Volume I, No. 3

November 20, 2008

Joint Occupancy

School District Property: A Generator of Income and Provider of Facilities

State law provides an opportunity for school districts to be entrepreneurial in meeting their revenue generation and facilities needs by way of cooperative endeavors with private sector and non-profit entities. Education Code Sections 17515-17526 are broad in their vision of opportunities and ripe with promise. These code sections nevertheless have been rarely utilized by school district superintendents and governing boards.

This statute allows a governing board, having ownership of real property, to enter into leases and agreements with “any private person, firm or corporation” relating to real property and buildings that will be used jointly by the district and the other party. The building or portion thereof to be used by the other party shall be subject to the zoning and building code requirements of the local jurisdiction in which the building is located.

Any lease to be executed by the district may not exceed 66 years and must require the lessee to provide for the construction of a building or buildings to be jointly used by the district and the lessee. Any building constructed to be used by the district as part of the joint occupancy agreement is subject to Education Code 17280 through 17313, commonly referred to as the Field Act. The statute is clear. Plans for buildings intended for use by the district must be reviewed and approved by the Division of the State Architect (DSA). As noted above, buildings to be occupied by the other party are subject to the rules imposed by local jurisdictions.

In that a district seeking to utilize the authority provided in this statute will be engaging in negotiations with the “private sector” and recognizing, from varied parties in the Capitol Building, that it is largely assumed that school district administrative personnel and governing boards are ill equipped for the task. The statute therefore requires that the governing board meet or cause others to meet the following requirements:

• Adopt a resolution at a regularly scheduled meeting that identifies the property to be jointly occupied, states the intended use of the building to be occupied by the district and sets a time at least 90 days from the date of the adoption of the resolution at which time the board shall meet at the normal location for purposes of “receiving and considering all plans and proposals submitted.”
• Notice of adoption of the resolution and time and place of the meeting must be published once each week for a period of three weeks in a newspaper of general circulation.
• Submit the proposed plan or agreement to the State Board of Education for consideration of approval. The State Board must, within 45 days, notify the governing board of the district of its approval or disapproval.
• Require of the person, firm or corporation entering into the agreement with the governing board to file with that board either a bond for performance of the lease or joint occupancy agreement or, instead, provide an irrevocable letter of credit issued by a state or national bank or a federal or state credit union.

It is interesting to note that Education Code 17526, the last section in Article 8, provides that this Article prevails over all other areas of the law that would conflict with Article 8.

The authority granted by this Article offers unlimited proposals to be submitted to superintendents and governing boards for generating income for capital needs and for meeting district facility needs. In the experience of the writer, the vast majority of school districts do not take the time to consider the wealth remaining and thus sitting fallow in school district properties. The Joint Occupancy Article of the Education Code is the wallflower at the dance of need annually held and voiced by school district superintendents and governing boards.

~Tom Duffy

tduffy@m-w-h.com