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Decision No. 16,316

Appeal of THOMAS C. O’BRIEN from action of the Board of Education of the City School District of the City of Corning regarding a bond resolution.

Decision No. 16,316

(November 21, 2011)

Harris Beach, PLLC, attorneys for respondent, Laura Purcell, Esq., of counsel

KING, JR., Commissioner.--Petitioner appeals various actions of the Board of Education of the City School District of the City of Corning (“respondent” or “board”) concerning a bond resolution for a facilities project.  The appeal must be dismissed.

Since approximately December 2009, the board has considered various proposals to address the district’s facilities needs.  In December 2009 and March 2010, the board sought voter approval of a $178 million facilities project (“Alternative C”), which involved the renovation and consolidation of several of the district’s elementary, middle and high school facilities.  According to respondent, because Alternative C would have exceeded the district’s debt limit, such measure failed because it was not approved by at least 60 percent of the voters as required by Local Finance Law §104.00 (“§104.00”), which limits the amount of indebtedness for which a city school district may contract to no more than five percent of the average full valuation of the school district, unless, among other things, the debt is approved by at least 60 percent of the voters at an election.

Thereafter, the district proposed a $97.47 million facilities project (“2010 project”).  According to respondent, the 2010 project is a “scaled back” version of Alternative C that “would address the [d]istrict’s most urgent facilities issues at a lower cost.”  Specifically, the 2010 project includes the renovation of the district’s two existing high school buildings.  The district’s two high schools would be consolidated and housed in one of the renovated buildings and its two middle schools would be consolidated and housed in the other.  The district’s two existing middle schools and other unused buildings would be repurposed and/or rented.

On October 20, 2010, respondent approved a bond resolution to finance the 2010 project and voted to hold a special district election on December 16, 2010 to seek voter approval.  The board also adopted a resolution classifying the 2010 project as a Type I action pursuant to the New York State Environmental Quality Review Act (“SEQRA”) (6 NYCRR Part 617)[1] and issued a negative declaration[2]  based on its determination that the 2010 project would not cause any significant adverse environmental impact.  This appeal ensued.  Petitioner’s request for interim relief was denied on November 17, 2010 and the district’s voters approved the 2010 project on December 16, 2010 by a margin of 60 percent to 40 percent.[3] 

Petitioner raises several objections to the board’s conduct in connection with the 2010 project, including that:  (1) the board failed to seek approval of at least 60 percent of the district’s voters in violation of §104.00; (2) respondent improperly “segmented” the April 2010 closing of an elementary school – an action that was included in Alternative C and was part of the SEQRA review for that project – from the SEQRA review conducted for the 2010 project; (3) respondent “misrepresent[ed] that the District has conducted outreach to inform the public” of the 2010 project in violation of SEQRA; and (4) respondent failed to submit its designation of the site for the consolidated high school to the city planning commission in violation of Education Law §2512(6).  Petitioner further maintains that, in March and April 2010, respondent “withheld pertinent information from public hearings” regarding the district’s 2010-2011 operating budget.

Respondent generally denies petitioner’s allegations and asserts that its actions with respect to the 2010 project were in all respects proper.  Respondent argues that petitioner’s claims with respect to the district’s 2010-2011 operating budget are untimely and that the appeal must be dismissed for failure to state a claim upon which relief may be granted and failure to establish the facts upon which he seeks relief.

Initially, I must address several procedural issues.  In his reply, petitioner argues that respondent’s answer does not properly respond to the petition and requests that it be struck from the record.  Pursuant to §275.12 of the Commissioner’s regulations, an answer must “contain a clear and concise statement of each respondent’s defenses to each claim and shall either admit or deny the allegations of the petition.”  Respondent’s verified answer consists of 13 numbered paragraphs in which it either admits or denies the allegations in each of the petition’s numbered paragraphs and asserts three affirmative defenses.  Although respondent’s answer does not specifically allege the substantive facts upon which it relies, respondent has incorporated into the answer by reference the affidavits and exhibits submitted in opposition to petitioner’s request for interim relief.  Petitioner maintains that he “should not be required to look through the Stay Affidavits and their Exhibits and guess which statements constitute Respondent’s answer and which are intended as affirmative defenses.”  However, contrary to petitioner’s assertions, §275.12 of the Commissioner’s regulations does not preclude a respondent from incorporating by reference affidavits and exhibits submitted in response to a stay request and respondent’s answer clearly refers to the specific paragraphs in such affidavits in which its factual allegations are contained.  Therefore, in the absence of any demonstrated prejudice to petitioner, I find that respondent’s answer provides a clear and concise statement of its defenses as required by §275.12 and I decline to strike the answer (seeAppeals of Gonzalez, 48 Ed Dept Rep 405, Decision No. 15,898; Application of the Bd. of Educ. of the Elmont Union Free School Dist., 48 id. 29, Decision No. 15,783).

Petitioner also argues that the affidavits and exhibits submitted by respondent in response to petitioner’s request for interim relief “do not address the Verified Petition except incidentally” and should not be considered as part of respondent’s answer.  However, contrary to petitioner’s assertion, such documents directly respond to the allegations contained in the petition and I have therefore considered them.

Respondent objects to 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 the answer.

Petitioner submits several newspaper articles to support his claims.  It is well settled that newspaper articles do not constitute evidence of the truth of the statements contained therein (Appeal of Wachala, 49 Ed Dept Rep 31, Decision No. 15,950; Appeal of Levens-Freeman, 48 id. 163, Decision No. 15,826; Application of Coleman, 45 id. 282, Decision No. 15,324).  Therefore, I have not considered such articles for the veracity of their content.

Petitioner has also requested permission to submit a reply memorandum of law.  Reply memoranda of law may be accepted only with the prior approval of the Commissioner (8 NYCRR §276.4; Appeal of Gorsky, 47 Ed Dept Rep 162, Decision No. 15,658; Appeal of Dunshee, 44 id. 414, Decision No. 15,216).  However, a reply memorandum of law may not be used to belatedly add new assertions that are not part of the pleadings (Appeal of Kirschenbaum, 43 Ed Dept Rep 366, Decision No. 15,020; Appeal of T.M., 41 id. 443, Decision No. 14,740; Appeal of Muench, 38 id. 649, Decision No. 14,110).  Much of petitioner’s reply memorandum of law appears to restate the allegations described in the petition and other pleadings.  Accordingly, while I have accepted petitioner’s reply memorandum of law for consideration, to the extent that this document attempts to add new claims against respondent, I have not considered them.

As noted above, petitioner alleges that in March and April 2010, respondent “withheld pertinent information from the [2010-2011] Budget Hearing in consideration of a series of payments which it solicited from [a] private foundation.”  As the basis for his claim, petitioner has produced a February 16, 2010 letter (“February letter”) in which the superintendent of schools requested $395,760 annually to support the district’s International Baccalaureate (“IB”) program and other curricular programs during the 2010-2011, 2011-2012 and 2012-2013 school years.  The letter stated that “[w]ith a commitment of financial support from the [foundation] in advance of the deliberations on the 2010-2011 School District operating budget, we will be able to remove the IB program from the public discussion.”

An appeal to the Commissioner must be commenced within 30 days from the making of the decision or the performance of the act complained of, unless any delay is excused by the Commissioner for good cause shown (8 NYCRR §275.16; Appeal of Lippolt, 48 Ed Dept Rep 457, Decision No. 15,914; Appeal of Williams, 48 id. 343, Decision No. 15,879).  Petitioner contends that this claim is timely because he received a copy of the February letter on October 6, 2010 in response to his September 29, 2010 Freedom of Information Law (“FOIL”) request to the district and commenced this appeal within 30 days of such receipt.  Together with his reply, petitioner has submitted a copy of his FOIL request, in which he sought “[t]he final version (including any attachments) of the request attached as Exhibit D hereto, and any response thereto by the [foundation].”  Exhibit D to petitioner’s FOIL request is an unsigned letter on district letterhead dated March 1, 2010 requesting funding from the foundation.  The text of this document appears identical to that contained in the February letter.  Petitioner also submits an October 6, 2010 response from the district’s records access officer granting portions of his FOIL request.

Respondent argues that this claim is untimely because petitioner had knowledge of the facts underlying this claim – i.e., the district’s request for financial support from the foundation – on or about August 25, 2010, when the district provided petitioner with information regarding such request.  Respondent also contends that a copy of the February letter was provided to petitioner on September 8, 2010.

While the record is unclear as to the origin or purpose of the March 1, 2010 document or whether it is the document the district claims to have provided to petitioner in August or September 2010, the record does indicate that petitioner relied on the information contained in such document as part of the basis for his September 29, 2010 FOIL request.  As a result, I find that petitioner was aware of the facts underlying this claim more than 30 days prior to the commencement of this appeal, thus rendering this claim untimely.

Petitioner also appears to argue that the February letter establishes that “school business ... is controlled by the [f]oundation,” which constitutes a continuing wrong which may be appealed at any time.  I find no merit to such claim.  The continuing wrong doctrine applies when the ongoing action is itself an unlawful action, such as the unlawful employment of an unqualified individual (Appeal of Kippen, 48 Ed Dept Rep 469, Decision No. 15,919), unlawful appointments to a district’s shared decision-making team (Appeal of Sadue-Sokolow, 39 Ed Dept Rep 6, Decision No. 14,155), an improperly constituted professional development team (Appeal of Copenhagen Teachers’ Association, et al., 45 Ed Dept Rep 459, Decision No. 15,381) or certain ongoing expenditures under an austerity budget that did not comply with the law (Appeal of Aarseth, 32 Ed Dept Rep 506, Decision No. 12,901).  The doctrine does not apply where the specific action being challenged is a single action, inaction or decision and the resulting effects are not intrinsically unlawful (Application of Ayers, 48 Ed Dept Rep 350, Decision No. 15,883; Appeal of a Student with a Disability, 48 id. 146, Decision No. 15,821, judgment granted dismissing petition to review, April 8, 2009, Sup.Ct., Albany Co. [Zwack, J.]).  Respondent’s request for funding from the foundation to maintain certain curricular programs in the face of budgetary constraints – and the resulting impact of such funding on the district’s 2010-2011 budgetary planning – was a single act which was not intrinsically unlawful.  Therefore, the continuing wrong doctrine does not apply here and the claim must be dismissed as untimely.

I note that even if this claim were not dismissed as untimely, it would be dismissed on the merits.  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).  Petitioner contends that the superintendent’s February letter “reveal[s] that school business in the District is controlled by the Foundation” and asserts that the district “is not supposed to cede crucial school decisions to entities that are not subject to the New York State Education Laws and Rules, even if they pay for it.”  Petitioner correctly asserts that a school district may not cede control over its programs to a third party; previous Commissioner’s decisions have held that a board of education may accept gifts of money to be used for specific programs, but it may not delegate to a third party its responsibility for determining whether or not to offer such programs or any control over the manner in which they are to be offered (seeAppeal of DeMasi, et al., 18 Ed Dept Rep 320, Decision No. 9,859).  However, the February letter indicates only that respondent sought funding from the foundation to continue specific curricular and other programs that “have had a positive impact on student achievement” and that receipt of such funding could impact the district’s 2010-2011 operating budget.  Other than his conclusory assertions, petitioner has submitted no evidence to indicate that respondent has improperly delegated control over such programming to the foundation.

Turning to the merits of petitioner’s remaining claims, §104.00 provides that no city school district “shall contract indebtedness for any purpose or in any manner which, including existing indebtedness, shall exceed” five percent of the average full valuation of the school district, unless, among other things, the debt is approved by at least 60 percent of the voters at an election.  Respondent maintains that “if the amount of debt anticipated to be issued for a capital project is anticipated to be within the District’s debt limit at the time such debt will be issued, the bond resolution authorizing such project must be approved by a simple majority of District residents ....”  Respondent explains that, at the time the board and voters approved the bond resolution for the 2010 project, the district’s debt limit was $92,336,230 and its debt contracting margin was $69,975,730.  However, respondent asserts that the district will not incur the full $97.47 million cost of the 2010 project at one time; rather, it will finance the project in installments over several years, during which time it will “pay off portions of its outstanding debt each year and will issue additional debt as necessary for the financing of the project.”  According to respondent’s plan, each individual debt issue for the 2010 project will be within the district’s debt limit at the time it is made.  Specifically, in estimating the district’s debt limit over the life of the project, respondent estimated no growth in the district’s valuation and recalculated the available debt limit as of the date of each planned debt issue as follows:

Date                   1/11   2/12    3/13      6/14

Debt Issue            $ 5.8M $20.5M   $55.2M    $15.9M

Total Debt            $ 5.8M $24.5M   $78.3M    $87.5M

Avail. Debt Limit     $69.98M $79.8M  $85.2M    $89.6M

Unneeded Debt Limit   $64.2M $55.3M   $ 6.9M    $ 2.1M

Accordingly, respondent maintains that “at no time will the District’s outstanding debt exceed the 5% debt limit as set forth under the law” and the district “will never have less than $2,082,570 available debt margin during the period that it will be issuing debt” for the 2010 project.

To the contrary, petitioner urges that the district’s “total indebtedness (including the amount of the Bond Resolution) ... must fit within the District’s debt contracting margin at the time the proposition is voted on.”  Petitioner asserts that because the total $97.47 million cost of the 2010 project would exceed the district’s debt contracting margin as it existed on the date of the vote, the project must be approved by at least 60 percent of the voters.  Petitioner reasons that “the District’s pledge of full faith and credit is a contracting of indebtedness that occurs when the voters approve the bond resolution.  From that instant onwards, the obligation is an ‘existing indebtedness’ that must be considered together with other existing indebtedness.”

Initially, I note that, contrary to petitioner’s position, the Commissioner has held in prior decisions that the controlling date for determining whether more than a simple majority vote is required for purposes of the Local Finance Law is “the date the bonds are issued, rather than the date the bonds are authorized by the voters” (Matter of Platt, 11 Ed Dept Rep 113, Decision No. 8,371; Matter of Iocovozzi, 1 id. 469, Decision No. 6,751). 

Petitioner’s argument that the provisions of the Local Finance Law specifying which items may be properly deducted from a district’s debt statement do not include “obligations authorized but not yet issued” is also unavailing.  As noted by respondent, Comptroller’s Opinion No. 7752 (11 St. Dept. Rep. 634 [1955]) specifically stated that the term “existing indebtedness” in §104.00(c) does not include “obligations authorized but not issued (see Local Finance Law, §§132.00, 135.00, 136.00).”  The Comptroller noted:

[T]he approval of the voters of a bond resolution does not in fact “authorize” the issuance of obligations in excess of the constitutional debt limit.  The approvals of the State Comptroller and Board of Regents must be obtained before obligations may be issued (Local Finance Law, §104.00(c, 3)).  It is entirely possible in a given instance that such approvals may not be granted.  We do not believe, therefore, that it can be maintained under any circumstances that the approval of the voters of a school district of a bond resolution for the issuance of obligations in excess of the constitutional debt limit has the immediate effect of putting the school debt over the constitutional limit (Comptroller’s Opinion No. 7752, 11 St. Dept. Rep. 634 [1955]).

While petitioner urges in conclusory fashion that the Comptroller’s decision is “erroneous” and “100% wrong,” he cites no persuasive authority to the contrary.  Rather, he attempts to distinguish the Comptroller’s decision from the instant appeal by arguing that, because the word “issue” does not appear in §104.00(b), “it does not matter ... if those obligations were never issued.”  However, contrary to petitioner’s assertions, it is §104.00(b) and (c), taken together, that provide school districts such as respondent with the authority to exceed the constitutional debt limit.  As noted above, §104.00(c) specifically states that a city school district may, interalia, “issue bonds” in excess of the debt limit with the approval of at least 60 percent of the voters.  As a result, I find no merit to petitioner’s argument.

Petitioner also argues that “the full faith and credit pledge obligation comes into existence with the voters’ approval of the bond resolution, whether or not the district issues bonds,” and relies on Hill v. Bd. of Educ. of Central School Dist. No. 2 of Towns of Glenville, Amsterdam and Charlton (286 AD 332, affd 309 NY 945 [“Hill”]) for the proposition that “[f]ull faith and credit would necessarily be implied by a vote to raise money to issue bonds.”  However, in line with the reasoning of the Comptroller’s decision, the Hill court also explained that “the word ‘issue’ [in §104.00(d)] has a rather clear and accepted meaning in this state when used with reference to bonds and notes.  It means the delivery of such obligations against payment of the purchase price [citations omitted].”  The court concluded that “[s]ince it is the actual issuance of bonds which fixes liability against the taxpayers the debt limitation requirement in [§104.00(d)] does not come into play until the issue of bonds is imminent” (seeRigaud v. Bd. of Educ. of Central School Dist. No. 2 of Town of Ramapo, Rockland County, 207 Misc 742 [Sup. Ct. Rockland County, 1955][“subdivision d of section 104.00 of the Local Finance Law provides that the date controlling the validity of the bond issue involved here is the date when the bonds are issued and not the date of the school district meeting”]; Matter of Platt, 11 Ed Dept Rep 113, Decision No. 8,371; Matter of Iocovozzi, 1 id. 469, Decision No. 6,751).  While petitioner urges that the Hill court’s analysis of §104.00(d), which does not apply to city school districts, is irrelevant to this case, I note that the court’s analysis of the term “issue” is generally applicable to the other portions of this section of the Local Finance Law.

As noted above, petitioner has the burden of establishing the facts upon which he seeks relief.  Based on the record before me and the precedent described above, I cannot conclude that respondent’s action was arbitrary, capricious or contrary to law.  Nevertheless, although I am constrained to dismiss petitioner’s claim for the reasons described above, I am mindful of the concerns raised in this appeal that the method used by respondent to calculate the district’s debt limit may, under certain circumstances, lead to delays, changes in scope or even abandonment of a project.  I note that while the Hill court acknowledged that “[i]t is a matter of common knowledge that there may be and frequently is a considerable lag in time between the date when the electors of a district vote upon a proposition to raise money for building a new schoolhouse and the date when a bond issue may be ready for sale,” the court also concluded that “[if] at the time it is proposed to issue the bonds, the debt limitation is still a bar the project must be abandoned, or else a two-thirds vote of the electors must be obtained  ....”  That is a risk inherent in the principle of law followed by the Hill court, the past decisions of the Commissioner and the opinion of the State Comptroller cited above.  While a simple majority of the voters was required for approval of the bond issue challenged by petitioner, if the debt limit is reached, it is possible that respondent could be required to call another vote to obtain approval by at least 60 percent of the voters prior to the issuance of additional bonds.

Petitioner also alleges that respondent violated SEQRA by (1) failing to conduct adequate “public outreach” prior to adopting the negative declaration resolution on October 20, 2010, and (2) improperly “segmenting” the April 2010 elementary school closing from its SEQRA review of the 2010 project.  Article 8 of the Environmental Conservation Law does not authorize the Department of Environmental Conservation or any other administrative agency to review SEQRA determinations.  The sole mechanism for challenging a SEQRA decision is an Article 78 proceeding under the Civil Practice Law and Rules brought in State Supreme Court (Appeal of Groarke and Meindl, 48 Ed Dept Rep 427, Decision No. 15,904; Appeal of Mullen, 45 id. 492, Decision No. 15,390).  Accordingly, these claims must be dismissed for lack of jurisdiction.

Finally, I find no merit to petitioner’s claim that respondent was required to submit its designation of the site for the consolidated high school under the 2010 project to the city planning commission.  Generally, as a small city school district governed by Article 51 of the Education Law, respondent has the authority under Education Law §§2511 and 2512 to acquire real property without a separate vote by the residents of the district.  Sections 2511 and 2512 of the Education Law authorize the board of education of a city school district of a city with less than 125,000 inhabitants to purchase real property, whenever in the judgment of the board such acquisition is necessary for an educational purpose authorized by law.  As a prerequisite to the exercise of that authority, the board is required to submit the matter of the site proposed to be purchased to the city planning board for its approval (Education Law §2512[6]) and also submit plans and specifications to the State Education Department for approval (Education Law §2512[4]).

Respondent contends that, while it has consulted with city representatives concerning the location of the consolidated high school, it was not required to do so as such action does not constitute a “designation” under Education Law §2512(6).  Specifically, respondent explains that the location at which the consolidated high school will be sited is “already in use as a school and thus has already been so designated.”  As respondent points out, it has long been settled that “the requirement for submission of a new site to a city planning commission required by [§2512(6)] must be limited exclusively to the initial designation of a new location for any school district” (City of Glens Falls v. Board of Educ. of Glens Falls City School Dist., 88 AD2d 233 [“Glens Falls”]).  The court in Glens Falls noted that in “a formal opinion, counsel to the State Education Department has held that the term ‘designation of a site’ is a technical term referring to the acquisition of real property and does not encompass subsequent determinations by a school board regarding the specific use of a site” (City of Glens Falls v. Board of Educ. of Glens Falls City School Dist., 88 AD2d 233; see Formal Opinion of Counsel No. 129, 3 Ed Dept Rep 262).  In a footnote to his memorandum of law, petitioner acknowledges this portion of the Glens Falls decision, and states that he “will not pursue” this argument.  However, petitioner notes that the Glens Falls decision “also stands for the proposition that the District must involve the public ‘as early as possible’ in the proposed action – not starting on the day it approve[d]” the 2010 project.  I note that the statement of the Glens Falls court cited by petitioner relates to actions a lead agency must take pursuant to SEQRA where it determines that that a proposed action may have a significant impact on the environment.  As explained above, in this case, respondent issued a negative declaration pursuant to SEQRA and I have no jurisdiction to review such action in this appeal.

THE APPEAL IS DISMISSED.

END OF FILE.

[1]A SEQRA Type I action is one that is “likely to have a significant adverse impact on the environment and may require an EIS [environmental impact statement]” (6 NYCRR §617.4[a][1]).

[2] Pursuant to SEQRA, a negative declaration is “a written determination by a lead agency that the implementation of the action as proposed will not result in any significant adverse environmental impacts” (6 NYCRR §617.2[y]).

[3] Section 104.00(c) requires that propositions to issue debt in excess of a district’s debt limit must inform voters that “the obligations to be issued may be issued in excess of the constitutional debt limitation of the school district.”  The record indicates that the proposition before the district’s voters on December 16, 2010 did not contain such language.