Clarification of Law on School Sales Urged : Bill to Repeal Naylor Act Stirs Debate Between City, District Officials

South Bay school district officials voiced support last week for repeal of legislation that allows cities to purchase vacant school sites for less than market value.

City officials, however, spoke against a bill by Assemblyman Gerald Felando (R-San Pedro) that would repeal the so-called Naylor Act, saying they need the price break provided by the law.

Speaking at an Assembly Local Government Committee hearing in Torrance, both sides agreed that the Naylor Act is ambiguous and confusing and that clarifying and tightening it could solve many of the problems they cited.

The issue is especially important in the South Bay, where declining enrollment has left several districts with vacant schools and a shortage of state aid, which is based on number of students.

Torrance an Example

As an example of the confusion caused by the current law, many of the 18 speakers at the hearing pointed to the situation in Torrance.

In November, 1984, the Torrance Unified School District notified the city that the 3.44-acre Greenwood School was up for sale. Under the Naylor Act, a city is allowed to purchase 30% of a district’s surplus school sites for as little as 25% of market value.

But because the law is not specific in several areas, the city and the district interpreted it differently.

The first disagreement was over the value of the land. The district’s appraiser said the site was worth $2.2 million. The city’s appraiser said it was worth only $1.87 million. There are no guidelines in the Naylor Act to determine the value of a site.

Disagreement Over 30%

The district then said the city was entitled to only 30% of the Greenwood School site, or about one acre, at the discounted rate. The city, however, said that all school sites that had been vacated since 1981--when the Naylor Act became effective--should be considered surplus, including four sites that had been sold to private developers and a site now used for adult education classes. With that interpretation, the entire Greenwood site fell within the 30% rule.

After haggling over those issues for about nine months, the district applied to the state Board of Education for a waiver from the act so it could sell the property to a private developer. The city then filed suit and received a temporary restraining order preventing the district from selling the site to anyone but the city.

Controlled by Zoning

The district received its waiver last month but continued negotiating with the city. Later, the two sides finally agreed on a price, $1.9 million, and a payment schedule. The two sides are still negotiating over language in the sales agreement.

David Sargent, recently elected president of the Torrance school board, told the Assembly committee that once a city notifies a district that it wants to buy a site, negotiations should have a time limit. He said prolonged talks tie up the property and cost the district potential interest. Sargent suggested the negotiations be completed within 30 days. If no agreement is reached, the district could sell the site to anyone.

Other school district officials complained that cities have an edge in negotiations because by controlling zoning, they, in effect, control the price a district can get for the property. A lot zoned for condos or apartments, for example, can be worth hundreds of thousands of dollars more than one zoned for a park.

A bill by state Sen. John Seymour (R-Anaheim) that takes effect Jan. 1 is expected to remedy that problem. The law will require cities to rezone former school sites to be compatible with the surrounding area.

Not Entitled to Profit

School district officials last week also asked that the 30% rule be more specific. Richard Godino, an attorney representing the Redondo Beach Unified School District and other districts statewide, called Torrance’s interpretation of the 30% “bizarre.”

“Surplus is totally impossible to determine” under the current law, Godino said. “If Naylor is not repealed, then it should at least be amended.”

Hermosa Beach Mayor Jack Wood angered some supporters of Felando’s bill when he said that school districts should not be in the real estate business and that districts are entitled to recoup only the money they put into a property when selling it to a city.

City officials should “zone everything that isn’t brick and mortar as open space” and let school districts “sell that portion that is brick and mortar,” Wood said. In response to the districts’ arguments that more money is needed for educational programs, Wood said, “You cannot take a small body of children and say their rights are supreme and to hell with everyone else.”

Referring to an autocratic French king, Godino said Wood’s attitude was an example of cities’ “Louis XIV approach: ‘We have some divine right. You are not to be trusted.’ ”

At the close of the meeting--and after Wood left--Felando said, “You saw a perfect example of the arrogance of local government,” referring to Wood’s statements. “I have to remind the cities that the school grounds are not their property; they belong to the schools.”

Schools Get Short End

Felando said he introduced his bill because he believes school districts are getting the short end of the deal under current law. He said declining enrollments and limited sources of revenue have left districts with few options other than selling properties at a profit to run their school programs.

Felando, however, later acknowledged that his bill--which is in the Assembly’s inactive file but can be brought out for a floor vote at any time--may never reach the governor’s desk. But, he said, he hopes his bill “fires a shot across the bow of city governments.”

Assemblyman Dominic L. Cortese (D-San Jose), chairman of the state Assembly Committee on Local Government, said preliminary findings of a statewide survey of 24 cities and school districts on Naylor indicated that 80% of the respondents said there should be a time limit for completing a purchase under the act. Cities favored a one-year limit; school districts preferred six months.

Cortese said the complete findings of the survey and a committee recommendation on Felando’s bill will be available in about a month.