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Decision No. 16,308

Appeal of ANTONIO LUCIANO from action of the Board of Education of the East Ramapo Central School District, the Board of Education of the Clarkstown Central School District, and Congregation Yeshiva Avir Yakov regarding the lease of real property.

Decision No. 16,308

(October 4, 2011)

Minerva & D’Agostino, P.C., attorneys for respondent Board of Education of the East Ramapo Central School District, Roslyn Z. Roth, Esq., of counsel

Lexow, Berbit & Associates, P.C., attorneys for respondent Board of Education of the Clarkstown Central School District, Warren E. Berbit, Esq., of counsel

Shebitz Berman Cohen & Delforte, P.C., attorneys for respondent Congregation Yeshiva Avir Yakov, Frederick J. Berman and Julia R. Cohen, Esqs., of counsel

KING, JR., Commissioner.--Petitioner challenges the determination of respondent Board of Education of the East Ramapo Central School District (“East Ramapo”) to lease its Hillcrest Elementary School (“Hillcrest” or “the school”) to respondents Board of Education of the Clarkstown Central School District (“Clarkstown”) and Congregation Yeshiva Avir Yakov (“Congregation”).[1] The appeal must be dismissed.

This appeal is the third to arise out of East Ramapo’s determination to close and then sell Hillcrest.  In Appeals of Luciano and Hatton, 50 Ed Dept Rep, Decision No. 16,153, the Commissioner of Education (“Commissioner”) dismissed a challenge to East Ramapo’s decision to close Hillcrest and designate it as surplus property.  Thereafter, in Appeal of White, 50 Ed Dept Rep, Decision No. 16,239 (“Appeal of White”), the Commissioner annulled and set aside East Ramapo’s sale of Hillcrest to the Congregation.

Much of the factual background relevant to this appeal is set forth in Appeal of White and, therefore, will not be repeated here.[2]   However, on August 31, 2010, the Commissioner issued a stay in Appeal of White prohibiting East Ramapo from selling Hillcrest to the Congregation pending a final decision in that appeal.  Thereafter, East Ramapo requested permission to enter into a lease with the Congregation for the 2010-2011 school year.  On September 1, 2010, East Ramapo was advised by my Office of Counsel that the stay issued in Appeal of White did not prohibit it from leasing Hillcrest to the Congregation, but that any such lease had to provide for termination in the event that, among other things, the sale of Hillcrest was set aside.

At approximately the same time that East Ramapo sought to lease Hillcrest to the Congregation, Clarkstown began experiencing problems at one of its elementary schools where some students and staff members were becoming ill.  Clarkstown moved the school’s staff and students to its South High School while it investigated the cause of the problem.  However, it appears that after it became apparent that more testing, analysis and remediation work was needed, Clarkstown sought a “more permanent” location for its staff and students and approached East Ramapo about temporarily leasing Hillcrest.

On October 20, 2010, East Ramapo approved short-term leases of Hillcrest to both Clarkstown and the Congregation for $16,000 per month (the “Hillcrest leases”).  Specifically, Clarkstown was allowed to lease Hillcrest “for a two (2) month period” beginning on October 15, 2010, and the Congregation leased Hillcrest “for . . . the period of December 15, 2010 through August 31, 2011.”  The leases contained provisions requiring early termination upon a number of events, including the invalidation of the sale of Hillcrest that was being challenged in Appeal of White. This appeal ensued.  Petitioner’s request for interim relief was denied on December 7, 2010.

Petitioner argues that the rental rate being charged to Clarkstown and the Congregation – which amounts to $3.56 per square foot – does not “truly and accurately depict the fair market rental value” of Hillcrest. In support of this contention, petitioner submits a lease that East Ramapo entered into for the rental of its Merill L. Colton Elementary School building for $11.28 per square foot (“Colton lease”), a lease that East Ramapo entered into with the Board of Cooperative Educational Services of Rockland County (“BOCES”) for the rental of two classrooms at another elementary school building for $7.97 per square foot (“BOCES lease”), and an appraisal that East Ramapo obtained prior to soliciting bids for the sale of Hillcrest which indicates that “current market rent” for Hillcrest is $10.50 per square foot.  In addition, petitioner maintains that East Ramapo did not appropriately market Hillcrest or take other steps to ensure that a fair market rental value was achieved, such as allowing “a reasonable time for exposure in the open market” and/or leasing Hillcrest via competitive bids.  Petitioner, therefore, contends that the Hillcrest leases violate Education Law §403-a, and that East Ramapo “failed to fulfill its fiduciary responsibilities to protect public assets and the educational needs of the District.” 

As relief, petitioner requests that I vacate the decision to lease Hillcrest to the Congregation, that I direct East Ramapo to charge Clarkstown a rental rate equal to the BOCES lease, and that I direct East Ramapo to “aggressively market” Hillcrest and list it with a real estate agent.  In addition, petitioner requests that I review and approve all real property transactions proposed by East Ramapo until such time as I am “satisfied that [it] is acting rationally and prudently,” and that it is “fulfilling its fiduciary responsibilities.” 

Respondents essentially argue that the Hillcrest leases do reflect Hillcrest’s fair market rental value and that the leases and appraisal that petitioner relies upon fail to demonstrate otherwise.  In addition, respondents maintain that the stay issued in Appeal of White put a cloud on Hillcrest’s title which adversely affected its fair market rental value.  Respondents, therefore, contend that, under the circumstances, the Hillcrest leases - which both generated income for the district and relieved it of the responsibility to maintain the school – are rational.  In addition, Clarkstown and the Congregation raise a number of other defenses, including failure to properly join them as necessary parties.

I will first address a number of procedural issues, beginning with petitioner’s reply.  The purpose of a reply is to respond to new material or affirmative defenses set forth in an answer (8 NYCRR §§275.3 and 275.14).  A reply is not meant to buttress allegations in the petition or to belatedly add assertions that should have been in the petition (Appeal of Caswell, 48 Ed Dept Rep 472, Decision No. 15,920; Appeal of Hinson, 48 id. 437, Decision No. 15,908; Appeal of Baez, 48 id. 418, Decision No. 15,901).  Therefore, while I have reviewed the reply, I have not considered those portions containing new allegations or exhibits that are not responsive to new material or affirmative defenses set forth in respondents’ answers.

In addition, petitioner contends that East Ramapo and the Congregation both served late answers and requests that they not be considered.  Section 275.13 of the Commissioner’s regulations requires each respondent to serve an answer within 20 days of the date of service of the petition.  Extensions may be granted in the discretion of the Commissioner upon timely application therefor (8 NYCRR §276.3).  Further, a late answer may be accepted, in the discretion of the Commissioner, upon consideration of the proffered reason for the delay (seeAppeal of Hamblin, 48 Ed Dept Rep 421, Decision No. 15,902; Appeal of Smith, 48 id. 125, Decision No. 15,813).

Here, both East Ramapo and the Congregation were initially required to serve answers in this matter on December 8, 2010, but were granted extensions of time until December 22, 2010.  The Congregation submitted an affidavit of service indicating that its answer was served on petitioner by mail on December 23, 2010.  Petitioner contends that he did not receive the Congregation’s answer until December 24, 2010, and cites its cover letter, addressed to my Office of Counsel and dated December 23, 2010, as further proof of untimely service.  In response, the Congregation submitted an “amended affidavit of service” which states, among other things, that the December 23 date on both the cover letter and its original affidavit of service was a typographical error, and that its answer was actually served on December 22, 2010.  In addition, the Congregation submitted tracking information indicating that the cover letter, although dated December 23, was actually sent on December 22, 2010.  Based on the record before me, I am unable to conclude that the Congregation’s answer was untimely and, therefore, will accept it. 

East Ramapo submitted an affidavit of service indicating that its answer was served on petitioner on December 22, 2010.  However, petitioner submits tracking information indicating that the answer was not tendered for delivery until December 23, 2010.  In addition, petitioner contends that he did not receive East Ramapo’s answer (which the record reflects was sent via overnight delivery) until December 24, 2010.   East Ramapo does not respond to these contentions or otherwise dispute them.  Accordingly, I find that East Ramapo’s answer was untimely and will not accept it for consideration.

Clarkstown and the Congregation contend that the petition must be dismissed for failure to name them as necessary parties.  Specifically, they contend that, while they are necessary parties, it is not clear from the petition whether they were intended to be named as respondents.  I disagree.  

A party whose rights would be adversely affected by a determination of an appeal in favor of a petitioner is a necessary party and must be joined as such (Appeal of Murray, 48 Ed Dept Rep 517, Decision No. 15,934; Appeal of Miller, 48 id. 465, Decision No. 15,917; Appeal of Williams, 48 id. 343, Decision No. 15,879).  Joinder requires that an individual be clearly named as a respondent in the caption and served with a copy of the notice of petition and petition to inform the individual that he or she should respond to the petition and enter a defense (Appeal of Murray, 48 Ed Dept Rep 517, Decision No. 15,934; Appeal of Miller, 48 id. 465, Decision No. 15,917; Appeal of Williams, 48 id. 343, Decision No. 15,879).

On the record before me, I find that Clarkstown and the Congregation were properly joined as necessary parties.  Both Clarkstown and the Congregation appear in the caption, and both were personally served with copies of the petition and notice of petition.  It is the notice of petition which alerts a party that he or she is required to appear in the appeal and answer the allegations contained in the petition (seee.g., Appeal of Peterson, 48 Ed Dept Rep 530, Decision No. 15,939; Appeal of R.R. and P.R., 48 id. 326, Decision No. 15,873; Appeal of Cole, et. al., 37 id. 407, Decision No. 13,891).  In addition, I conclude that both Clarkstown and the Congregation had a full and fair opportunity to respond to the allegations in the petition and, indeed, did respond.  Therefore, under the facts of this case, I find that whatever ambiguities might exist in the petition do not, by themselves, constitute a sufficient basis for me to dismiss this appeal (seee.g., Appeal of Lander, et. al., 42 Ed Dept Rep 201, Decision No. 14,822; Appeal of Goldin, et. al., 40 id. 639, Decision No. 14,573; Appeal of Cole, et. al., 37 id. 407, Decision No. 13,891).

The appeal, however, must be dismissed, in part, as moot.  The Commissioner will only decide matters in actual controversy and will not render a decision on a state of facts which no longer exist or which subsequent events have laid to rest (Appeal of a Student with a Disability, 48 Ed Dept Rep 532, Decision No. 15,940; Appeal of M.M., 48 id. 527, Decision No. 15,937; Appeal of Embro, 48 id. 204, Decision No. 15,836).  Here, petitioner requests that, among other things, I vacate the decision to lease Hillcrest to the Congregation.  However, the Congregation’s lease with East Ramapo contains a provision requiring termination upon certain occurrences, including the invalidation of the bid for the sale of Hillcrest that was at issue in Appeal of White.  As noted above, the Commissioner invalidated that bid on June 6, 2011.  Accordingly, petitioner’s request that I invalidate the Congregation’s lease is moot.

Petitioner’s appeal must also be dismissed on the merits.  A board of education is authorized to enter into a lease agreement regarding its unused real property so long as the provisions of Education Law §403-a are met.  Here, petitioner contends that the Hillcrest leases violate Education Law §403-a, and that East Ramapo violated its fiduciary responsibilities because the Hillcrest leases “do not truly and accurately depict the fair market rental value” of Hillcrest, and because East Ramapo did not take steps to ensure that a fair market rental value was achieved.  As noted above, in support of this contention, petitioner relies on two leases (i.e., the Colton lease and the BOCES lease) and an appraisal which he claims shows that the Hillcrest leases are undervalued.  However, in an appeal to the Commissioner, a petitioner has the burden of demonstrating a clear legal right to the relief requested and the burden of establishing the facts upon which petitioner seeks relief (8 NYCRR §275.10; Appeal of Aversa, 48 Ed Dept Rep 523, Decision No. 15,936; Appeal of Hansen, 48 id. 354, Decision No. 15,884; Appeal of P.M., 48 id. 348, Decision No. 15,882).   On the record before me, I find that petitioner has failed to meet his burden.

Specifically, both the Colton lease and the BOCES lease upon which petitioner relies contain terms which are materially different from those in the Hillcrest leases.  The Colton lease, for example, is for a five year term, and the BOCES lease requires East Ramapo to pay for utilities and maintenance of the premises.  In contrast, the Hillcrest leases are both for periods of time which are significantly less than one year and require the respective tenants (i.e., Clarkstown and the Congregation) to be responsible for utilities and maintenance.[3]  I find that these differences reasonably call into question the comparability of the other leases to the Hillcrest leases and that petitioner does not adequately address these differences.

In addition, contrary to petitioner’s assertions, I am unable to find that the appraisal establishes that the Hillcrest leases are undervalued.  Specifically, it appears that the appraisal relied upon by petitioner, which was the first of two appraisals discussed in Appeal of White, was obtained by East Ramapo, in part, for the purpose of determining the value of a five-year lease of Hillcrest.[4]   As noted above, however, the Hillcrest leases are both short-term leases for terms of significantly less than one year and were entered into at a time when East Ramapo had been directed to include a provision for early termination in any such lease.  Accordingly, I am not persuaded that the lease value set forth in the appraisal is a fair measure of the market value of these short-term leases, and I am unable to find that petitioner has established that the Hillcrest leases are undervalued.

Petitioner further contends that East Ramapo did not take steps to ensure that a fair market rental value was achieved.   Education Law §403-a(3) gives boards of education the discretion to lease real property “upon such terms and conditions as the board of education . . . may deem appropriate.”  It does not specify that a property be marketed in any particular way or require that it be leased via competitive bids.  Rather, boards of education are required to dispose of property upon the most beneficial terms which it is possible for them to secure (see Education Law §403-a[3]; Ross v. Wilson, 308 NY 605; Yeshiva of Spring Valley, Inc. v. Bd. of Ed. of the East Ramapo Central School Dist., 132 AD2d 27).  The manner in which a particular property must be marketed and leased, therefore, depends upon the circumstances of each individual case, and boards of education are given discretion to determine which methods, in their judgment, would bring about the best price (seegenerallyRoss v. Wilson, 308 NY 605; Feldman v. Miller, 151 AD2d 755).

Here, petitioner simply contends in conclusory fashion that East Ramapo failed to properly market Hillcrest, allow a “reasonable time for exposure in the open market,” or open the lease of Hillcrest to competitive bidding.  As noted above, however, Education Law §403-a(3) does not require competitive bidding or that a property be marketed in a particular way.  In addition, and as also noted above, petitioner has not adequately established that the Hillcrest leases are undervalued.  Without more, therefore, I am unable to conclude that East Ramapo abused its discretion in this matter or that it otherwise failed to obtain the best possible lease price for Hillcrest.  This is especially true where, as here, respondents contend (and petitioner does not appear to dispute) that the stay that was issued in Appeal of White put a cloud on Hillcrest’s title which, in turn, created a restricted rental market for Hillcrest and adversely affected its rental value.  Accordingly, petitioner’s appeal must be dismissed.

In light of this disposition, I need not address the parties’ remaining contentions. 

THE APPEAL IS DISMISSED.

END OF FILE.

[1] East Ramapo, Clarkstown and the Congregation are collectively referred to herein as “respondents.”

[2] For purposes of this appeal, I take judicial notice of the record in Appeal of White.

[3] It is significant to note that the BOCES lease indicates that only $2.93 per square foot was being charged for the use of the space and structure that was the subject of the lease, while the other $4.04 per square foot was being charged for the operation and maintenance of the building.  Though petitioner contends that he believes that the BOCES lease was for an amount that was less than fair market rental value, he does not explain the basis for that conclusion.  

[4] As noted in Appeal of White, East Ramapo issued a “formal request for proposals” (“RFP”) for the sale or lease of Hillcrest in June 2010.  The appraisal that petitioner relies upon was obtained by East Ramapo at that time for the purpose of valuing Hillcrest for such sale or lease.  According to the terms of East Ramapo’s RFP, to the extent that bidders wished to submit a bid for the lease of Hillcrest, the lease was required to be for a five-year term.