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Decision No. 13,053

Appeal of RICHARD A. HOLLISTER from action of the Board of Education of the Potsdam Central School District relating to a lease of real property.

Decision No. 13,053

(November 24, 1993)

Cappello & Linden, Esqs., attorneys for respondent, Roger B. Linden, Esq., of counsel

SOBOL, Commissioner.--Petitioner challenges a lease entered into by respondent Board of Education of the Potsdam Central School District. The appeal must be dismissed.

In February 1991, Potsdam Day Care Center, Inc., a not-for-profit corporation, approached respondent concerning the construction of a day care center on one unused acre of respondent's sixty-six acre campus. The proposal required that respondent lease the acre of land to the day care center pursuant to a ten year-lease with one ten-year option to renew upon the consent of the Commissioner of Education. In exchange, the day care center agreed to build and operate a new day care center facility upon the land. Upon the expiration of the lease term, the day care facility would become respondent's property. The total project cost of approximately $600,000.00 is covered by grants and loans from the federal, state and local government, as well as contributions by individuals and civic groups. Respondent board gave final approval to the project on April 27, 1993, and the lease was signed on May 12, 1993. On July 23, 1993, the parties involved in the project, including respondent, the Potsdam Day Care Center Inc., and the Village of Potsdam, executed an addendum to the lease agreement in which the day care center agreed to pay respondent $500 for the fair market rental of the property. Construction was begun by Danko Construction Company with an anticipated occupancy date of October 1993. This appeal ensued. Petitioner's request for a stay pending a determination on the merits was denied on July 23, 1993.

Petitioner alleges that the lease was improper because respondent did not adopt a resolution declaring the land unneeded as required by Education Law '403-a. Petitioner also asserts that the land is needed and that given the length of time of the lease, the consideration to be received by respondent is grossly inadequate. Petitioner requests an order that construction cease and that a public hearing and referendum be held since petitioner alleges that there was inadequate public input on this matter.

Respondent contends that the petition should be dismissed because petitioner failed to join the Potsdam Day Care Center Inc. and Danko Construction Company as necessary parties. Respondent further claims that the lease transaction was in all respects proper and that respondent will receive considerable benefit from the lease since the structure to be built upon its land will become property of respondent at the end of the lease term.

I will first address the procedural issue raised by respondent. Respondent contends that the appeal must be dismissed since petitioner has failed to join two necessary parties to this proceeding, the Potsdam Day Care Center Inc. and Danko Construction Company. Petitioner is required to name any individual as a party whose rights would be adversely affected by a determination in favor of the petitioner (Appeal of Chesbrough, 32 Ed Dept Rep 647; Application of a Child with a Handicapping Condition, 31 id. 212; Appeal of Boeddener, 28 id. 578). In this case, a decision on the merits would adversely affect both the day care center and the construction company involved in this project. Therefore, the appeal must be dismissed for failure to join a necessary party (Appeal of Nordin, 32 Ed Dept Rep 17).

The 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. The statute provides in pertinent part:

The board of education or trustees of a school district are hereby authorized to adopt a resolution providing that specific real property of such district is not currently needed for school district purposes and that the leasing of such real property is in the best interest of the school district. The terms of such lease shall be subject to the following:

(a) The rental payment shall not be less than the fair market rental value as determined by the board of education.

(b) The term of the lease shall not exceed ten years....

2. Upon the consent of the commissioner, renewal of a lease may be made for a period of up to ten years.

In this case, respondent adopted a resolution as required under the statute, met the statutory requirements with regard to the lease term, received fair market rental value for the property and considered the project in the best interests of the school district. Although petitioner contends that respondent did not adopt a resolution declaring the land unneeded, the record indicates that at its April 27, 1993 meeting, respondent's board declared that the land was unneeded for school district purposes and that the lease and the project were in the best interests of the school district. Respondent has submitted sworn statements from its superintendent and two board members discussing the project and its benefit to the district and has submitted two real estate appraisals indicating that the fair market rental value of the property is between $200 and $500 per year. Respondent contends that at the end of the lease term, it will possess a day care facility that will be of considerable value to the district, its employees and students. Thus, my review of the record indicates that the requirements of Education Law '403-a were met.

Petitioner also contends that respondent erred when it failed to bring this issue to the public for approval by referendum. Respondent claims to have sought public input at a number of meetings held during the time that it considered the project, and that there is no legal requirement that a referendum be held. Respondent is correct. While petitioner may not agree with respondent's actions, the record does not support his contention that respondent acted improperly. There is also no legal requirement which mandates that respondent submit the issue of construction of the day care center to a public vote.

Since the board of education has discretion to determine the use of school property, even when there may be some opposition to its decision by the community, and because there is no basis in the record for me to find that respondent has acted improperly, the appeal must be dismissed (Appeal of McAuliffe, et al., 25 Ed Dept Rep 153; Matter of Deresh, et al., 20 id. 589; Matter of Meyer, 20 id. 660).