"Based on its inquiry and an analysis of the law, OEA concludes that the complaint against the Harlan County Board of Education that it acted improperly when leasing and attempting to sell the Loyall Elementary School is not substantiated," said the report, which was sent to Harlan County Schools Superintendent Tim Saylor earlier this week.
The OEA received a written complaint that the board entered into a lease agreement with the city of Loyall that allowed the city to receive a great financial benefit with the district property. The complaint also alleged that the board later did not accept the highest bid for the sale of the school.
The city and the board entered into a lease agreement on Sept. 1, 2001, for $100 per month soon after the school was closed.
According to the report, "district officials and board members indicated to OEA that there was support for the lease agreement because it would relieve the district from some of the expense of maintaining the property."
The lease agreement remains in effect because the sale of the school has not been finalized.
Bids for the school were sought by the board earlier this year with attorney Russell Alred presenting the highest of three proposals at $225,000.
The board rejected the bids in June but did agree to sell a lot next to the school building for $75,000 to the Calvary Baptist Church.
The remaining property was re-advertised for bidding later that month, with only one bid received of $50,000 from the city of Loyall. The offer was accepted by the board in July.
District officials, according to the OEA, were pleased with the plans the city had for the school, including a day care program, adult education/GED classes, lifeskills training, Boys and Girls Club use of the gym and a heating assistance program.
"Board members found these programs to be in the best interest of local children and the Loyall community, and some board members felt that such a lease agreement could improve relations between any residents of Loyall that might not be as supportive of the school board since the closure of its elementary school," according to the OEA report.
Even though the district lost approximately $100,000 by selling the school to the city and church instead of Alred, some board members told the OEA, according to the report, that "commercial development was not in the best interest of the residents of Loyall."
"While the rejection of a bid $100,000 greater than the ultimate sale price is subject to question on business grounds, the district would realize more than fair market value at the $125,000 level, and the district is not bound by law to take the highest bid," according to the report.
Representatives of the district sought advice from the Kentucky Department of Education during the process of leasing and attempting to sell the Loyall property, a point the board used in its defense.
The report also stated that district officials were surprised that the city of Loyall submitted the only bid in the second round of bidding.
The complaint also stated that board chairman Gary Farmer had stated at a board meeting before the property was sold that he had offered or promised the school property to the city of Loyall or its mayor. Farmer told the OEA that he said if possible, he had a preference for the city acquiring the property, but that no public or private promise or commitment was made by him to convey the school and grounds to the city.
According to the report, "board members interviewed recalled different versions of a statement regarding the sale of the Loyall school. ... But the investigation did not establish conclusively that Mr. Farmer made a public statement committing the district to selling the property to the city."
The OEA said in its report that additional information should be sent by Nov. 10 before it issues a final report.