ARIZONA HOUSE OF REPRESENTATIVES

Fifty-seventh Legislature

First Regular Session

House: ED DPA 7-4-1-0

HB 2640: school districts; leases; termination; nonrenewal

Sponsor: Representative Gress, LD 4

Caucus & COW

Overview

Implements public hearing, public comment and timeframe requirements a school district governing board (governing board) must follow when proposing to terminate or refuse to renew a lease.

History

The Division of School Facilities (SFD) is required to annually publish a list of both vacant and partially used buildings that are owned by the state or school districts and that may be suitable for the operation of a school. This list is to be made available on SFD's website and to: 1) charter school applicants; 2) applicants applying to SFD for additional space; and 3) existing school districts and charter schools. A vacant building is a building that has been vacant and unused for at least two years. A partially used building has at least 4,500 square feet of contiguous, unused space.

A school district wishing to sell or lease a vacant or partially used building cannot: 1) prohibit a charter school or private school from negotiating to buy or lease the property in the same manner as other potential buyers or lessees; or 2) accept an offer for the sale or lease of a vacant or partially used building from a buyer or lessee that is less than an offer from a charter school or private school. More generally, the owner of a building on the vacant and partially used buildings list cannot withdraw the property from sale or lease solely because a charter school or private school is the highest bidder. However, statute does not require the owner of a building on the list to sell or lease the building or a portion of the building to a charter school or any other school or prospective buyer or tenant.

Once a lease for an existing tenant that is a public school or that provides services to public school students concludes, the lease may be terminated, renewed according to the terms of the existing agreement or renewed with a negotiated increase. If the building owner intends to negotiate an increase, the owner must provide a rationale for the proposed increase to the lessee (A.R.S. § 15-119).

Provisions

1. Stipulates a school district, as the building owner, may terminate or refuse to renew a lease for an existing tenant that is a public school, private school or that is providing services to public school students only if the governing board:

a) announces it is proposing to refuse to renew or terminate the lease in a public hearing;

b) provides an opportunity for public comment regarding the proposal for at least 90 days after the date of the announcement and before the governing board may vote on the proposal;

c) reviews and considers any submitted public comments before approving the proposal; and

d) approves the proposal in a public hearing before the date of the proposed termination or the date on which the lease is scheduled to expire. (Sec. 1)

2. Details that public comment may include written or emailed comments or oral comments during the required public hearings. (Sec. 1)

3. Contains a retroactivity clause of January 2, 2025. (Sec. 2)

4. Makes technical and conforming changes. (Sec. 1)

Amendments

Committee on Education

1. Grants a charter school that is leasing a building from a school district or that is the most recent lessee of a vacant building that is owned by a school district the right of first refusal to purchase the building if the school district decides to sell the building.

2. Provides that the owner of a building on the vacant and partially used buildings list may not withdraw the property from sale or lease solely because a charter school exercises its right of first refusal.

3. Exempts the proceeds from the sales of school property to other schools from statutory restrictions relating to the required disposition of proceeds from the sale or lease of school property.

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7. HB 2640

8. Initials CH Page 0 Caucus & COW

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