Iowa Auditor of State Rob Sand speaks during a news conference. (Photo courtesy of Iowa Auditor of State’s office)
The Davenport Community School District gave a local nonprofit with board connections a favorable deal on the purchase of a former schoolhouse, according to the auditor of state.
The sale of the former Lincoln Elementary School was approved by the school board in July 2019, when the board agreed to accept a $30,000 offer from Together Making a Better Community, a local non-profit organization with ties to the Third Missionary Baptist Church.
At the time, the board had two other offers on the building, one of which was for $290,000.
The auditor noted that had the board accepted that offer, which came from a private developer, the assessed value of the building would have been added to the county’s tax rolls and provided revenue for the district and other governmental entities. By selling to a non-profit organization that is exempt from property tax, the board essentially created an annual ongoing revenue loss, in addition to the loss incurred by accepting “a deeply discounted” offer from the nonprofit.
The auditor noted that the Constitution states in part that “no public money or property shall be appropriated for local, or private purposes.”
At least six official Iowa Attorney General opinions since 1972 have concluded that a governmental body may not donate public funds to a private entity, even if the entity is established for charitable or educational purposes and performs work which the government could perform directly.
The auditor also reported a “clear conflict of interest” that was ignored by the board and administration. Board member Linda Hayes, who made the motion to sell the building to the nonprofit, was employed by Third Missionary Baptist Church. She publicly disclosed her conflict in the building’s sale in March 2018, two months after the nonprofit submitted its first offer. For a full year, she continued to participate in board discussions regarding the sale, the auditor found.
Although Hayes made the motion to sell and abstained from voting, her actions still constituted a conflict of interest, the auditor said.
The auditor also noted that on several occasions school board President Ralph Johanson stated he was interested in purchasing the property and knew the amount of the other offers. However, the minutes of board meetings published to the district’s website, as well as the audio recordings of closed session meetings, do not include any mention of any offer made by Johanson.
Auditors could also find no record of the board publicizing or holding the required public hearing prior to the sale of the building, and could find no record of the board issuing a “request for proposal” — a published solicitation of bids — that would have alerted other potential buyers to the proposed sale.
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