State of Arizona school districts are centers of the communities in which they are established. As such, the school district’s property, or “facilities”, can be viewed by the public at large as gathering places to foster community spirit. In some communities, the school district’s facilities can be the largest meeting space available for local citizens and business to utilize for a variety of reasons. Presumably recognizing this integral connection to the community, the State of Arizona Legislature saw fit to grant school districts the authority to lease out facilities on a short term basis through the use of a facilities use agreement (commonly referred to as a “FUA”). This article will provide some of the basics of what State of Arizona law requires be drafted into a facilities use agreement in order to maintain the school district within the bounds of the authorities granted to it by the State of Arizona Legislature. Please note that this article is only meant as a broad overview and that any proposed facility use agreement should be vetted by the appropriate school district legal counsel.
Arizona Revised Statues (“A.R.S.”) §15-1105 outlines the authorities which govern a school district’s short term lease of its facilities. It is worthy of note that the term “facilities” is not clearly defined in statute, but is rather broadly outlined in A.R.S. §15-1105(A) which states,
“A. The governing board, or the superintendent or chief administrative officer with the approval of the governing board, may lease school property, including school buildings, grounds, buses and equipment, to any person, group or organization for any lawful purpose, including recreational, educational, political, economic, artistic, moral, scientific, social, religious or other civic or governmental purpose in the interest of the community, including extended day resource programs. The governing board, superintendent or chief administrative officer shall charge a reasonable use fee for the lease of the school property, which may include goods contributed or services rendered by the person, group or organization to the school district.” Emphasis added.
The inclusion of buildings, grounds, buses, and equipment indicates that the intentions of the State of Arizona Legislature were broad in granting school districts the power to lease out facilities. It is important to remember that the items listed as leasable facilities in A.R.S. §15-1105 only include physical property, not employees. If a school district wishes to “lease” its employees it may be possible through another form of agreement, but cannot be accomplished through a facility use agreement drafted under the authority of A.R.S. §15-1105.
The second part of A.R.S. §15-1105 permits the school district to lease out facilities to “any person, group or organization for any lawful purpose.” This permits the school district to lease to an individual, a corporation, a parent teacher organization, a booster club, or even a local citizen’s group. The purpose for such lease can be for nearly any purpose not deemed illegal. This includes political and religious purposes, which can be contrary to popular belief. It is important to ensure that the facility use agreements, and any applicable school district policies, clearly indicate that the school district does not endorse or support the purposes for which the facilities were leased. The agreement should be truly an “arm’s length” arrangement where the only relationship between the school district and the person, group or organization leasing the facility is the terms under which the use is permitted.
The statute also mandates that the school district charge a “reasonable use fee” for permitting the person, group or organization to lease the school district’s facility. “Reasonable use fees” can be outlined in school district policies or can be decided upon on a case-by-case basis by the school district’s Governing Board. Either way, the fee schedule for lease of school district facilities must be approved by the Governing Board annually (See A.R.S. §15-1105(F)) and should be applied consistently and objectively to each class of facility and user.
What is and what is not considered a “reasonable use fee” will vary depending on the individual circumstances surrounding the proposed facility use agreement. It is important to weigh factors such as what is the going rate for rental space in the area, what costs does the school district have to cover in holding the facility out for lease, cleaning costs, utility costs, and damage deposits. The statute does permit the school district to barter with the person, group or organization by allowing the school district to accept services or goods in kind in lieu of a “reasonable use fee.” Whether the school district is willing to accept goods, services, or monetary compensation for the lease of its facilities it is important to remember that the compensation to the school district must adequately compensate the school district for the use of the facility. If not, the school district runs the risk of violating the State of Arizona Constitution’s Gift Clause.
If a group or organization cannot afford the reasonable use fee and cannot provide adequate goods or services as compensation the school district may be able to permit the uncompensated use of the facility. A.R.S. §15-1105(B) states,
“The governing board, or the superintendent or chief administrative officer with the approval of the governing board, may permit the uncompensated use of school buildings, grounds, buses, equipment and other school property by any school related group, including student political organizations, or by any organization whose membership is open to the public and whose activities promote the educational function of the school district as determined in good faith by the school district’s governing board, or the superintendent or chief administrative officer with the approval of the governing board, including extended day resource programs, except as provided in section 15-511.” Emphasis added.
Basically, if the group or organization extends membership to any member of the public and the activities of that group or organization promote the educational function of the school district than the school district Governing Board can vote to permit use of the facility without requiring a reasonable use fee. The determinations of the Governing Board to approve the facility use agreement and to find that the organization or group’s purpose does promote the educational function of the school district must be made in good faith; it cannot be a subterfuge or “sham” finding.
Finally, regardless of whether or not the Governing Board seeks compensation or permits uncompensated use of school district facilities each person, group or organization must provide proof of liability insurance. See A.R.S. §15-1105(F). This requirement is non-negotiable and cannot be waived by the school district.
A State of Arizona school district is given broad authorities to permit the public to lease its facilities for a variety of purposes. This authority is governed by A.R.S. §15-1105, as well as other applicable statutes and State of Arizona Constitutional provisions. It is always best practice to contact the school district’s appropriate legal counsel whenever a facility use agreement is contemplated not only for the protection of the school district but for the protection of the user as well.
This blog should be used for informational purposes only. It does not create an attorney-client relationship with any reader and should not be construed as legal advice. If you need legal advice regarding Facility Use Agreement: What Needs to Be In It?, or any other estate planning matters, please feel free to contact at 480.461.5300, log on to udallshumway.com, or contact an attorney in your area. Udall Shumway PLC is located in Mesa, Arizona and is a full service law firm. We assist Individuals, families, businesses, schools and municipalities in Mesa and the Phoenix/East Valley.