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EDUCATION-SCHOOL PROPERTY-LEASES: Where education district will use ninety 

percent of property for educational programs and leases for remaining ten percent are for 

commercial uses that do not interfere with educational programs, existing leases do not 

disqualify the purchase of the property by the district. Under these facts, purchasing the 

property subject to existing leases is a purchase for a valid public purpose if the education 

district board determines lease terms are in the best interests of the district. Minn. Stat. 

§ 123B.51. 

(correcting citations in Op. Atty Gen. 622a6; cr. 161B-11(Oct. 25, 2023))

622a6; cr 161b-11

November 13, 2023

Christian R. Shafer

Ratwik, Roszak & Maloney, P.A.

444 Cedar Street, Suite 2100

St. Paul, MN 55101

Re: Request for Opinion

Dear Mr. Shafer:

Thank you for your letter of September 21, 2023, which requests an opinion from this 

Office on whether an education district may purchase a property subject to private commercial 

leases. You represent the Hiawatha Valley Education District (HVED), an education district 

created under Minn. Stat. § 123A.15, and request this opinion pursuant to Minn. Stat. § 8.07. 

BACKGROUND

The facts as you present them are that HVED is comprised of twelve-member school 

districts and two charter schools. HVED provides special education, out-of-school placement 

options, alternative education programs, and other education-related programs and services to 

children, particularly children with disabilities. 

HVED currently houses its operations at five sites and seeks to consolidate its facilities. 

The district is in discussion with a mall property at a central location that would be substantially 

renovated to meet the district’s needs. Your letter indicates the mall has sufficient space 

(approximately 83,000 square feet) and flexibility for current programming and anticipated future 

expansion opportunities. Having all HVED staff at one location will enhance the safety and 

security of students given the increased total number of staff near a student at any given time. 

HVED will be using at least ninety percent of the property under consideration to house its 

educational programs. The remaining ten percent of the property is subject to commercial tenant 

leases of varying duration and terms. At least one lease extends to 2032 but allows either the 
Christian R. Shafer

Ratwik, Roszak & Maloney, P.A.

November 13, 2023

Page 2

tenant or landlord to terminate for any reason based on six-months’ notice. The HVED Board of 

Directors is prepared to adopt a resolution stating the areas of the mall occupied by tenants are not 

currently needed for school purposes, and tenant operations will not interfere with the district’s 

educational programs. The resolution will also state that the Board may renew a lease only if the 

lease and tenant occupancy does not interfere with HVED educational programs and the space is 

not necessary for the same. 

QUESTIONS PRESENTED

1. Is an education district authorized to purchase a mall property subject to private 

tenant leases if the primary purpose of the purchase is to house educational 

programs, and if the leased spaces are not necessary for, and the lease does not 

interfere with, the educational programs taking place on the mall property? 

2. Would the purchase of a property subject to existing leases qualify as a purchase 

for a valid public purpose? 

SUMMARY OF CONCLUSION

Where the education district will use ninety percent of the purchased property for its current 

and anticipated educational programs and leases for the remaining ten percent are for commercial 

operations that do not interfere with district educational programs, the existing leases do not 

disqualify the purchase of the property. Under these facts, purchasing the property subject to 

existing commercial leases is a purchase for a valid public purpose if the terms of the leases are 

determined to be in the best interests of the district. 

ANALYSIS

Authority to Purchase Property Subject to Leases. Your letter acknowledges that 

school boards are statutorily authorized to purchase property and lease out property, but it is not 

readily apparent whether school districts can purchase property subject to an existing lease. You 

argue that such authority can be implied based on various principles of statutory construction. 

First, however, as you note the board of an education district formed under section 123A.15

is governed by laws applicable to independent school districts unless specifically provided 

otherwise. Minn. Stat. § 123A.17, subd. 4. General powers of independent school districts include 

both specific powers granted by the Legislature and implied powers. Minn. Stat. § 123B.02, subd. 

1. 

School boards of independent school districts are authorized to purchase property 

necessary for school purposes. Minn. Stat. § 123B.51, subd. 1. Recognizing that there may not 

be an exact match of purchased and necessary space, the Legislature also authorized school 

districts to: 
Christian R. Shafer

Ratwik, Roszak & Maloney, P.A.

November 13, 2023

Page 3

lease to any person, business, or organization real property that is not needed for 

school purposes . . . if the board determines that leasing part of the property does 

not interfere with the educational programs taking place on the property. The board 

may charge and collect reasonable consideration for the lease and may determine 

the terms and conditions of the lease. 

Minn. Stat. § 123B.51, subd. 4(a).1 We are not aware of any specific provision of law otherwise 

providing for real property purchases or leases by education districts, so conclude that Minn. Stat. 

§ 123B.51 applies to HVED as an education district. See Minn. Stat. § 123A.17, subd. 4 (education 

district governed by laws applicable to independent districts unless specifically provided 

otherwise). 

You argue that the power to purchase real property subject to a lease must be implied to 

give effect to both the purchase authority and lease out authority of section 123B.51, and to 

conclude otherwise would lead to an absurd result. See Minn. Stat. § 645.17(1) and (2).

We agree that the authority to purchase subject to an existing lease may be fairly implied 

from subdivisions 1 and 4 of Minn. Stat. § 123B.51 The Legislature clearly authorizes a purchase 

of property by a school district and separately authorizes the district to lease to a business. The 

power to purchase subject to a lease is fairly implied from those two express authorizations. Cf.

In re Hubbard, 778 N.W.2d 313, 321 (Minn. 2010) (holding that while court is reluctant to find 

implied statutory authority of an administrative agency, agency’s authority need not be given a 

“cramped reading” and enlargement of powers by implication must be “fairly drawn and fairly 

evident from the agency’s objectives and powers expressly given by the legislature.” quoting In re 

N. States Power Co., 414 N.W.2d 383, 387 (Minn. 1987) and Peoples Natural Gas v. Minn. Pub. 

Utils. Comm’n, 369 N.W.2d 530, 534 (Minn. 1985)); Welsh v. City of Orono, 355 N.W.2d 117, 

120 (Minn. 1984) (implied powers of municipality must be in aid of those powers expressly 

conferred). Consistent with a finding of implied authority here, we previously determined that a 

school district could take title to property subject to a reversionary interest in favor of a prior 

grantee. Op. Atty. Gen. 469-a-15 (Nov. 20, 1969). 

To effectuate the legislative intent in subdivision 4 that the board “may determine terms 

and conditions of the lease,” the school district must examine the terms of the existing leases to 

ensure not only the absence of a conflict with the district’s educational uses of the building, but 

that the terms of the leases are reasonable and that assuming them is in the district’s best interests. 

See Op. Atty. Gen. 622a6 (Sept. 25, 1946) (in opinion predating section 123B.51, holding school 

district may lease property to private corporation upon such terms as board reasonably deems to 

be for the best interests of the school district). This should be part of the district’s due diligence 

in examining any encumbrance on title before the purchase. After the purchase, in addition to not 

renewing any lease if the space is needed for educational purposes, HVED should also be prepared 

1 A previous version of this statute allowed leases out only to “persons or organizations.” Minn. 

Stat. § 123.36, subd. 10(a)(1988). A 1990 amendment added “business” to the list of permissible 

lessees. 1990 Minn. Laws ch. 562, art. 8, § 23. 
Christian R. Shafer

Ratwik, Roszak & Maloney, P.A.

November 13, 2023

Page 4

to exercise rights of termination in the existing leases if doing so is in the best interest of the 

district. 

Public Purpose. You also ask us to opine whether the described purchase would qualify 

as one for a valid public purpose. The Minnesota Supreme Court has construed “public purpose” 

to mean “such an activity as will serve as a benefit to the community as a body and which, at the 

same time, is directly related to the functions of government.” City of Pipestone v. Madsen, 178 

N.W.2d 594, 599 (1970). As noted in your letter, the applicable caselaw holds that an “incidental” 

private benefit does not disqualify a transaction as being fundamentally for a valid public purpose. 

See Visina v. Freeman, 89 N.W.2d 635, 643 (Minn. 1958). We agree that the benefit accruing to 

private commercial lessees who occupy approximately ten percent of school property that is not 

necessary to the district does not necessarily negate the public purpose. 

This office analyzed the public purpose question in an opinion regarding whether a 

municipal liquor store could extend credit to business customers. Op. Atty. Gen 218-R (Sept. 26, 

1978). That was a somewhat analogous situation in that the authority to extend credit was not 

express in statute. After determining that this authority could be fairly implied from the authority 

to operate the liquor store, we concluded that credit liquor sales could serve a public purpose 

because the Legislature had determined that operation of municipal liquor stores serves the public 

good. However, our opinion cautioned that business practices must comply fully with applicable 

statutes, and credit could not be extended indiscriminately. 

Similarly, the Legislature has determined that leasing out property not needed by school 

districts is a valid function of a district and serves the public good. See Minn. Stat. § 123B.51,

subd. 4. Also similar to the extension of credit, leases must not be entered into indiscriminately, 

however. The terms of each lease must be evaluated carefully to ensure the terms (including 

duration, rent, allocation of risk, nature of the lessee’s use of the property, etc.) are in the district’s 

best interests. Only if that is the case will the leases “serve as a benefit to the community.” 

Madsen, 178 N.W.2d at 599. That question is for the district to decide. 

Thank you again for your inquiry, and we hope this opinion is helpful to you. 

Sincerely,

KEITH ELLISON

Attorney General

Encl: Op. Atty. Gen. 469-a-15 (Nov. 20, 1969)

Op. Atty. Gen. 622a6 (Sept. 25, 1946)

Op. Atty. Gen. 218R (Sept. 26, 1978)

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