REMINDER REGARDING APPROVAL REQUIREMENTS IN SCHOOL DISTRICT REAL ESTATE TRANSACTIONS
July 1, 2019
With the annual meeting of the electors approaching for common school districts and union high school districts, many are considering whether elector approval is required for certain real estate transactions. This article explores when certain real estate transactions require elector approval at an annual (or special) meeting and when the power to enter into certain real estate transactions rests with the school board.
In common school districts and union high school districts, the Wisconsin statutes divide governance of the school district between the board of education and the electors. The statutes delegate specific powers to the electors at the annual meeting. Powers not delegated to the electors by statute are reserved for school boards. In unified school districts, the school board has the powers of both the school board and the annual meeting in a common school district. Therefore, this article focuses on real estate transactions for common school districts and union high school districts.
Purchasing or Selling Real Estate
If a common school district or union high school district is purchasing real estate for school district purposes, elector approval is generally required, with some exceptions. Specifically, the statutes delegate to the electors the power to “[a]uthorize the school board to acquire, by purchase or condemnation under ch. 32, real estate and structures and facilities appurtenant to such real estate necessary for school district purposes.” Wis. Stat. § 120.10(5m). Importantly, elector approval of the specific purchase terms is not required. Additionally, there are some exceptions to the elector approval requirement for real estate purchases, such as when the school district is purchasing land from another governmental unit. Wis. Stat. § 120.13(3).
Unlike the elector approval requirement for purchasing real estate, elector approval is not required when a common school district or union high school district sells real estate “belonging to and not needed by the school district.” Wis. Stat. § 120.13(19m). Rather, this power rests with the school board. Notably, there are additional requirements to address if a school board intends to abandon real estate, such as reviewing the deed language.
A different provision applies to options to purchase real estate. An option to purchase is an agreement under which the buyer has the right to purchase real estate for a specified price during a predetermined period. Under the statutes, a school board has the power to “[s]olicit and obtain one or more options to purchase real property and, upon approval of the annual or special meeting, exercise such option.” Wis. Stat. § 120.13(20) (emphasis added). Thus, a school board may enter into an option to purchase real estate, but exercising the option to purchase requires authorization by the electors at an annual (or special) meeting.
Leasing Real Estate
If a common school district or union high school district will be leasing real estate for school district purposes, or will be leasing school district real estate no longer needed for school purposes to others (on more than a temporary basis), elector approval is generally required, subject to certain exceptions.
The statutes delegate to the electors the power to “[d]esignate sites for school district buildings and provide for the erection of suitable buildings or for the lease of suitable buildings for a period not exceeding 20 years with annual rentals fixed by the lease.” Wis. Stat. § 120.10(5). In addition, school boards have the power to “lease school sites, buildings, and equipment not needed for school purposes to any person for any lawful use at a reasonable rental if approved at an annual or special school district meeting.” Wis. Stat. § 120.13(25) (emphasis added). Elector approval of the specific lease terms is not required.
There are some exceptions to the elector approval requirement for leases. For instance, a school board has the power to:
Enter into agreements, including leases for a term not exceeding 50 years, with a school board, technical college district board, city, village, town, county or the state or any department or agency thereof for the purchase, operation and maintenance of land, buildings and equipment for educational purposes, including, without limitation because of enumeration, contracts for the construction or repair of school driveways, roadways and parking areas or for the operation of any school program authorized by law.
Wis. Stat. § 120.13(3).
However, under Wis. Stat. § 120.25(4), elector approval at the annual (or special) meeting is required for leases entered into by two or more school boards for a term exceeding five years.
Additionally, a school board may enter into a lease with a “licensed public or private nonsectarian child care center…for prekindergarten or kindergarten programs offered by the school district” without elector approval. Wis. Stat. § 120.13(36). Furthermore, a school board has the power to enter into a lease for a term of 20 years or less “for acquisition of cable television or data processing services and facilities for educational purposes.” Wis. Stat. § 120.13(22).
If a school district is considering a transaction involving real estate, it is advisable to determine early on in the process whether the transaction will require elector or school board approval. Doing so will allow the school district to address this requirement in negotiations and allow sufficient time to obtain the necessary approval.
For questions regarding this article, please contact the author, Attorney Jenna E. Rousseau (email: firstname.lastname@example.org; telephone: 844.833.0828), or your Strang, Patteson, Renning, Lewis & Lacy, s.c., attorney.