Can a West Virginia county board of education lease an active school auditorium to a for-profit company so the company can capture historic tax credits to fund renovations, with the board taking partial ownership in the for-profit?

Plain-English summary

The Monongalia County Board of Education wanted to renovate the Morgantown High School auditorium using federal historic tax credits. The plan: the Board would still own the building, but it would create a for-profit management company and a non-profit foundation. The Board would lease the auditorium to the management company. The management company would sublease to the foundation. An outside investor would claim the historic tax credits and channel the funds back through the management company to pay for repairs. The Board would be a part owner of the management company so the structure held together.

The Attorney General said the Board cannot do any of that.

Boards of education are creatures of statute. They have only the powers that statutes expressly give them or that are necessarily implied to exercise an express power (Napier, 2001; City of Huntington v. Bacon, 1996). When a statute is ambiguous about whether the Board has a power, the answer is no (McCallister, 1992).

Two statutes touch lease authority. W. Va. Code § 18-5-7 says the Board may lease "any school property [it] is no longer needed for school purposes" or lease the property "for a public use to the State of West Virginia, or its political subdivisions." Neither applies here: the Board still wants to use the auditorium for school purposes, and the lessee is a private company, not the State or a political subdivision. The maxim expressio unius est exclusio alterius applies: when the Legislature spelled out which leases are permitted, it implicitly excluded the rest (Progressive Max, 2022; Dooley, 1917).

W. Va. Code § 18-5-13 gives the Board general authority to "control and manage" school property. But leasing an active school facility to a for-profit company so it can lease back to a non-profit is not a normal aspect of managing a school building. And the more specific statute (§ 18-5-7) controls over the more general one (Barber, 2018), so § 18-5-13 cannot be read to expand what § 18-5-7 limits.

Case law supports this. Herald (W. Va. 1909) struck down a school board's lease of school land for oil and gas, holding that a board "cannot lease [land] for money making, because the statute provides for the accomplishment of its object by taxation, not by negotiation in the business world." When the Legislature later granted that authority by statute, the Court upheld a similar arrangement (Garrett, 1930). The pattern: school-board power follows statute exactly, no more.

Two earlier AG opinions (2014 and 2018) reached the same answer for analogous county-commission-and-private-company schemes. The 2014 opinion held a county commission could not lease the third floor of a county building to a private individual as a residence. The 2018 opinion held a county commission could not lease county property to a private company for for-profit business activities, even as a co-lessee. Notably, those opinions involved county commissions, which have broader powers than boards of education (W. Va. Code § 7-1-3hh expressly allows county-commission leases for a "public purpose"). If county commissions could not do it, boards of education certainly cannot.

The opinion separately concluded that the Board cannot create or co-own a for-profit entity. Napier (2001) addressed a Lincoln County Board of Education program ("West Virginia Dreams") that the Board operated through a non-profit. The Court held the Board lacked "the power under West Virginia law to form such an entity in affiliation with another organization." That same logic blocks Monongalia County's plan to be a co-owner of a for-profit.

The opinion also flagged a separate problem even if the Board could form the entity: Napier signaled that when the Board exerts substantial control over a related entity, courts may treat the entity as part of the Board, which would defeat the entire historic-tax-credit theory. So even an arrangement that might survive the authority question would likely fail the tax-credit-eligibility question.

Bottom line: the historic-tax-credit objective may be admirable, but the structure violates West Virginia statutory and case-law limits on board-of-education powers.

What this means for you

If you are a school board member or superintendent eyeing historic tax credits

This route is closed in West Virginia. A board of education cannot lease an active school facility to a for-profit company. Even with co-ownership, even with a non-profit in the structure, the AG opinion says the authority does not exist. Herald (1909) is the historical foundation; the 2014 and 2018 AG opinions are the modern analogues.

If a renovation project is a financial necessity, focus on funding mechanisms within board authority: bonds with voter approval, the State School Building Authority, capital appropriations from the Legislature, conventional grants and donations, or partnership with the State or a political subdivision (which is permitted under § 18-5-7(f)).

If the historic-tax-credit structure is essential, consider whether a different entity should hold title. A county commission has broader lease authority under § 7-1-3hh and may be able to engage in similar structures for "public purpose" leases. But the analysis there is fact-specific, and the 2018 AG opinion narrowed county-commission authority too. Get specialty counsel before assuming a county commission can do what the school board cannot.

If you are a county prosecuting attorney advising the board

The opinion is unambiguous. Document the legal advice clearly, because boards under financial pressure will be tempted to revisit creative structures. Cite Herald (1909) for the historical baseline, Napier (2001) for the implied-authority limits, and the 2014 and 2018 AG opinions as the modern roadmap.

If the Board is determined to pursue the project, the path is legislative, not administrative. Encourage a statutory amendment that would give boards of education explicit lease authority for historic-renovation purposes, with appropriate safeguards. Until that happens, the answer remains no.

If you are a developer or tax-credit investor pitching this structure to a board

The structure does not work in West Virginia. The board cannot enter the lease, cannot own the management company, and Napier suggests that even if it could, the level of control would likely defeat the tax-credit eligibility. Take this off the table; you are spending board attention on a deal that will not close.

If you want to do similar work in West Virginia, look for projects where the title-holder is a county commission, a municipality, or a private nonprofit with separate ownership of the historic asset. Federal historic tax credits work in many structures; the constraint here is West Virginia school-board authority, not the federal credit itself.

If you are a community member supporting school renovation

The AG opinion does not say the renovation is wrong. It says the structure is wrong. Adequate funding for school capital projects is a legislative and budgetary problem. School Building Authority funding, bond elections, and state appropriations are the available routes.

If you are an attorney representing parties to a similar transaction in another state

The West Virginia answer is jurisdiction-specific. Many states give school boards broader corporate-organization and lease powers. The Herald / Napier line is unusually strict. Run the analysis in your jurisdiction independently.

Common questions

Q: Why can't the Board just lease the auditorium if it owns it?
A: Because boards of education have only the powers the Legislature gave them, and the Legislature limited lease authority in § 18-5-7 to property "no longer needed for school purposes" or leases to the State or its political subdivisions. The auditorium is still in use, and the lessee is a private company. Neither permitted scenario applies.

Q: What about § 18-5-13's "control and manage" power?
A: That is the general power. § 18-5-7 is the specific lease statute. The specific controls over the general (Barber, 2018). And leasing an active school to a for-profit is not a normal aspect of "control and manage" anyway.

Q: Can the Board co-own a for-profit entity?
A: No. Napier (2001) held that a board of education does not have authority to form an entity in affiliation with another organization. There is no statute granting that authority.

Q: But the historic tax credits would help fund essential renovations. Doesn't that count for something?
A: The opinion acknowledges the goal is admirable but says the legal answer does not change. School boards are creatures of statute and cannot improvise around the statute, even for good reasons.

Q: What can the Board do if it really needs the renovation funded?
A: Voter-approved bonds, State School Building Authority funding, legislative appropriations, conventional grants, or a partnership in which a different entity (like a county commission, a non-profit, or a private donor) holds title. The Board cannot be the structuring entity for a for-profit historic-credit deal.

Q: Could a different West Virginia public entity do this deal?
A: County commissions have somewhat broader authority under § 7-1-3hh, but the 2018 AG opinion narrowed even that authority. The path is fact-specific and not guaranteed; it requires careful structuring with counsel.

Q: Why does the Board's "control" defeat the tax credits even if the rest worked?
A: Napier (2001) held that when a board of education exerts substantial control over an affiliated entity, the courts may treat the entity as part of the board for legal purposes. If the courts treat the management company as part of the Board, the Board is effectively claiming the credits, which the tax law generally does not permit for governmental entities (the credits are designed for taxable entities).

Q: Does this opinion change the law, or just apply it?
A: It applies existing law. Herald (1909), Napier (2001), and the AG's 2014 and 2018 opinions already established that boards have narrow lease and entity-formation powers. The 2023 opinion confirms the doctrine in the context of historic tax credits.

Background and statutory framework

West Virginia boards of education are statutory entities under Chapter 18 of the Code. The foundational principle is that a board's powers come from statute and cannot be expanded by improvisation. Napier (2001) and Bacon (1996) restate the Shinn (1894) rule: a board "can exercise no power not expressly conferred or fairly arising from necessary implication, and in no other mode than that prescribed or authorized by the statute."

Implied authority is narrowly construed. It must "fairly arise from necessary implications" in the exercise of express powers (Bacon, 1996; Consol Energy, 2014). When the statute is ambiguous, the answer is no (McCallister, 1992).

Two statutes are central. W. Va. Code § 18-5-7 is the specific lease statute. Its subsections (e) and (f) define the only permitted leases: property no longer needed for school purposes, or property leased to the State or political subdivisions. Expressio unius est exclusio alterius applies (Progressive Max, 2022).

W. Va. Code § 18-5-13 is the general powers statute. It authorizes the Board to "control and manage" school property. The opinion reads this language narrowly because the specific statute controls over the general (Barber, 2018) and because "control and manage" does not naturally include leasing to a for-profit for a tax-credit pass-through.

Case law follows the statutory text. Herald (1909) struck down a school-land oil-and-gas lease, holding boards "cannot lease [land] for money making." Garrett (1930) upheld a similar lease only after the Legislature granted the authority. Hartman (2022) recently restated the Pa. Lightning Rod rule that statutory entities are limited to their enabling statutes.

The county-commission analogue, W. Va. Code § 7-1-3hh, allows leases involving private companies if the lease serves a "public purpose." Boards of education have no equivalent statute. The 2018 AG opinion warned that even § 7-1-3hh's broader authority cannot support a "lease designed to allow a private company to conduct for-profit business activities" on county-owned property, including as a co-lessee.

The opinion's discussion of Napier (2001) addresses a related problem: even if the Board could form a for-profit affiliate, Napier suggests that courts would treat a closely-controlled affiliate as part of the Board. That conclusion would defeat the historic-tax-credit theory because the Board, as a governmental entity, cannot itself claim those credits.

Citations and references

Statutes:
- W. Va. Code § 5-3-2 (AG advice to prosecutors)
- W. Va. Code § 18-5-7 (Lease and sale of school property)
- W. Va. Code § 18-5-13 (General powers of boards)
- W. Va. Code § 7-1-3hh (County commission lease authority)

Cases:
- Hartman v. Putnam, 2022 WL 9925098 (W. Va. 2022)
- Napier v. Lincoln Cnty. Bd. of Educ., 209 W. Va. 719, 551 S.E.2d 362 (2001)
- Pa. Lightning Rod Co. v. Bd. of Educ. of Cass Twp., 20 W. Va. 360 (1882)
- Shinn v. Bd. of Educ., 39 W.Va. 497, 20 S.E. 604 (1894)
- City of Huntington v. Bacon, 196 W. Va. 457, 473 S.E.2d 743 (1996)
- McCallister v. Nelson, 186 W. Va. 131, 411 S.E.2d 456 (1992)
- Progressive Max Ins. Co. v. Brehm, 246 W. Va. 328, 873 S.E.2d 859 (2022)
- Dooley v. Bd. of Educ. of Cabin Creek Dist., 80 W. Va. 648, 93 S.E. 766 (1917)
- Barber v. Camden Clark Mem'l Hosp. Corp., 240 W. Va. 663, 815 S.E.2d 474 (2018)
- Herald v. Bd. of Educ., 65 W. Va. 765, 65 S.E. 102 (1909)
- Garrett v. Bd. of Educ. of Chapmansville Dist., 109 W. Va. 714, 156 S.E. 115 (1930)

Prior AG opinions:
- 35 W. Va. Att'y Gen. Op. 24, 2018 WL 3390019 (June 6, 2018) (county commission cannot lease for-profit business)
- 31 W. Va. Att'y Gen. Op. 20, 2014 WL 1875639 (May 6, 2014) (county commission cannot lease building floor as private residence)

Source

• Landing page: not separately published (the PDF is the official record)
• Original PDF: https://ago.wv.gov/media/17556/download?inline

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain — the linked PDF is authoritative.

State of West Virginia
Office of the Attorney General
Patrick Morrisey
Attorney General

(304) 558-2021
Fax (304) 558-0140

October 6, 2023

Honorable Gabrielle Mucciola
Monongalia County Prosecuting Attorney
75 High Street
Morgantown, WV 26505
Dear Prosecutor Mucciola:

You have asked for an Opinion of the Attorney General on whether the Monongalia
County Board of Education can lease school property to a for-profit business that it will then co-own.
This Opinion is being issued under West Virginia Code § 5-3-2, which provides that the
Attorney General "may consult with and advise the several prosecuting attorneys in matters
relating to the official duties of their office." When this Opinion relies on facts, it depends solely
on the factual assertions in your correspondence with the Office of the Attorney General.

Your letter explains that the Monongalia County Board of Education wants to take
advantage of historic tax credits to renovate the Morgantown High School Auditorium. To do so,
the Board would need to restructure how the building is managed. Though the Board would still
own the building, it would create two entities: a for-profit management company and a nonprofit
foundation. The Board would enter a long-term lease with the management entity, which
would in turn enter a sublease with the foundation. Then, an unspecified investor would apply
for and receive the historic tax credits, which would provide funds to the management entity to
make the repairs. To make sure this plan works, the Board would need to be a part owner of the
management company.

You have asked the following question:

Whether the Board of Education has authority to lease county-owned property to a for-profit
management entity, and whether the Board can hold an ownership position in the
for-profit entity?

We conclude that, under the facts you have described, the Board's plans are
impermissible under West Virginia Code Sections 18-5-7 and 18-5-13.

DISCUSSION

As the Board acknowledges, county "boards of education are 'created by statute with
functions of a public nature.'" Hartman v. Putnam, No. 21-0765, 2022 WL 9925098, at *2
(W. Va. Oct. 17, 2022) (quoting syl. pt. 2, Napier v. Lincoln Cnty. Bd. of Educ., 209 W. Va. 719,
551 S.E.2d 362 (2001)); see also Pa. Lightning Rod Co. v. Bd. of Educ. of Cass Twp., 20 W. Va.
360, 360 (1882). A county board of education like Monongalia County thus depends on its
enacting statute for its powers. And the Board "can exercise no power not expressly conferred or
fairly arising from necessary implication, and in no other mode than that prescribed or authorized
by the statute." Syl. pt. 2, Napier, 209 W. Va. 719, 551 S.E.2d 362 (quoting syl. pt. 4, Shinn v.
Bd. of Educ., 39 W.Va. 497, 20 S.E. 604 (1894)); see also City of Huntington v. Bacon, 196 W. Va.
457, 470, 473 S.E.2d 743, 756 (1996).

When a statute does not grant the Board powers expressly, then the Board can presume to
exercise implied authority only in certain limited circumstances. Implied authority "fairly
aris[es] from necessary implication[s]" in the exercise of a board of education's express powers.
Syl. pt. 7, Bacon, 196 W. Va. 457, 473 S.E.2d 743; cf. Commonwealth, Pennsylvania Fish &
Boat Comm'n v. Consol Energy, Inc., 233 W. Va. 409, 414, 758 S.E.2d 762, 767 (2014). And if
a statute is ambiguous when it comes to the powers it might confer on the board, then a court
will find that the board does not have authority. See Syl. pt. 1, McCallister v. Nelson, 186 W.
Va. 131, 411 S.E.2d 456 (1992).

We conclude that the Board does not have either express or implied statutory authority to
either lease the auditorium or create or co-own a for-profit management entity.

Take the lease agreement first. Two statutory provisions give county boards of education
authority over lease agreements. First, a county board of education may sell or lease school
property that is no longer needed for school purposes. W. Va. Code § 18-5-7. Second, a board
has authority to control and manage "all of the schools and school interests for all school
activities and upon all school property owned or leased by the county." Id. § 18-5-13.
(Relatedly, the Board must also "provide ... [f]or the repair and good order of the school ...
buildings." Id.)

West Virginia Code Section 18-5-7 does not give the Board the authority to enter into the
proposed lease agreement here. That statute sets out the procedure for leasing school property:
If a "county board determines that any school property is no longer needed for school purposes,"
then it may "offer the property for lease." Id. § 18-5-7(e). The Board may also lease out the
building if it is "for a public use to the State of West Virginia, or its political subdivisions,
including county commissions." Id. § 18-5-7(f). So the Board may lease property if it no longer
needs it, or if it leases the building to the State or its political subdivisions.

But under the facts you have described, neither subsection of Section 18-5-7 applies
here, the Board still intends to use the auditorium for school use, and it would be leasing it to a
private company. Thus, the Board's proposal would exceed its express authority under Section
18-5-7. We find no implied authority deriving from the statute, either. We think it important
that the Legislature was unmistakably clear about what types of leases it wanted to permit, and
the sort of lease the Board now wants to enter is noticeably absent. "[I]n the interpretation of
statutory provisions the familiar maxim expressio unius est exclusio alterius, the express mention
of one thing implies the exclusion of another, applies." Progressive Max Ins. Co. v. Brehm, 246
W. Va. 328, 334, 873 S.E.2d 859, 865 (2022); cf. Dooley v. Bd. of Educ. of Cabin Creek Dist., 80
W. Va. 648, 93 S.E. 766, 768 (1917).

We reach the same conclusion under West Virginia Code § 18-5-13, which sets out the
general powers that boards of education may exercise. As relevant here, boards may "[c]ontrol
and manage all of the schools and school interests for all school activities and upon all school
property owned or leased by the county" and likewise maintain buildings like the auditorium
here. W. Va. Code § 18-5-13. But nothing in this language explicitly gives the Board the ability
to lease the auditorium to a for-profit company. And we further conclude that the language does
not unambiguously greenlight this sort of lease by implication because this kind of lease
arrangement, a lease of a still-operating school facility to a for-profit entity for the express
purpose of leasing back the facility to a non-profit entity, is not a normal and necessary aspect
of managing and maintaining school buildings. What's more, because Section 18-5-7 already
addresses the limited circumstances that the Board may lease school property, Section 18-5-13
shouldn't be read to expand that authority. See Barber v. Camden Clark Mem'l Hosp. Corp.,
240 W. Va. 663, 670, 815 S.E.2d 474, 481 (2018).

Cases from the Supreme Court of Appeals confirm our understanding of these two
statutes, as the Court has hewed closely to the enabling statutes' language when deciding the
powers of a county board of education to lease land. See Herald v. Bd. of Educ., 65 W. Va. 765,
65 S.E. 102 (1909). In Herald, the Court rejected a county school board's lease of a school lot
for oil and gas, finding that a board of education "cannot lease [land] for money making, because
the statute provides for the accomplishment of its object by taxation, not by negotiation in the
business world." Id. at 105. To allow the board to lease for profit, the Court said, would provide
limitless powers to a board of education. Id. at 106. The Court later upheld a similar plan,
however, after the legislature revised the statute because "[t]hat power has since been conferred
by the legislature." Garrett v. Bd. of Educ. of Chapmansville Dist., 109 W. Va. 714, 156 S.E.
115, 116 (1930). Thus, the Court recognizes that a school board's power goes only as far as the
statutory language.

This Office addressed similar questions in similar fashion in two earlier opinion letters.
In a 2018 opinion letter, we explained that a county commission lacks the authority to create a
"lease designed to allow a private company to conduct for-profit business activities" on county-owned
property because it would exceed "the Commission's express powers." 35 W. Va. Att'y
Gen. Op. 24, 2018 WL 3390019 (June 6, 2018). This concern arises "even as a joint lessee." Id.
This Opinion was consistent with another opinion from 2014, in which we concluded that a
county commission could not lease or rent the third floor of a county-owned building to a private
individual for use as a private residence. 31 W. Va. Att'y Gen. Op. 20, 2014 WL 1875639 (May
6, 2014). Though we noted county commissions may lease property involving a private company
provided it is for a "public purpose," that power exists only because a statutory provision gives
the county commission express authority. W. Va. Code § 7-1-3hh. It also makes sense for
county commissions to have this authority, and not boards of education, because county
commissions' "powers are wider than those of a board of education." Herald, 65 W. Va. 765, 65
S.E. 102, 105 (1909).

So consistent with the statutory text, case law, and the 2018 and 2014 Opinion Letters,
we conclude that a county board of education lacks the authority to lease property still being
used for school purposes to a for-profit business.

Even aside from the lease agreement, the Board also lacks the authority to create and co-own
a legally distinct for-profit company. Nothing in West Virginia Code Sections 18-5-7,
18-5-13, or any other section that we have reviewed says that a board of education could co-own
a for-profit entity. And as explained above, we think this arrangement cannot be seen as an
exercise of implied authority tied to one of the Board's express powers.

Here again, precedent from the Supreme Court of Appeals forecloses the Board's ability
to do so, too. Napier, 209 W. Va. 719, 551 S.E.2d 362. In Napier, the Court analyzed a Lincoln
County Board of Education program called "West Virginia Dreams," a collaborative effort
between the board of education and a non-profit community organization to provide after-school
and summer programs. The Court considered whether this venture was subject to the statutory
grievance process for state and local educational employees. In holding that the Grievance
Board had jurisdiction to hear the grievance, the Court recognized that the county board of
education lacked "the power under West Virginia law to form such an entity in affiliation with
another organization." Id. at 724, 551 S.E.2d at 367. No "direct or implied authority permitt[ed]"
the board of education's actions. So, the board of education could not create a separate entity or
shield itself from the "statutory grievance process."

Napier also shows that, even if the Board could act as a co-owner in this venture, it may
not allow the Board to take advantage of the sought-after tax credits. The Napier Court analyzed
who controlled West Virginia Dreams, finding that the board of education still controlled the
program by "retain[ing] the final say in all matters related to the project"; moreover, a "majority
of the Management Team [wa]s composed of employees of the Board of Education." Napier,
209 W. Va. at 725, 551 S.E.2d at 368. The board of education's control meant that the program
did not "stand apart to any material degree from the Board of Education" and would be treated as
a subordinate organization, not a "fiscal agent for another entity." Although we are presented
with only limited facts about the degree of control that the Monongalia County Board of
Education would exercise over this entity, the same might be true here. So, courts could still
treat the management company as part of the Board, making it ineligible for the tax credits.

But that eligibility question only matters if the Board had the authority to enter into a
lease with a for-profit business of its own making, something the statutory provisions, case law,
and previous Opinions of the Attorney General say cannot happen.

However admirable its ultimate objectives might be, the Board has limited powers to
lease its property. It can lease its property if it no longer needs it, or it can lease it to the State of
West Virginia or its political subdivisions. But it cannot lease its property to a for-profit
company, let alone co-own the for-profit business.

Sincerely,

Patrick Morrisey
West Virginia Attorney General
Michael R. Williams
Principal Deputy Solicitor General
Spencer J. Davenport
Assistant Solicitor General