Who has to approve a South Carolina school district leasing out its property, the district or the county?

Plain-English summary

Representative Cody Mitchell asked the South Carolina Attorney General a set of questions about a real situation in the Lancaster School District: a nonprofit signed a one-year lease for a district-owned building in 2005, the lease expired in 2006, and the nonprofit kept occupying the building rent-free for years afterward with no clear record of who, if anyone, approved it. Mitchell wanted to know which body has to sign off on such a lease and whether the arrangement is even legal.

The heart of the answer is that South Carolina has two overlapping statutes, and which one controls depends on how the property is used. Section 59-19-250 is the general rule: a school district's trustees may sell or lease school property, but only after getting the consent of the county board of education (or, where there is none, the county's governing body). Section 59-19-125 is a narrower rule added later: a district may lease, or even allow free use of, school property for "civic or public purposes" or for a school-age child care program, and when that provision applies the district does not need county board or county council approval. The South Carolina Supreme Court held in Whiteside v. Cherokee County School District No. One that the more specific § 59-19-125 operates as an exception to the general § 59-19-250, including for lease-purchase deals.

So the AG's practical answer to "who approves it?" is: figure out the purpose first. If the documents show the property will be used only for civic or public purposes, the district can act alone under § 59-19-125. If the property could be used for something else, the district must go through § 59-19-250 and get county board (or county council) consent. Because deciding what the parties actually intended is a factual question, the AG said it could give the framework but a court would have to apply it, and it declined to answer whether the nonprofit's current rent-free occupancy is legal.

What this means for you

The opinion is about three years old, so the statutes it cites are likely still current, but the AG expressly declined to rule on the specific Lancaster arrangement.

School districts and administrators

The opinion gives districts a decision rule. Before leasing or lending out school property, identify whether the use is strictly "civic or public" (which points to § 59-19-125 and district-only approval) or something broader (which points to § 59-19-250 and required county board consent). Either way, the AG stressed that approval must come from the governing body acting collectively in an open meeting, with the vote recorded in the minutes (§ 30-4-90(a)), and that even a free-use arrangement under § 59-19-125 should be documented with written terms (utilities, insurance, expiration). The opinion also notes § 59-19-250 requires the trustees to report the terms of a sale or lease to the county board within thirty days.

Nonprofits and community organizations using school buildings

If your group occupies or wants to occupy a school-owned building, this opinion shows the district must have approved the arrangement through the right channel, and that a lapsed or undocumented occupancy raises exactly the questions Mitchell asked. The AG did not say the Lancaster nonprofit's continued occupancy is legal or illegal; it said that is a factual question for a court.

On the "in-kind donation" question

The AG did not resolve whether rent-free occupancy is an in-kind donation. For federal tax deductions it pointed to 26 U.S.C. § 170 and deferred to the IRS. For state law it discussed, only by analogy, a 2005 opinion under the Research University Infrastructure Act (§ 11-51-10 et seq.) where below-market use of a building could count as an in-kind contribution, while noting that act does not apply to school districts.

Common questions

Q: Does a South Carolina school district always need county approval to lease its property?
A: No. Under § 59-19-125, if the property will be used only for "civic or public purposes" (or a qualifying school-age child care program), the district's trustees can approve the lease or free use without the county board of education or county council. County consent is required under the general statute, § 59-19-250, when § 59-19-125 does not apply.

Q: How do you know which statute applies?
A: It turns on the intended use of the property. If the transaction documents show the property will be used solely for civic or public purposes, § 59-19-125 controls. If the property could be used for other purposes, the district should proceed under § 59-19-250. The AG said this is a fact-specific determination for a court.

Q: Can a school district let a nonprofit use a building with no written lease?
A: The opinion says both statutes contemplate a public body approving the arrangement in an open, recorded meeting, and that even a free-use approval under § 59-19-125 will usually be documented in writing. Section 59-19-125 does not explicitly require a written document for free use, but the AG expected written terms in practice.

Q: Did the Attorney General say the ongoing rent-free occupancy is legal?
A: No. The AG said its opinions cannot find facts, so it could not decide whether the nonprofit is legally occupying the building without a written lease in effect.

Background and statutory framework

Two statutes govern how South Carolina school districts part with the use of their property. Section 59-19-250, on the books since before the turn of the twentieth century and last amended in 1973, lets trustees sell or lease school property but requires the consent of the county board of education (or the county's governing body where no board exists) and a report of the terms within thirty days. Section 59-19-125, adopted in 1989 and amended in 1992, lets a district lease or permit free use of school property for civic or public purposes or a school-age child care program, and allows long-term leases to corporations, community-service organizations, or other governmental entities for those uses.

In Whiteside v. Cherokee County School District No. One, the South Carolina Supreme Court reconciled the two: because § 59-19-125 addresses lease-purchasing in more specific terms, it operates as an exception to the general § 59-19-250 (applying the interpretive rule from Wilder v. South Carolina Hwy. Dept. that a specific statute qualifies a general one, and that later legislation supersedes earlier law on the same subject, per State v. Brown and Duke Power Co. v. South Carolina Pub. Ser. Comm'n). A 1993 AG opinion added that which statute governs a given lease-purchase depends on the facts of the transaction, especially whether the property will be used only for civic or public purposes. Layered on top is the open-meetings requirement of § 30-4-90(a), which obligates public bodies to record their decisions, including a lease approval, in written minutes.

Citations and references

Statutes:

• S.C. Code § 59-19-250 (sale or lease of school property, with county board consent)
• S.C. Code § 59-19-125 (leasing school property for civic or public purposes)
• S.C. Code § 30-4-90(a) (written minutes of public meetings)
• 26 U.S.C. § 170 (federal charitable-contribution deduction)
• S.C. Code § 11-51-10 et seq. (South Carolina Research University Infrastructure Act)
• S.C. Code § 11-51-70 (matching-cost certification)

Cases (all South Carolina courts):

• Whiteside v. Cherokee County School District No. One, 311 S.C. 335, 428 S.E.2d 886 (1993)
• Wilder v. South Carolina Hwy. Dept., 228 S.C. 448, 90 S.E.2d 635 (1955)
• State v. Brown, 289 S.C. 581, 347 S.E.2d 882 (1986)
• Duke Power Co. v. South Carolina Pub. Ser. Comm'n, 284 S.C. 81, 326 S.E.2d 395 (1985)

Source

• Landing page: https://www.scag.gov/opinions/opinions-archive/opinion-addressing-which-entities-are-authorized-to-approve-lease-purchase-agreements-for-the-use-of-school-property/
• Original PDF: https://www.scag.gov/media/fohbg2yk/03323585.pdf

Original opinion text

Alan Wilson
attorney General

June 27, 2023

The Honorable Cody T. Mitchell
Member
South Carolina House of Representatives

District No. 65
P.O. Drawer 1408

Hartsville, SC 29550
Dear Representative Mitchell:

Attorney General Alan Wilson has referred your letter to the Opinions section. The letter
states the following.
I am aware that our South Carolina Code, and other provisions, covers the sale and

lease of school district properties. Specifically, S.C. Code § 59-19-250 provides:
SECTION 59-19-250. Sale or lease of school property by trustees.

The school trustees of the several school districts may sell or lease
school property, real or personal, in their school district whenever
they deem it expedient to do so and apply the proceeds of any such
sale or lease to the school fund of the district. The consent of the

county board of education or, in those counties which do not have a
county board of education, the governing body of the county, shall
be first obtained by the trustees desiring to make any such sale or

lease. The board of trustees, within thirty days after making any such
sale or lease, shall send a report thereof to the county board of
education or, in those counties which do not have a county board of
education, the governing body of the county, setting forth the terms

and amount of the sale or lease.
It seems to me that the general provisions of this section have been modified, or
tempered to an extent, by the subsequent enactment of S.C. Code § 59-19-125:

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The Honorable Cody T. Mitchell
Page 2

June 27, 2023

SECTION 59-19-125.

Leasing school property for particular

purposes.

Each district board of trustees may lease any school property for a
rental which the board considers reasonable or permit the free use
of school property for:
(1) civic or public purposes; or
(2) the operation of a school-age child care program for children
aged five through fourteen years that operates before or after the
school day, or both, and during periods when school is not in
session, if the property is not needed for school purposes. Under this

section the board may
corporation,

enter into a long-term lease with a

community

service

organization,

or

other

governmental entity, if the corporation, organization, or other
governmental entity will use the property to be leased for civic or

public purposes or for a school-age child care program. However, if
the property subject to a long-term lease is being paid for from

money in the district's debt service fund, then all proceeds from the
long-term lease must be deposited in that school district's debt

service fund so long as the property has not been paid for.

With these statutory provisions, your prior opinions, and related materials as a
backdrop, I am told that the Lancaster School District entered into a written lease

agreement with a nonprofit entity with USC 501(c)(3) status back in 2005 for a
building the school district owned. It is my understanding that the lease expired in

2006. However, it seems that this nonprofit entity has remained in this building,
      paying zero rent even though they continue to occupy it. It is not known if any

county entity approved the original one-year lease, or the occupancy arrangement
that has taken place from 2006 to the present day, after the written lease purportedly
expired.

As a result of this situation described to me, these questions come to mind:
1.

What entity would have had to approve the 2006 written lease?

2.

What entity would have to approve the current occupancy arrangement for
this school district building?

The Honorable Cody T. Mitchell
Page 3

June 27, 2023

3.

Can a school district properly allow a nonprofit to occupy its building
without an approved, written lease in effect?

4.

Would the nonprofit entity occupying a school district-owned building

realize an in-kind donation as part of continuing to occupy this building?
Would the school district also realize this donation?

5.

Is this nonprofit legally occupying this building without any written lease
in effect? If not, how could it do so?
Law/Analysis

Section 59-19-250, which authorizes the sale or lease of school property by a school district
board of trustees, has been codified in the South Carolina Code of Laws since before the turn of
the twentieth century and has not been amended since 1973. See 1973 Act No. 322; see also Op.
S.C. Att’y Gen., 1997 WL 783360 (October 15, 1997) (examining legislative history with regard
to county board of education consent requirements when such board had been abolished). Section

59-19-125, which authorizes the leasing of school property for civic or public purposes, was
adopted in 1989 and most recently amended in 1992. See 1992 Act No. 315, § 1. In Whiteside v.

Cherokee County School District No. One, 311 S.C. 335, 428 S.E.2d 886 (1993), the South

Carolina Supreme Court concluded that the provisions of S.C. Code § 59-19-125 serve as an
exception to S.C. Code § 59-19-250.

We are persuaded that from its inception until the most recent amendment in 1973,
Section 59-19-250 contemplated the term “lease” in the conventional sense. In

1 989, during the evolution of lease-purchasing as a prevailing method of acquiring
school facilities, the legislature enacted Section 59-19-125. This court has held
that where there is one statute addressing an issue in general terms and another

statute dealing with the identical issue in a more specific and definite manner, the
more specific statute will be considered an exception to, or a qualifier of, the
general statute and given such effect. Wilder v. South Carolina Hwy. Dept., 228
S.C. 448, 90 S.E.2d 635 (1955). Moreover, later legislation supersedes earlier laws

addressing the identical issue. State v. Brown, 289 S.C. 581, 347 S.E.2d 882, 88485 (1986); Duke Power Co. v. South Carolina Pub. Ser. Comnfn, 284 S.C. 81, 326

S.E.2d 395 (1985).

We conclude that it is logical to believe the legislature was cognizant of lease
purchasing transactions in the enactment of the later statute, and hold that the lease
purchase arrangement under consideration is within the scope of Section 59—19—

The Honorable Cody T. Mitchell
Page 4
June 27, 2023

125. Therefore, this Court holds that Section 59-19-125 will be considered an
     exception to, or qualifier of, Section 59-19-250 and given such effect.

Whiteside, 3 1 1 S.C. at 340, 428 S.E.2d at 888-89. Following the Whiteside decision, our opinions
have advised that the determination of which statute applies to a given lease-purchase agreement
will depend on the facts of the transaction.

As to which of the two statutes applies in a given situation, the facts of each lease
purchase transaction will be crucial. ... If it is clear from the documents comprising
the transaction that the parties intend that the property to be leased will be used only
for “civic or public purposes,” then the school district could proceed under §59—
19-125 without the approval of the county board of education or county council, as
may be appropriate. If, however, the parties to the transaction contemplate that the

property to be leased could conceivably be used for a purpose other than a “civic
or public purpose,” then the school district should proceed under § 59-19-250, at
least as to approval of the ground lease.
Considerations other than the legal issues discussed above also enter into the
determination to proceed under a particular statute. The availability of financing,

the requirements and intentions of the parties involved in the transaction, and other
similar matters must be considered.
1993 S.C. Op. Att'y Gen. 148 (1993).

It must be noted that the resolution to your questions concerning leasing school district

property requires factual determinations which are beyond the scope of this Office's opinions. See
Op. S.C. Att'y Gen., 2006 WL 1207271 (April 4, 2006) (“Because this Office does not have the

authority of a court or other fact-finding body, we are not able to adjudicate or investigate factual
questions”). However, we will assume the facts provided in your letter in order to offer guidance
where it is possible.

Your first question asks, “What entity would have had to approve the 2006 written lease?”
As described in your letter, the school district entered into a lease in 2005 which expired in 2006.
Therefore, I understand your question to ask which body would have been authorized to enter into

a lease of the subject school districts property had a lease been sought at the time. As explained
above, if it can be demonstrated that the property would be used for civic or public purposes the
school district could proceed under S.C. Code § 59-19-125 without the approval of the county
board of education or county council. If there was no indication of such a purpose for the use of

the school district’s property, then the transaction would need to be approved as authorized under
section S.C. Code § 59-19-250.

In that case, the 2006 lease would need to be approved by the

county board of education or county council.

The Honorable Cody T. Mitchell
Page 5
June 27, 2023

Your section question asks, “What entity would have to approve the current occupancy

arrangement for this school district building?” The analysis described in response to your first
question is equally applicable here. Again, determining which entity was required to approve the

lease-purchase transaction depends on whether the school district property was used for civic or
public purposes.

Your third question asks, “Can a school district properly allow a nonprofit to occupy its
building without an approved, written lease in effect?”

Both statutes contemplate that a public

body would approve a lease agreement. For a school district, county board of education, or county
council to approve such a lease, its governing body would have to act collectively in an open
meeting and the vote would be recorded in its meeting minutes. See S.C. Code § 30-4-90(a) (“All

public bodies shall keep written minutes of all of their public meetings. Such minutes shall include
but need not be limited to: ... (3) The substance of all matters proposed, discussed or decided and,
at the request of any member, a record, by an individual member, of any votes taken.”). In addition

to meeting minutes reflecting an approval of a lease-purchase agreement, even in a scenario under
section 59-19-125 where the school district approves free use of school property, presumably a
document would establish terms by which the nonprofit would occupy an identified property, such

as who is responsible for utilities, insurance, and when the agreement expires. While section 5919-125 does not explicitly require a written document when a school district approves the free use

of school property, in many cases there will be written documentation outlining the parameters of
the occupancy and that the body of trustees voted to approved it.

Your fourth question asks, “Would the nonprofit entity occupying a school district-owned
building realize an in-kind donation as part of continuing to occupy this building? Would the
school district also realize this donation?” This question does not state under what law an in-kind
donation would be sought to be recognized.

Federal law allows deductions for charitable

contributions from income taxes. See 26 U.S.C. § 170. If this question is meant to address such a
deduction, this Office would defer to the Internal Revenue Service’s interpretation of the relevant

statutes and regulations it is charged to administer.1
Alternatively, if the question is meant to address a state statutory scheme, it is possible that

a lease of property for below market value would qualify as an in-kind donation.

This Office

previously opined on whether proposed real-estate contracts would qualify as an in-kind donation
under the South Carolina Research University Infrastructure Act, S.C. Code § 11-51-10 etseq. See

Op. S.C. Att’y Gen., 2005 WL 2652381 (September 26, 2005). Our opinion explained that section

1 As we stated in a prior opinion, “the question of the applicability of federal law to a particular situation is
a factual matter which is beyond the scope of an opinion of this Office.” Op, S.C, Att’y Gen., (May 8,
1989); see also Op. S.C. Att’y Gen., (March 6, 2008) (“consistent with the policy of this Office, we do not
interpret federal statutory law or regulations.”) In such matters, this Office defers to the federal agency
charged with the interpretation of the federal statute or regulation in question.

The Honorable Cody T. Mitchell
Page 6
June 27, 2023

11-51-70 required the Research Centers of Excellence Review Board to certify “to the state board
that at least fifty percent of the cost of each research infrastructure project is being provided by

private, federal, municipal, county, or other local government sources.” S.C. Code § 11-51-70.
The statute also granted the Review Board discretion to determine “this portion of the cost” while

specifically listing contributions “may be in the form of cash; cash equivalent; buildings including
sale-lease back; gifts in kind including, but not limited to, land, roads, water and sewer, and

maintenance of infrastructure; facilities and administration costs; equipment; or furnishings.” Id.
(emphasis added). The opinion considered a scenario in which Clemson University engaged in a
partnership with Greenwood Genetics Center (GCC) of Greenwood.

The facility has a market value of $2,600,000 and is located on 5 acres of land
valued at $250,000. Under its partnership with Clemson, GCC would retain
ownership of the land and the building, and the use of the facility would be shared
between Clemson and GCC. Clemson is requesting that the Board consider the
value of access to the GCC facility as a qualifying match. You have asked whether

shared access to the facility with the combined value of the land and the building
set at $2,850,000 would qualify as an in-kind contribution and, if so, what kind of
documentation would Clemson be required to provide to quantify the value of the
land and the facility?
Op. S.C. Att’y Gen., 2005 WL 2652381, at *4 (September 26, 2005). We noted that loaning
property had been recognized as an in-kind contribution and that the board was granted discretion
to determine whether the use of the facilities qualified under the statute.

[T]he ultimate determination of what would constitute “gifts in kind” is a matter
within the discretion of the Board. As noted previously, authorities have recognized
the permitted use or loan of property as an in kind contribution of cash. Also, the
statute specifically provides that the “the cost. . .may be in the form of. . .buildings.”
Consistent with such, in my opinion, access to and permitted use of a building
would qualify as a gift “in kind” for purposes of Section 1 1-15-70. Furthermore, as
recognized previously, the fifty percent of cost may be in the form of “...gifts in
kind including, but not limited to, land, roads, water and sewer, and maintenance

of infrastructure; facilities and administration costs; equipment; or furnishings.”
Again, with this large potential pool of “in kind” gifts a court could conclude that
access to a facility would qualify as an “in kind” gift.
Id.

This statute would be inapplicable to your question as the school district is not a research

university, but the analysis demonstrates how such a lease could be found to qualify as an in-kind

contribution.

We recommend determining under which statute the contribution would be

evaluated, examining its terms, and referring to the appropriate administering body for guidance.

The Honorable Cody T. Mitchell
Page 7
June 27, 2023

Your fifth question asks, “Is this nonprofit legally occupying this building without any
written lease in effect? If not, how could it do so. As explained above, our opinions cannot find

facts. As a result, we arc unable to provide a response to this question.

Conclusion

As discussed above, it is this Office’s opinion that determining whether a lease-purchase
agreement for school district property is authorized by either S.C. Code § 59-19-125 or S.C. Code

§ 59-19-250 is fact dependent, but the determination will generally turn on whether the property
will be used for a “civic or public purpose.” See 1993 S.C. Op. Att'y Gen. 148 (1993). The answers
to each of your questions arc provided in the analysis above.

Sincerely,

Matthew Houck
Assistant Attorney General

REVIEWED AND APPROVED BY:

Robert D. Cook
Solicitor General