Private Christian School - use of public property
Public trust owns a property that has been vacant for about a year. It has been advertised for rent but there has been almost no interest.
Private Christian school approaches trust, asking to rent the building to use to establish a new branch of the school. The school does not want to pay market value but is asking for a lower rate - the rate trust charged to an "incubator" business several years ago.
The trustees are interested in renting to the school at the reduced rate. They reason that it is essentially a business incubator in the community and it is better have the building occupied and productive, rather than sitting empty.
I would have no concern about this if the rent was market rate, but want to be sure there is no issue with public support for religious activities at the lower rental rate. I haven't yet carefully read this week's Supreme Court decision in Drummond v. Oklahoma Statewide Virtual Charter School Board, and expect that will have some bearing on this issue.
In the meantime, I thought I'd seek the well-informed thoughts of this great group.
Any thoughts will be greatly appreciated.
Kim Spady
Kim: I think your concerns are valid. You ought to become comfortable that the rental rate is not below market with the excess being susceptible to challenge as a gift in support of religious education. I think the trustees' business incubator rationale would not insulate the trust from that exposure. But sitting idle for a year at $x asking rental rate is some evidence that the rate is too high, i.e., not market rate. I would suggest stepping down the asking rental rate over time to gauge the market or engaging a real estate valuation/appraiser to advise the trust of the market rate, and then set the rental rate as advised. Ron
Ronald E. Stakem
Cheek & Falcone, PLLC
6301 Waterford Blvd., Suite 320
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From: Kimberlee Spady via Oama oama@lists.imla.org
Sent: Thursday, June 27, 2024 3:05 PM
To: OAMA oama@lists.imla.org
Subject: [Oama] Private Christian School - use of public property
Public trust owns a property that has been vacant for about a year. It has been advertised for rent but there has been almost no interest.
Private Christian school approaches trust, asking to rent the building to use to establish a new branch of the school. The school does not want to pay market value but is asking for a lower rate - the rate trust charged to an "incubator" business several years ago.
The trustees are interested in renting to the school at the reduced rate. They reason that it is essentially a business incubator in the community and it is better have the building occupied and productive, rather than sitting empty.
I would have no concern about this if the rent was market rate, but want to be sure there is no issue with public support for religious activities at the lower rental rate. I haven't yet carefully read this week's Supreme Court decision in Drummond v. Oklahoma Statewide Virtual Charter School Board, and expect that will have some bearing on this issue.
In the meantime, I thought I'd seek the well-informed thoughts of this great group.
Any thoughts will be greatly appreciated.
Kim Spady