West Lafayette Community School Corporation has sued Governor Holcomb in his official capacity (Cause 79C01-1909-PL-115 in the Circuit Court of Tippecanoe County) to challenge a law that requires local school corporations to make unused buildings available to charter schools for a dollar before they can sell them, leave them vacant, or (the law is less clear) lease them for non-school purposes. West Lafayette has an old building, Happy Hollow, that’s on its last legs and the school corporation has long term plans to use the site, likely as an early education facility, once it gets a solid model put together and can line up the proper funding. In the meantime, it’s being leased to the City of West Lafayette as a temporary city hall for which the City is paying the School a healthy lease payment which, in turn, is being used to fund School operations.
Earlier this year, the General Assembly passed HB 1641 which added IC 20-26-7.1 featuring the $1 lease/purchase requirements. (If a school sells real estate in violation of this requirement, proceeds from the sale go to the State to fund charter school grants). In the case of Happy Hollow, the school corporation arguably has to forego a revenue stream from the City lease or put long term plans on hold if a charter school expresses interest and an intent to get a charter school up and running in the next two years.
So that’s the background. Being a strong proponent of local government and of public schools, it will come as no surprise to anyone that I take the school’s side on this one. But that’s not what prompted me to write this.
In defending the lawsuit, Governor Holcomb (by counsel) has made the breathtaking argument:
“[T]he Takings Clauses and Just Compensation do not apply to the State’s relationship with political subdivisions.”
“[M]unicipalities and subdivisions of the State cannot request just compensation even if there is taking[.]”
The State’s argument does not offer any limitation to this principle which is unique to schools. The State can take local government property and not pay for it. Full stop. The argument is that local government is merely a “subalternate instrumentality” of the State government — in other words, local government is just a tool of State government, so there’s really been no loss if the State commandeers local property for its own purposes.
There is an old United States Supreme Court case, Board of Commissioners of Tippecanoe County v. Lucas, 93 U.S. 108 (1876) where the Court said, “the legislature of a state possesses the power to direct a restitution to taxpayers of a county or other municipal corporation of property exacted from them by taxation, into whatever form the property may be changed, so long as it remains in possession of the municipality.” (emphasis added) It’s true that the State has a lot of power to direct the affairs of local government. So, if the State said that the school had to sell vacant property at market value and, for example, use the proceeds to buy school buses for itself, the “taking” argument would be much weaker. Yes, the State is meddling in local affairs, but taxes paid by local residents are not being diverted to other entities.
But that’s not the argument the Governor is making. Local government property can be used for any purpose the State wants. It doesn’t matter if taxpayers supported a local tax rate precisely because decisions about the use of those taxes were being made by the city council or school board. This goes well beyond taking local school property to subsidize charters. In principle, it could be used to sell off the Wayne County Courthouse in Richmond and use it to subsidize toll road operations in northern Indiana. Or whatever. Like I said, the argument doesn’t offer any limiting principle to the State’s authority to seize local government property without paying for it.
Now, if I had to guess, this is probably the case of an attorney operating out of Indianapolis trying to grind out a win without having run the argument past any political types. I highly doubt that Gov. Holcomb knows anything about this argument even though it’s being made in his name. I suspect the political types would understand that an assertion by the State of unfettered control over local resources is unlikely to be well received outside of the State House.