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Phoenix Elementary School District’s (“PESD”) asserts that its action in terminating ASU

Preparatory Academy’s (“ASU Prep”) lease is compelled by A.R.S.§ 15-189. But that assertion
is belied by the express language of the statute and its legislative history.

ARIZ. REV. STAT. ANN. § 15-189(B) provides (emphasis added):

[i]f a school district decides to sell or lease a vacant and unused


building or a vacant and unused portion of a building, the school
district may not prohibit a charter school or private school from
negotiating to buy or lease the property in the same manner as
other potential buyers or lessees. A school district shall attempt to
obtain the highest possible value under current market conditions
for the sale or lease of the vacant and unused building or the
vacant and unused portion of a building and may not accept an
offer from a potential buyer or lessee that is less than an offer
from a charter school or private school. This section does not
require the owner of a building on the list [of vacant and
unused buildings] to sell or lease the building or a portion of
the building to a charter school, to any other school or to any other
prospective buyer or tenant, except that the owner of a building on
the list may not withdraw the property from sale or lease solely
because a charter school or private school is the highest bidder.

First, the express language of the statute applies to a district’s decision to sell or lease
vacant and unused buildings. The building leased by ASU Prep is neither vacant nor unused.
It is, instead, currently being used in a way that is “improv[ing] public education, promot[ing]
college readiness and success, creat[ing] best practices for teachers and students, develop[ing]
innovations in education and collaboration, …and maximize[ing] efficiencies in resources.” The
Agreement, § I(K).

Although the statute requires the district to attempt to obtain fair market value, that
attempt applies to vacant and unused buildings. Once again, the property is currently being
leased by ASU Prep, and is therefore neither vacant nor unused. Furthermore, this language,
relating to “the highest possible value under current market conditions” was only added to the
statute in April of 2015. S.B. 1074, 52nd Leg., 1st Reg. Sess. (Ariz. 2015). ASU Prep and PESD
entered their lease agreement on July 1, 2014, almost one year before this portion of the statute
was even enacted. The Agreement, § IV(A).

In short, nothing in the lease requires a district to terminate an existing lease in order to
obtain fair market value. Indeed, we seriously doubt that PESD would terminate the lease to
obtain less rent in a down market. What the statute requires is that a district, at the time of
entering into a lease, to obtain fair market value and not to treat charter schools unfairly.
Nothing in the statute requires a district to end an existing leasing relationship in order to obtain
fair market value rent.

The legislative history surrounding the initial imposition of the statute, and its subsequent
amendments, further belies PESD’s reasoning for terminating the lease. A.R.S. §15-189 was
enacted as part of a greater collection of statutes promoting charter schools throughout Arizona.
In 1994, the legislature recognized that charter schools “provide a learning environment that will
improve pupil achievement… [and] provide additional academic choices for parents and pupils.”
ARIZ. REV. STAT. ANN. § 15-181 (2018) (original version at H.B. 2002, 41st Leg., 9th Spec. Sess.
(Ariz. 1994)). The 2018 amendments to the statute give charter and private schools additional
protection by prohibiting school districts from accepting lower bids from non-charter or private
school bidders or from removing the property from sale or lease just because the highest bid
came from a charter or private school. ARIZ. REV. STAT. ANN. § 15-189(B) (2018).

It is clear that A.R.S. § 15-189 was passed to promote charter schools and to preclude
districts from unfairly dealing with charter schools when leasing or selling a district’s real estate.
PESD’s decision to terminate ASU Prep’s lease stands this legislative history on its head—this
action is wholly unfair to ASU Prep and may result in the closure of a highly successful charter
school.

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