Can an Arkansas school district donate land to a nonprofit for affordable teacher housing?
Plain-English summary
Bentonville School District wanted to donate roughly 9 acres of land adjacent to its high school to Excellerate Foundation (a 501(c)(3) nonprofit). Excellerate would develop the land into affordable housing, including units designated for school district employees, plus a small community center offering classes to citizens and students. The motivation: Bentonville's high housing costs were hampering teacher recruitment. Representative Mindy McAlindon asked the AG whether this proposal complied with Arkansas law. The AG: yes, likely.
The four statutory conditions for school-district property donation (A.C.A. § 6-21-108).
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Not needed for district needs. The school board must determine the property is not required for present or future district needs. Bentonville had not identified any specific use for the property in its 10-year facilities plan; the AG read that as supporting the not-needed finding.
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Beneficial educational service. The board must find the donation serves a beneficial educational service for district citizens. The proposed community center would provide classes to citizens and students. The AG read this as likely meeting the standard, provided the school board makes a formal finding.
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Qualifying recipient. The recipient must be a publicly supported higher-education institution, technical institute, community college, not-for-profit organization, county, city, incorporated town, or entity thereof. Excellerate Foundation, as a 501(c)(3), qualifies.
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Limited statutory purpose. The donation must fulfill one of three enumerated purposes: (a) preservation, improvement, upgrade, rehabilitation, or enlargement of the property; (b) providing the recipient with property for classes (only for the higher-education recipients); or (c) community programs and beneficial educational services, social enrichment programs, or after-school programs. The Bentonville proposal could satisfy both (a) (development of housing and community center) and (c) (community center programming).
The "improvement" question. The AG looked up the term "improve" in Black's Law Dictionary and Garner's Dictionary of Legal Usage. Both treat "improve" as developing land, including building structures on it. So building affordable housing and a community center on previously undeveloped land qualifies as improvement under § 6-21-108(b)(1)(A).
The constitutional layer (public-purpose doctrine). Ark. Const. art. 14, §§ 1 and 2 require the state to maintain "a general, suitable and efficient system of free public schools" and forbid using public school money or property "for any other purpose." The Arkansas Supreme Court in Chandler v. Board of Trustees of Teacher Retirement System, 236 Ark. 256, 365 S.W.2d 447 (1963), said the state cannot, under due process (Ark. Const. art. 2, § 8), appropriate public funds to a private purpose.
For school district donations, the constitutional rule requires that the donation benefit the district's students, not just citizens generally. The Bentonville proposal satisfied this: the community center classes would serve students, AND the affordable housing component supports teacher recruitment, which directly benefits students. The AG's reading: a teacher-recruitment-focused affordable housing project for a school district has a sufficient educational nexus to survive public-purpose scrutiny.
Caveat: AG opinions are not factfinding. The AG repeatedly noted that the conclusion depends on the facts McAlindon provided. If the actual proposal differs (e.g., the housing is open to anyone with no district employee preference, or the community center is purely commercial), the analysis could change.
What this means for you
School boards considering similar projects
The Bentonville model gives a workable template:
- Pass a formal board resolution making findings on each statutory element. Don't rely on implication.
- Document the property is not needed in the district's facilities plan.
- Identify a qualifying nonprofit recipient with the operational capacity to develop the project.
- Build in a community-education or student-services component that strengthens the educational nexus.
- If the project serves teacher recruitment, document the recruitment problem and how affordable housing addresses it.
The constitutional public-purpose layer requires that students benefit, not just the broader community. Affordable housing alone (open to anyone, no teacher preference) is more vulnerable to challenge than a project with explicit teacher-recruitment design.
School district administrators
Run a checklist before recommending a donation to the board:
- Is the property currently in or planned for the district's facilities plan?
- Is the recipient confirmed as a nonprofit (501(c)(3) designation, state nonprofit registration)?
- Does the proposal include educational programming or services that benefit students?
- Have you obtained legal review? AG opinions are persuasive but each fact pattern is different.
Teacher recruitment officers
Affordable housing for educators is an emerging tool for districts in high-cost markets. This opinion confirms that Arkansas school districts can structure land donations to support such projects, when the programmatic design clearly ties the housing to district employee recruitment.
Affordable housing developers
If you partner with a school district, structure the partnership to meet the four statutory conditions and the constitutional public-purpose test. Get ahead of the analysis by:
- Documenting your nonprofit status.
- Drafting a program agreement that designates a clear share of units for school district employees.
- Including community education programming.
- Keeping student-benefit language explicit in your project documents.
Municipal planners
District-led housing projects can complement city affordable-housing efforts. Coordinate on zoning, infrastructure, and density planning so the project fits the surrounding development pattern. Districts may need municipal cooperation on utility extensions or zoning approvals.
State legislators
The opinion confirms that the existing § 6-21-108 framework supports innovative district responses to teacher-recruitment challenges. If the legislature wants to encourage more such projects, statutory clarification (e.g., explicit authorization for "teacher housing" donations) could reduce uncertainty. The AG's opinion is favorable but each future project would need its own analysis.
Common questions
Can the school district sell the land instead of donating?
Yes, sale is a separate authority under different statutes. The donation framework in § 6-21-108 is specific to giving the property without consideration; sales follow other rules. A sale at fair market value to a nonprofit could fund district operations, while a donation supports the project's affordability.
What if Excellerate later sells the property to a for-profit developer?
The AG opinion does not address subsequent transfers. The donation framework presumes the recipient will fulfill the stated purpose. If Excellerate transferred the property contrary to the donation's purpose, the district could potentially have remedies (breach of donation conditions, reverter clauses) depending on how the donation deed was drafted. Build protective clauses into the donation deed.
Is "affordable housing" defined under Arkansas law for these purposes?
Section 6-21-108 does not define "affordable housing." The opinion does not specify income thresholds. Practically, the district's program agreement should define eligibility criteria (income limits, district employment preference, etc.) clearly.
Does the donation require state approval?
No state-level approval is required if the school board complies with § 6-21-108. The board's findings are the controlling administrative action. State agencies do not pre-approve.
What if the property has been promised to a future school project?
Then it would not satisfy the "not required for present or future district needs" condition. The board would need to reassess whether the future project is still planned and whether it requires this specific parcel.
Can other types of school real property (older buildings, vacant lots) be donated similarly?
Yes, the same framework applies to any school-district real property. The four statutory conditions plus the constitutional public-purpose test control. Vacant lots adjacent to schools are a common candidate.
Background and statutory framework
A.C.A. § 6-21-108 authorizes Arkansas school districts to donate real property under specified conditions. The four statutory conditions (board finding of not-needed, board finding of beneficial educational service, qualifying recipient, qualifying purpose) are mandatory. The qualifying purposes in § 6-21-108(b)(1)(A) include preservation, improvement, upgrade, rehabilitation, or enlargement of the property by the donee.
The "improvement" interpretation draws from Garner's Dictionary of Legal Usage 434 (3d ed. 2011) ("to develop, as land") and Black's Law Dictionary 1049 (11th ed. 2019) ("[l]and that has been developed"). The AG used these to confirm that building structures on previously undeveloped land qualifies as improvement.
The constitutional layer comes from Ark. Const. art. 14, § 1 (state's duty to maintain free public schools), § 2 (school money/property cannot be used for non-school purposes), and art. 2, § 8 (due process). The Arkansas Supreme Court in Chandler v. Board of Trustees of Teacher Retirement System, 236 Ark. 256, 365 S.W.2d 447 (1963), said that "no principle of constitutional law is more fundamental or more firmly established" than the rule that the state cannot appropriate public funds to a private purpose. (Chandler is Arkansas Supreme Court; Ark. + S.W.2d.)
The AG flagged prior opinions on the public-purpose application to school district donations: Ops. 2017-105, 2015-105, 2013-116, 2012-060.
Citations
- A.C.A. § 6-21-108 (school district authority to donate real property)
- A.C.A. § 6-21-108(b)(1) (four statutory conditions)
- A.C.A. § 6-21-108(b)(1)(A) (qualifying purposes)
- Ark. Const. art. 2, § 8 (due process)
- Ark. Const. art. 14, § 1 (free public schools system)
- Ark. Const. art. 14, § 2 (school money/property limitation)
- Chandler v. Bd. of Trs. of Teacher Ret. Sys., 236 Ark. 256, 258, 365 S.W.2d 447, 448 (1963)
- Garner's Dictionary of Legal Usage 434 (3d ed. 2011)
- Black's Law Dictionary 1049 (11th ed. 2019)
- Ark. Att'y Gen. Ops. 2017-105, 2015-105, 2013-116, 2012-060
Source
Original opinion text
Opinion No. 2023-065
September 5, 2023
The Honorable Mindy McAlindon
State Representative
Post Office Box 324
Centerton, Arkansas 72719
Dear Representative McAlindon:
I am writing in response to your request for an opinion regarding a matter in your district.
You state that Bentonville School District is considering a proposal from Excellerate
Foundation (Excellerate), a 501(c)(3) nonprofit, in which the district would donate
approximately nine acres of its real property to Excellerate. Excellerate would then develop
the property into affordable housing, some of which would be designated for school district
employees. The development would also include a small community center that would
"provide classes to both citizens and students of the school district." You explain that this
proposal is needed because Bentonville's high housing costs have hampered the district's
efforts to recruit teachers. You also note that the district does not have any specific plans
or use for the property to be donated.
Against this background, you ask the following questions, some of which I have
paraphrased:
1. Under Arkansas law, can Bentonville School District donate nine acres of real
property adjacent to the high school to a not-for-profit corporation for the
development of affordable housing available for school employees and others in
the community?
Brief answer: Yes, based on the information you have provided, I believe that the
proposed plan would likely survive constitutional and statutory
scrutiny.
2. Pursuant to A.C.A. § 6-21-108, would Bentonville School District's donation of
real property to a not-for-profit corporation for development of affordable housing
for district employees and others "serve a beneficial educational service for the
citizens of the school district"?
Brief answer: Yes, based on the information you have provided, I believe the
donation would likely "serve a beneficial educational service for the
citizens of the school district."
3. Pursuant to A.C.A. § 6-21-108, would the development of affordable housing for
district employees and citizens in the community be considered improving or
upgrading the donated land?
Brief answer: Yes, based on the information you have provided, I believe the
proposed development would likely be considered an improvement
or upgrade to the donated land.
DISCUSSION
As an initial caveat, I must point out that the Attorney General's Office is not a factfinder
when issuing opinions. Therefore, this opinion is based solely on the information you have
provided in your request for an opinion.
Question 1: Under Arkansas law, can Bentonville School District donate nine acres of
real property adjacent to the high school to a not-for-profit corporation for the
development of affordable housing available for school employees and others in the
community?
Both the Arkansas Code and the Arkansas Constitution restrict the circumstances under
which a school district may donate real property. Any potential donation must take into
account both the statutory and constitutional requirements.
1. Statutory requirements. The statute you have asked about, A.C.A. § 6-21-108, allows
a school district to donate real property only if the following four conditions are met:
- The school district board of directors must determine that the real property "is not
required for the present or future needs of the school district";
- The school district board of directors must determine that the donation would
"serve a beneficial educational service for the citizens of the school district";
- The recipient of the property must be a "publicly supported institution of higher
education, a technical institute, a community college, a not-for-profit organization,
a county, a city, an incorporated town, or any entity thereof"; and
- The donation must fulfill one of the limited purposes enumerated in the statute.
Your request states that the district has not identified any specific use for the property on
its ten-year facilities plan and that Excellerate is a not-for-profit organization. This suggests
that the first and third statutory requirements have been met. And because the proposal
includes plans for a community center that will "provide classes to both citizens and
students of the school district," it appears that the second requirement may be met as well,
provided that the school board finds that these classes "serve a beneficial educational
service." The only remaining statutory question, then, is whether the land donation fulfills
one of the following limited purposes:
- Having the real property preserved, improved, upgraded, rehabilitated, or enlarged
by the donee;
- Providing the publicly supported institution of higher education, technical institute,
or community college with the donated property in which to hold classes; or
- Providing community programs and beneficial educational services, social
enrichment programs, or after-school programs.
The donation need only be for one of these three purposes, but the information you have
provided suggests that the proposed donation could fulfill both the first and third purpose.
The development of housing and a community center on the donated land would be
considered an improvement to the property. And the community center classes would
likely qualify as community programs, beneficial educational services, social enrichment
programs, or after-school programs, depending on their content.
2. Constitutional requirements. The Arkansas Constitution requires the state to "maintain
a general, suitable and efficient system of free public schools," and it prohibits "money or
property belonging to the public school fund, or to this State, for the benefit of schools or
universities" from being used for any other purpose. Furthermore, the public-purpose
doctrine, which the Arkansas Supreme Court has rooted in due process, requires that the
appropriation and expenditure of public funds be for a public purpose. Taken together,
these constitutional provisions require that any donation of a school district's real property
benefits the district's students, not just its citizens. The information you have provided
suggests that the proposed donation and development of the property would meet this
requirement. Not only would students be able to attend classes at the community center,
but the development of affordable housing could allow the school district to recruit quality
teachers who might otherwise be unable to accept employment with the district.
3. Conclusion. Because the plan you have described fulfills the statutory and constitutional
conditions necessary for a school district to donate real property, it is my opinion that
Bentonville School District's proposed land donation to Excellerate Foundation would be
lawful.
Question 2: Pursuant to A.C.A. § 6-21-108, would Bentonville School District's donation
of real property to a not-for-profit corporation for development of affordable housing
for district employees and others "serve a beneficial educational service for the citizens
of the school district"?
Yes, as explained in my response to your first question, the facts you have provided suggest
that the land donation would "serve a beneficial educational service for the citizens of the
school district."
Question 3: Pursuant to A.C.A. § 6-21-108, would the development of affordable
housing for district employees and citizens in the community be considered improving
or upgrading the donated land?
Yes, as explained in my response to your first question, building affordable housing and a
community center on the donated land would be considered "improving" the property.
Senior Assistant Attorney General Kelly Summerside prepared this opinion, which I
hereby approve.
Sincerely,
TIM GRIFFIN
Attorney General