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Decision No. 14,374

Appeal of JANET M. GOLTZ from action of the Board of Education of the South Country Central School District with respect to a Tax Pledge Agreement.

Decision No. 14,374

(May 26, 2000)

Jeffrey L. Bragman, Esq., attorney for petitioner

Van Nostrand & Martin, attorneys for respondent South Country School District, David S. Desmond, of counsel

Kevin A. Seaman, Esq., attorney for the South Country Library

MILLS, Commissioner.--Petitioner challenges action by the Board of Education of the South Country Central School District ("respondent") authorizing its president to execute a "Tax Pledge Agreement". The appeal must be dismissed.

Petitioner is a resident of the South Country Central School District ("the district"). The district contracts annually with the South Country Library ("the library"), a free association library, for the provision of library services to district residents. In response to the heavy use of its facility, the library sought to expand.

On October 5, 1998, district voters approved a proposed capital project to expand the facilities and authorized the district to levy a tax, in an amount not to exceed $340,000 per year for a maximum period of twenty years, to pay for such project.

Thereafter, the library sought funding from the Suffolk County Industrial Development Agency ("SCIDA"). SCIDA apparently agreed to issue civic facility revenue bonds to finance the project only if it received assurance that the library would receive adequate funding to repay the bonds. To satisfy SCIDA’s requirement, the district entered into a "Tax Pledge Agreement" ("the agreement") with the library, the Town of Brookhaven and the United States Trust Company of New York, as trustee ("the trustee"). In essence, the agreement provides that the district will levy taxes in an amount to be determined by the library as necessary to pay the principal and interest on the bonds, not exceeding $355,000 per year. The agreement grants the trustee a security interest in these tax funds and requires the Town of Brookhaven to collect the taxes and pay them directly to the trustee for deposit in a "Tax Pledge Fund". The trustee is obligated to use these funds to pay the principal and interest on the bonds as they become due.

Petitioner challenges the agreement on a variety of statutory and constitutional grounds. She alleges, among other things, that it constitutes a loan of school district funds to a private entity in violation of Article VIII, Section 2 of the New York State Constitution; improperly fixes the amount of library taxes for the term of the revenue bond issue in violation of Education Law "259; and violates petitioner’s right to petition the district for a special meeting to ask district voters to consider the reduction or elimination of the tax levy for library purposes. Petitioner requests that I find the agreement null and void.

Respondent raises a number of procedural objections, contending that the library is a necessary party to this appeal; that I should not entertain petitioner’s constitutional claims; and that petitioner lacks standing to maintain the appeal. On the merits, respondent contends that the agreement is lawful and was executed to enable the library to obtain financing for a capital improvement that was duly approved by district voters.

In reply, petitioner contends that the library is not a necessary party to this proceeding, but nevertheless, attaches a copy of an amended petition adding the library as a respondent. Although petitioner did not obtain permission to file an amended petition, she served this pleading on the library on April 2, 2000. The library has submitted an answer alleging, among other things, that "275.3 of the Commissioner’s regulations does not authorize petitioner to serve an amended petition.

I need not address the merits of petitioner’s claims because I find that the appeal must be dismissed on procedural grounds. An individual or entity 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 Roberta, 38 Ed Dept Rep 690, Decision No. 14,119; Appeal of Ocwieja, 38 Ed Dept Rep 70, Decision No. 13,985). Petitioner challenges respondent’s authority to execute the agreement and requests that I find it to be "invalid and a nullity". At the very least, the library, the Town of Brookhaven and United States Trust Company of New York, each of whom is a party to the agreement, as well as SCIDA, which relied on it in issuing the bonds, would be adversely affected by a determination that it is void. Accordingly, each is a necessary party to this appeal. Petitioner’s failure to join these entities warrants dismissal of the appeal.

Moreover, petitioner’s attempt to join the library was ineffectual. Section 275.1 of the Commissioner’s regulations provides that, after an appeal has been commenced, no party shall be joined except by leave or direction of the Commissioner of Education. Petitioner did not obtain authorization to add the library as a respondent and, accordingly, its service of an amended petition on it was improper and did not result in the library’s joinder (Appeal of Giglia, et al., 27 Ed Dept Rep 453, Decision No. 12,007).

The appeal must also be dismissed to the extent that petitioner challenges the agreement on constitutional grounds. It is well settled that an appeal brought under Education Law "310 is not the proper forum to decide novel issues of constitutional law (Appeal of Student with a Disability, 37 Ed Dept Rep 173, Decision No. 13,833; Appeal of Weiss, 35 id. 519, Decision No. 13,618; Appeal of Meredith, 33 id. 530, Decision No. 13,138).

Finally, petitioner lacks standing to maintain this appeal to the extent that she alleges that the agreement improperly binds successor district boards or violates her right to petition the district to lower the levy for library taxes. Pursuant to Education Law "310, an individual may not maintain an appeal unless aggrieved in the sense that he or she has suffered personal damage or injury to his or her civil, personal or property rights. Only persons who are directly affected by the action being appealed have standing to bring an appeal (Appeal of Lucente, 39 Ed Dept Rep 244, Decision No. 14,227). Petitioner apparently relies on her taxpayer status to commence this appeal. The Commissioner has previously stated that a taxpayer, as such, is aggrieved by any action of the board of education that would tend to raise his or her taxes (Appeal of Lubell and Faraone, 4 Ed Dept Rep 71, Decision No. 7441). The record reflects that district voters duly authorized the library to undertake the capital project and the district to levy taxes in an amount not to exceed $340,000 per year to pay for it. Petitioner does not challenge the legality of this referendum, or allege that the district has levied taxes in excess of the amount authorized by district voters. Nor does petitioner allege that respondent has refused to place on the ballot a duly submitted proposition seeking to reduce or eliminate the levy of taxes for library purposes. Petitioner’s concern that district voters may be precluded in the future from petitioning the board for a reduction in the library tax is wholly speculative and premised on a state of facts that may never come to pass. The Commissioner will not render advisory opinions or decide issues that have not yet become justiciable (Appeal of WNI Sales, 38 Ed Dept Rep 822, Decision No. 14,152; Appeal of Jacobson, 37 Ed Dept Rep 75; Decision No. 13,808). In short, petitioner has failed to establish that the agreement has had any tax consequences for district residents.

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