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Joint Occupancy (Ed. Code § 17515, et seq.): A school district may lease buildings or
property to other entities for a term of up to 99 years. This can include an arrangement
where the leasing entity makes improvements to school grounds. Effective June 29,
2020, Senate Bill 98 eliminated the requirement that a joint occupancy arrangement be
approved by the State Board of Education.

Certain Employee Housing Projects (Ed. Code § 17456): As of 2018, AB 1157 added
language to Education Code section 17456 regarding the financing of school district
employee housing projects. That statute exempts certain sale/saleback and
lease/leaseback property transactions from the full surplus property process, including
notice and offer requirements and competitive bidding. These types of transactions
generally generate funding through a certificate of participation. The statute now also
specifies that "the construction, reconstruction, or renovation of rental housing facilities
for school district employees" is a permissible capital outlay expenditure for purposes of
such a sale/saleback or lease/leaseback transaction.

IX. Use of Proceeds of Sale or Lease with Option to Purchase
Statutory limitations on the use of the proceeds of the sale of surplus property apply to (1)
sales and (2) leases with the option to purchase. They do not apply to leases with no option
to purchase.

The proceeds of the sale of surplus property generally must be used for capital outlay or non-
recurring maintenance costs. The proceeds of a lease with option to purchase may be
deposited in a restricted fund for routine repairs for up to a 5-year period. The proceeds
must be used for one-time expenditures, and may not be used for ongoing expenditures,
such as general operating expenses. (Ed. Code § 17462(a).)

With concurrence of the State Allocation Board that the District has no anticipated need for
additional sites or construction in the next ten years or major deferred maintenance
requirements, the District may surrender its state facility funding eligibility for those ten
years and place the proceeds unto its general fund, again for one-time expenditures. (Ed.
Code § 17462(a).)

Subject to certain conditions and State Allocation Board concurrence, a school district having
an average daily attendance of less than 10,001 in any fiscal year may deposit interest
earned on the funds from a sale of surplus property in that fiscal year into the general fund
for any general fund purpose, while surrendering state facilities funding for ten years. (Ed.
Code § 17463.)

Under Senate Bill 98, effective on June 29,2020, the Legislature revived Education Code
section 17463.7, which authorizes school districts to deposit the proceeds of the sale of
surplus property that was purchased entirely with local funds into the general fund for one-
time expenditures if certain conditions are met. This legislation will expire on July 1, 2024,
but for any transaction for the sale or lease with option to purchase that a school district

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