• Skip to content

Fagen Friedman & Fulfrost LLP

News

Surplus Property: Opportunities for Use of Proceeds

July 20203 minute read

Top Issues

  • #facilities

Practical Suggestions for the 2020-21 State Budget

The newly enacted 2020-21 state budget, signed by Governor Newsom on June 30, 2020, anticipates a deep decline in the State’s economic conditions as a result of the COVID-19 pandemic. In response, Senate Bill 98, effective immediately, introduces new fiscal and programmatic flexibilities for school districts, including the option to use certain surplus property proceeds for one-time General Fund purposes.

Typically, school districts may only use the proceeds from the sale of surplus property for capital facilities expenditures or long-term maintenance costs that will not reoccur within five years. (Cal. Educ. Code §17462). Existing law also prevents school districts from depositing property sale proceeds into the General Fund unless the district demonstrates to the State Allocation Board (SAB) that it has no anticipated need for the money to fund additional school sites or building construction over the next ten years.

SB 98 adds Education Code section 17463.7, allowing school districts to deposit proceeds from the sale of surplus property (or a lease with purchase option) into the General Fund for a one-time purpose. This “one-time” use cannot create ongoing costs nor commit the district to any future expenditures. Expenditures for recurring costs, such as salaries and benefits, are not permitted under the new law. The flexibility under Section 17436.7 is effective until July 1, 2024.

Before depositing surplus property proceeds into the General Fund under Section 17463.7, the district must: (1) at a regularly scheduled board meeting, present a detailed plan verifying the one-time use of the funds; and (2) submit various certification documents to SAB. Additionally, SAB will also reduce the district’s hardship assistance by an amount equal to any property proceeds used for one-time General Fund purposes. The amount of proceeds available for General Fund use will also depend on the purchase history of the district property and the funds originally used to acquire it. We anticipate further guidance and procedures from SAB on exercising this option in the coming months.

Many will recall the Legislature adopted a previous version of this law in 2009 during the Great Recession. The 2020 version of Section 17463.7 is similar, but with a few added flexibilities: (1) the 2009 version applied only to the proceeds from a sale of real property, while the 2020 version applies to the proceeds from a sale or lease with option to purchase; (2) unlike the 2009 version, Districts will not lose hardship funding for five years; and (3) Districts no longer need to show a lack of major deferred maintenance costs. Although Section 17463.7 now covers leases that include an option to purchase the property, the new law does not appear to impact the proceeds from traditional leases without purchase options, which are not subject to statutory use restrictions.

In response to this new fiscal flexibility, we encourage districts looking for alternative revenue sources to do the following to assess the potential sale or lease of surplus property:

  • Inventory current District properties, assess current enrollment at active school sites and consider use and need for current non-student, administrative or vacant properties;
  • Calculate the appropriate timelines and steps to sell or lease the surplus property, including making statutory offers to other public entities and organizations;
  • Assess the temperature of the community and openness to potential school closures or disposition of other non-student properties;
  • Identify individuals that could cooperatively represent various community stakeholders (such as parents, teachers, administrators and local business owners) and contribute to a district committee formed to assess the district’s facilities needs and surplus property;
  • Investigate the environmental condition of sites initially flagged for consideration as surplus and the potential resulting environmental effects of a sale or other disposition;
  • Consider district goals and begin to formulate internal messaging regarding the benefits of selling or otherwise disposing of a particular property and the resulting opportunities; and
  • Commission an appraisal and/or otherwise estimate the market value of potential surplus property and identify any additional expenses needed or recommended in order to maximize the potential return on sale or lease.

F3 Law recently partnered with CASBO and FCMAT on a complimentary webinar to provide guidance on Section 17463.7 and best practices for surplus property. The webinar was recorded and is available HERE:

If you have any questions regarding the impact of the 2020-21 budget, or would like further guidance on this new law or the surplus property process, please contact one of our offices.

Share this page

Professionals

  • Media item displaying: Sarah D. Polito

    Sarah D. Polito

    Partner

    San DiegoInland EmpireLos Angeles
    760.304.6005 760.304.6005
    spolito@f3law.com

View All Surplus Property: Opportunities for Use of Proceeds Professionals

Related Services

  • Business
Fagen Friedman & Fulfrost LLP
Get the latest F3 Insights and Invitations
Sign-up Now
Contact Us
  • © 2025 Fagen Friedman & Fulfrost LLP
  • Disclaimer
  • Privacy Policy
  • Sitemap
Site by
We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. By clicking “Accept”, you consent to the use of ALL the cookies.
Do not sell my personal information.
Cookie SettingsAccept
Manage consent

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary
Always Enabled
Necessary cookies are absolutely essential for the website to function properly. These cookies ensure basic functionalities and security features of the website, anonymously.
CookieDurationDescription
__cf_bm30 minutesThe cookie contains information related to the calculation of Cloudflare’s proprietary bot score and, when Anomaly Detection is enabled on Bot Management, a session identifier
algoliasearch-client-js1 yearNecessary in order to optimize the web site's search-bar function . The cookie ensures accurate and fast search results.
AWSELB1 yearUsed to distribute traffic to the website on several servers in order to optimise response times.
AWSELBCORS1 yearRegisters which server-cluster is serving the visitor. This is used in context with load balancing, in order to optimize user experience.
CONSENT1 yearUsed to detect if the visitor has accepted the marketing category in the cookie banner. This cookie is necessary for GDPR-compliance of the website.
cookielawinfo-checkbox-advertisement1 yearUsed to detect if the visitor has accepted the marketing category in the cookie banner. This cookie is necessary for GDPR-compliance of the website.
cookielawinfo-checkbox-analytics11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Analytics".
cookielawinfo-checkbox-functional11 monthsThe cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional".
cookielawinfo-checkbox-necessary11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookies is used to store the user consent for the cookies in the category "Necessary".
cookielawinfo-checkbox-others11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Other.
cookielawinfo-checkbox-performance11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Performance".
JSESSIONID1 yearPreserves users states across page requests.
viewed_cookie_policy11 monthsThe cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. It does not store any personal data.
Functional
Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features.
Performance
Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.
Analytics
Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc.
CookieDurationDescription
_ga1 yearRegisters a unique ID that is used to generate statistical data on how the visitor uses the web site.
_ga_#1 yearUsed by Google Analytics to collect data on the number of times a user has visited the web site as well as dates for the first and most recent visit.
_gat1 yearUsed by Google Analytics to throttle request rate.
_gid1 yearRegisters a unique ID that is used to generate statistical data on how the visitor uses the web site.
collect1 yearUsed to send data to Google Analytics about the visitor's device and behavior. Tracks the visitor across devices and marketing channels.
NRBA_SESSION1 yearCollects data on the user’s navigation and behavior on the website. This is used to compile statistical reports and heatmaps for the website owner.
Advertisement
Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. These cookies track visitors across websites and collect information to provide customized ads.
CookieDurationDescription
LAST_RESULT_ENTRY_KEY1 yearUsed to track user’s interaction with embedded content.
LogsDatabaseV2:V#||LogsRequestsStore1 yearUnclassified
nextId1 yearUsed to track user’s interaction with embedded content.
remote_sid1 yearNecessary for the implementation and functionality of YouTube video-content on the website.
requests1 yearUsed to track user’s interaction with embedded content.
TESTCOOKIESENABLED1 yearUsed to track user’s interaction with embedded content.
VISITOR_INFO1_LIVE1 yearUnclassified
VISITOR_PRIVACY_METADATA1 yearUnclassified
YSC1 yearUnclassified
yt-remote-cast-available1 yearStores the user's video player preferences using embedded YouTube video
yt-remote-cast-installed1 yearStores the user's video player preferences using embedded YouTube video
yt-remote-connected-devices1 yearStores the user's video player preferences using embedded YouTube video
yt-remote-device-id1 yearStores the user's video player preferences using embedded YouTube video
yt-remote-fast-check-period1 yearStores the user's video player preferences using embedded YouTube video
yt-remote-session-app1 yearStores the user's video player preferences using embedded YouTube video
yt-remote-session-name1 yearStores the user's video player preferences using embedded YouTube video
YtIdbMeta#databases1 yearUsed to track user’s interaction with embedded content.
Others
Other uncategorized cookies are those that are being analyzed and have not been classified into a category as yet.
CookieDurationDescription
BNI_new_persistence1 yearUnclassified
SAVE & ACCEPT
  • Professionals
  • Services
    • Business
    • Communications & Media Relations
    • Education Technology
    • Employment Law
    • Facilities & Construction
    • Governance & Leadership
    • Government Affairs & Public Policy
    • School and College Athletics
    • Investigations
    • Labor Relations & Negotiations
    • Litigation
    • Next Level Client Services
    • Real Estate & Property
    • Special Education
    • Student Rights & Discipline
    • Title IX
    • Virtual Learning
  • Our Clients
    • Charter Schools
    • Community Colleges
    • Higher Education
    • Independent & Private Schools
    • Public Agencies
    • Public Education K-12
    • Religious & Parochial Schools
  • Insights & News
    • Announcements
    • Client Alert
    • News
    • Symposium Materials
    • Tips & Tools
    • Viewpoints
  • Events
    • Special Education Symposium
    • Student Services Legal Symposium
  • Our Firm
    • Leadership
    • Locations
  • Careers
    • Our People
    • Job Opportunities
  • Our Culture
  • Civics
  • Contact Us