Join me, please, in a thought experiment. Let’s compare the withdrawal of Sandown from the Timberlane Regional School District to the divorce of a married couple.
Since getting married, Mr. Timberlane and Ms. Sandown have amassed a modest real estate empire. They have jointly and fully acquired by equal contribution
- a family home
- a summer cottage
- a rental property
- a house for Mr. Timberlane’s relatives
[For the purposes of this argument, ignore that tax law and domestic property law treats these properties differently.]
Ms. Sandown now wants a divorce. She tells Mr. Timberlane that she will leave the marriage with the family home and he can have the rest of the properties. Ms. Sandown, feeling guilty for breaking up the relationship, considers this more than generous since she owns half of all four properties and is just asking for the family house.
Mr. Timberlane, on the other hand, insists that Ms. Sandown buy him out of her half of the family home and forfeit all her equity in the other properties.
In real life here’s what would happen – (again ignoring the special legal/financial status of a marital home):
- The market value of the three properties would be determined. Half that value is what should be paid to Ms. Sandown. Then she would pay half of the market value to buy the family home from Mr. Timberlane.
A more simple-minded approach would:
- Add up Ms. Sandown’s contribution to all of the three properties. That figure should be subtracted from the half that Mr. Timberlane paid for the family home. (This leaves Ms. Sandown forfeiting all the growth in the investment which is a windfall for Mr. Timberlane.)
This is what Mr. Timberlane is demanding:
- All of what he paid for his half of the family home with no credit at all for what Ms. Sandown paid for the other properties jointly owned.
Mr. Timberlane’s position is exactly the position taken by the Majority Committee and the district with the support of the district’s lawyer. The position is outrageously unfair to Ms. Sandown and is grounded in an arguable reading of RSA 195:28.
COOPERATIVE SCHOOL DISTRICTS
Withdrawal From Cooperative School District
195:28 Disposition of Property. –If a pre-existing school district withdraws from the cooperative school district, the cooperative school district shall transfer and convey title to any school building and land located in the withdrawing district to the withdrawing district upon payment by the withdrawing district of the costs of capital improvements and additions to said school building incurred by the cooperative school district, less the share which the withdrawing school district has already paid toward such costs and the share which the withdrawing school district is required to contribute toward such costs as provided in RSA 195:27. The amount of said capital improvements and additions and the time of transfer of title shall be determined by the agreement for withdrawal between the cooperative school district and the withdrawing school district. The withdrawing school district forfeits its equity in all other cooperative school district facilities.
Source. 1977, 439:1, eff. Sept. 3, 1977.
I believe this RSA is at the very least ambiguous. “The withdrawing school district forfeits its equity in all other cooperative school district facilities,” should be understood to mean the forfeiture happens after withdrawal not during the negotiating process. Clearly this RSA was not written with the unique complex cooperative district that is Timberlane in mind. The objective of the law was to prevent towns from leaving a district with a financial advantage and to the detriment of the remaining towns in the district. The objective could not have been to strangle towns wishing to depart a cooperative so that they would have a heavy financial burden in paying twice for what they paid for once. Every atom of fairness cries out against the majority committee’s interpretation of the RSA.
Furthermore, why does the district think they are entitled to a windfall when a town leaves the district? (Mr. Collins himself uses “windfall” to describe the buyout.) The district has no offsetting expenses to deal with and no new obligations. There is nothing in natural justice that says the district is entitled to anything more than they have gained already from Sandown and in fact they will be left with millions of dollars that we contributed to the district that Sandown can’t take with it. That is what is meant by forfeiting our equity.
Since 2000 Sandown will have contributed $11.5 million in capital contributions to the district when the bond is paid off. The preliminary buy-out number proposed by the Majority Committee is $7.8* million. They can keep going back to the district’s inception to make their preliminary number bigger, but the point remains that individual towns that have paid more to the district than they have received in capital investment should not owe a thing to withdraw.
Let me leave you with one last thought experiment. Suppose Sandown pays $8 million in ransom to leave the district. Then Danville pays $6 million to leave the district. Then Atkinson pays $7 million to leave the district. Plaistow tax payers would be sitting on a completely unearned pot of gold. Does this make any sense whatsoever? The logic of this interpretation of the RSA is patently unfair and leads to absurdity.
Tomorrow I’ll post clips from last night’s the Majority Committee meeting.
*Mr. Collins seems to have a different understanding of the total buyout number than I do from a reading of the documents provided to the Majority Committee. He says the number is $6 million. Here are the documents. Good luck figuring out which is correct: SWFC buy out doc to SWFC-7-30-15 (1) I’m thinking that total capital cots in Sandown were $7.8 million. Sandown paid approximately 21% of those costs, so the buy-out number is closer to $6 million. Again, this is going back only to 2000. From inception of the district, the buy-out number would be larger.