new legislation signed by Governor Brown.  All laws became effective January 1, 2014, unless otherwise stated.

School Facilities: Sale of Surplus Real Property; Return of State School Facilities Funding Program Funds-- AB 308

The Governor signed AB 308, which adds section 17462.3 to the Education Code.  AB 308 addresses the sale of surplus property by a school district, county office of education, or charter school. 

Generally, a governing board of a school district (“governing board”) may sell, or lease for a term not exceeding 99 years, any real property belonging to the school district, if the property is not or will not be needed for school classroom buildings.  The real property may be sold or leased together with any personal property that is located on the property.  Before a governing board may sell or lease real property designed to provide direct instruction or instructional support, it must offer the property for sale or lease to any charter school that has made a written request to be notified of surplus property offered by the school district for sale or lease. The proceeds from a sale or lease must be deposited in the general fund of the school district, for use for one-time expenditures, if the governing board and the State Allocation Board determine “that the school district has no anticipated need for additional site or building construction for the 10-year period following the sale or lease with option to purchase, and the school district has no major deferred maintenance requirements.”

AB 308 authorizes the State Allocation Board to establish a program to require the return of funds to the State Allocation Board under certain circumstances.  If a school district, county office of education, or charter school sells real property that was purchased with, modernized with, or improved with moneys from a state school facilities funding program, it may have to return the moneys used to purchase, modernize, or improve the property to the State Allocation Board if all of the enumerated conditions in the statute are met.  The conditions are as follows:   (1) the property is not sold to a school district, a county office of education, charter school, “or an agency that will use the property exclusively for the delivery of child care and development services;” (2) the proceeds from the sale are not used for capital outlay, and (3) the “property was purchased, or the improvements were constructed or modernized on the real property, within 10 years before the real property is sold.” 

It is important to note that if the State Allocation Board does institute such a program, the moneys that must be returned to the State Allocation Board are those that were received within 10 years before the real property is sold.  If only a portion of the real property is sold, then only “a proportionate amount of funds received from a state school facilities funding program shall be returned to the State Allocation Board under this section based on the percentage of the real property sold.”

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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