Opinion
No. 1049 C.D. 2014
03-31-2015
In The Matter of Keystone Central School District Appeal of: Eugene Nicholas, Rusty Miller, Robert Bressler, Arthur Hawksworth and James Harbaugh
BEFORE: HONORABLE DAN PELLEGRINI, President Judge HONORABLE ANNE E. COVEY, Judge HONORABLE JAMES GARDNER COLINS, Senior Judge
OPINION NOT REPORTED
MEMORANDUM OPINION BY PRESIDENT JUDGE PELLEGRINI
Eugene Nicholas, Rusty Miller, Robert Bressler, Arthur Hawksworth and James Harbaugh (collectively, Objectors) appeal from an order of the Court of Common Pleas of Clinton County (trial court) approving the private sale of Sugar Valley Elementary School (Property) to Samuel and Salinda Lapp (Lapps). For the following reasons, we affirm.
In May 2013, Keystone Central School Board (School Board) passed a resolution to permanently close the Property. The Property had been empty for two to three years during which the Keystone Central School District (School District) had to maintain heat in the building. In addition, the Property needed a new roof; there was asbestos in the building which would cost $52,000 to remove; and it had been the target of severe vandalism in 2012.
Under Section 707 of the Public School Code of 1949 (Code), the School Board is authorized to sell property by public auction, by sealed bid or by private sale, which requires court approval. The School Board chose to sell the Property by private sale and secured appraisals from Christian T. Aumiller Real Estate Appraisal and Consulting Services (Aumiller) and Jerris Manikowski of Nestarick Appraisal and Consulting, Inc. (Nestarick) to appraise the Property. Aumiller appraised the Property for $165,000 and Nestarick for $215,000. The School Board contracted to market and sell the Property.
Act of March 10, 1949, P.L. 30, as amended, 24 P.S. §7-707. Section 707, in pertinent part, reads:
The board of school directors of any district is hereby vested with the necessary power and authority to sell unused and unnecessary lands and buildings, by any of the following methods and subject to the following provisions:24 P.S. §7-707(3).
* * *
3) At private sale, subject to the approval of the court of common pleas of the county in which the school district is located. Approval of the court shall be on petition of the board of school directors, which petition shall be executed by the proper officers of the board, and shall contain a full and complete description of the land proposed to be sold, a brief description and character of the building or buildings erected thereon, if any, the name of the prospective purchaser, the amount offered for the Property, and shall have attached thereto an affidavit of at least two persons who are familiar with the values of real estate in the locality in which the land and buildings proposed to be sold are located, to the effect that they have examined the Property, that the price offered therefor is a fair and reasonable one and in their opinion a better price than could be obtained at public sale, and that they are not interested, either directly or indirectly, in the purchase or sale thereof. Before the court may act upon any such petition it shall fix a time for a hearing thereon and shall direct that public notice thereof be given as provided in clause (1) of this section. A return of sale shall be made to the court after the sale has been consummated and the deed executed and delivered.
The trial court found that the Nestarick appraisal failed to take into consideration the cost of the asbestos abatement, the deterioration of the roof, and the cost of cleaning up the damages caused by the vandalism.
In September 2013, the School Board contracted with realtor Beth Riccardo (Riccardo) to market and sell the Property for $225,000. In her marketing efforts, Riccardo placed a notice of the sale of the Property in the West Branch Multiple Listing Service (MLS); made the Property available by all other realtors by displaying the Property on public websites; advertised the Property in the local newspaper and in the Real Estate Journal; and placed "For Sale" signs on it. The Property did not generate much interest. Riccardo only showed it on two occasions, including once to the Lapps. After the showing, the Lapps performed various inspections and obtained estimates for asbestos removal.
It is unknown whether, or how many times, other realtors showed the Property.
On November 4, 2013, the Lapps signed a formal offer to purchase the Property for $150,000, intending to open a grocery/general store. On November 7, 2013, the School Board's President, Jack Peters (President), signed off on the sale without School Board approval. From November 11 to November 18, 2013, the listing for the Property on MLS was marked "Sale Pending." This designation was removed on November 18, 2013, and the Property was marked as "active" once the President and Riccardo became aware that the School Board would need to conduct a public vote before accepting the Lapps' offer. The Lapps' offer was placed on the School Board's agenda for its December 2013 public meeting.
On the day of the public meeting, one of the Objectors contacted Riccardo to see the Property. At the public meeting, without having seen the Property, Objectors offered to match the Lapps' offer. The School Board then approved a resolution to sell the Property to the Lapps for $150,000, subject to the trial court's approval. In February 2014, the School Board contracted with Girio Agency, Inc. (Girio) to appraise the Property by considering the asbestos, the condition of the roof and any/all other issues. Girio valued the Property at $162,000.
The Objectors had emailed various School Board members directly to inform them of their interest in purchasing the Property prior to the December 5 public meeting.
Later in February 2014, the School District filed a petition with the trial court for approval to sell the Property to the Lapps for $150,000. Included in the School District's petition were affidavits from Aumiller and Girio opining that the proposed sale price of $150,000 was fair and reasonable and was a better price than could be obtained at public sale. The trial court ordered that the School District's petition be considered at a public hearing in April 2014.
The School District owns the Property.
In March 2014, at a School Board meeting, Objectors, intending to convert the Property into a community/senior center, made a verbal offer, and later, a written offer through their counsel to purchase the Property for $190,000.
At the public hearing, Riccardo testified to her marketing efforts and the School Board's President confirmed that the community knew of the sale and that interested parties of the Property had ample time and occasion to submit their offers. Girio testified that after considering the Property's defects, the Lapps' offer of $150,000 was fair and reasonable and a better price than could be obtained at a public sale. Girio also stated that Objectors' offer of $190,000 "as is" was fair and reasonable. However, because he was not informed of the terms of the Lapps' offer, he could not opine as to whether one offer was better than the other. Finally, School Board member Wayne Koch testified that the sale to the Lapps would benefit the community in many ways, including fulfilling the need for such a store.
When asked what steps she took to market the Property, Riccardo testified:
The very first thing I did was put it in the [MLS ... which] puts the property for sale to all other realtors. It does have public websites, and so that website also uploads to other websites. I also advertised the property in the newspaper, the real estate journal, and those -- some of those publications also are online. My own website is online. So one feeds the other, and that's how I marketed the property.(Reproduced Record at 391a.)
I also put for sale signs, which over the course of time seemed to be removed. I did replace them on a number of occasions. After approximately the third or fourth sign, I talked to the facility's manager and chose not to proceed with replacing signs.
Wayne Koch is a School Board member and the elected representative for Loganton Borough where the Property is located.
Objectors appeared to oppose the trial court's approval of the sale. They then presented testimony that they were unaware that the Property was for sale or available for inspection prior to the December 2013 School Board meeting due to the School District's inadequate marketing effort. Objectors also offered testimony that they made an offer to purchase the Property for $190,000 and intended to use it as a community/senior center.
In considering the School District's petition to approve the sale, the trial court rejected Objectors' contentions and approved the sale to the Lapps in the amount of $150,000, finding that the School District established that, despite Objectors' higher offer, the Property is being sold for a fair and reasonable price, which is better than could be obtained at a public sale. Objectors then appealed to this Court, arguing that the trial court erred in finding that the School District complied with the requirements of Section 707 of the Code.
On appeal, our scope of review is to determine whether the trial court abused its discretion or committed an error of law. Petition of the School District of Pittsburgh, 376 A.2d 1009, 1011 (Pa. Cmwlth. 1977). An abuse of discretion occurs "not merely when the lower court reaches a decision contrary to the decision that the appellate court would have reached, but rather, occurs when the course pursued represents not merely an error of judgment, but where the judgment is manifestly unreasonable or where the law is not applied or where the record shows that the judgment is the result of partiality, prejudice, bias or ill will." Payne v. Workers' Compensation Appeal Board (Elwyn, Inc.), 928 A.2d 377, 379-80 (Pa. Cmwlth. 2007). --------
Objectors first argue that the School District did not properly market the Property which prevented Objectors from submitting a timely offer and that the School District failed to receive the highest price for the Property. Objectors point to "two separate causes for confusion" that prevented their timely offer: (1) Riccardo "not properly advertising the Property", and (2) "[T]he Property being listed on the MLS from November 11, 2013 to November 18, 2013 as 'sale pending' and the placements of 'sale pending' sign [sic] near the Property." (Objectors' Amended Brief at 14-15.)
There was ample evidence, however, to support the trial court's finding that the Property was well-publicized and that interested parties would have known that the Property was for sale. The Property was listed on MLS, was available to other realtors through public websites, was advertised in the local newspaper and in the Real Estate Journal, and had "For Sale" signs on it. Moreover, as discussed in greater detail below, Section 707 requires that the School District receive a fair and reasonable price, which is not necessarily the highest price.
Objectors next contend that the trial court erred in finding that the School District had obtained a "fair and reasonable" price for the Property as required by Section 707 of the Code as evidenced by their higher offer for the Property. However, a "court may properly approve a private sale despite a higher offer where the difference in price is small or where other circumstances regarding the sale negotiated by the school board appeal to court's sound discretion." Swift v. Abington School District, 297 A.2d 538, 540 (Pa. Cmwlth. 1972) (emphasis added). In fact, while a higher offer is one factor to be considered by the court, it is "not necessarily controlling with regard to the approval or disapproval of the sale." Petition of Bd. of Public Ed. of School Dist. of Pittsburgh, 405 A.2d 556, 558 (Pa. Cmwlth. 1979). Another factor to be considered by the court is whether a proposed sale is in the public interest. Id.
Here, the trial court found that despite Objectors' higher offer, the public interest would be better served with the Lapps owning the Property as the community would benefit from the Lapps' business. The Lapps intend to open a grocery/general store in the existing building and make $140,000 of improvements to the building. Once the improvements are completed and the Lapps' business is underway, the Property will be returned to the public tax rolls, which will generate additional taxes for Loganton Borough, Clinton County and the School District. The Lapps also plan on employing 20 to 25 individuals, who will each pay income tax to the School District and Loganton Borough. Moreover, the Lapps will also pay mercantile/business privileges taxes to the School District. Conversely, the trial court found that Objectors' intended use of the Property, that is, creating a community/senior center, would not necessarily place the Property back on tax rolls. Furthermore, Objectors have failed to outline any details on financing, construction or timetables for their plan. Lastly, the community at large has shown great support for the Lapps' proposal to open a grocery/general store as such a business is needed in the area.
Accordingly, because in approving the sale the trial court did not abuse its discretion, the order of the trial court is affirmed.
/s/_________
DAN PELLEGRINI, President Judge ORDER
AND NOW, this 31st day of March, 2015, the order of the Court of Common Pleas of Clinton County dated May 23, 2014, at No. 190-2014, is affirmed.
/s/_________
DAN PELLEGRINI, President Judge