Opinion ID: 176682
Heading Depth: 4
Heading Rank: 2

Heading: The $2 Million Sale Price

Text: With respect to the option to purchase, case law before 2005 suggested that, generally, a sale of public property to a religious organization for less than market value would likely violate the Establishment Clause. See, e.g., Freedom from Religion Found., Inc. v. City of Marshfield, 203 F.3d 487, 492 (7th Cir.2000) (sale constitutional even though city did not solicit alternate bids: sale complied with state law, purchaser paid market value, and the city had no further maintenance responsibilities); Southside Fair Hous. Comm. v. City of New York, 928 F.2d 1336, 1348-49 (2d Cir.1991) (sale constitutional where party paid market value, land was transferred for private use, and property did not appear connected to the city in any way). But no case in the Ninth Circuit or elsewhere had held that a below-market sale would be unconstitutional where the organization also executed an important city policy and saved the city moneythe situation with which we are confronted here. The City did not give the BRM a gift; in fact, it received substantial consideration from the BRM. In return for management and ownership of the property, the City was relieved of the obligation and costs of operating the shelter, while at the same time ensuring as a matter of City policy that the shelter stayed open. Moreover, although there might be an issue of fact as to the market value of the property, it would not have been clear to a reasonable official that setting the option price at $2 million would violate the Constitution. The appraisal prepared at the request of the City of Community House was accompanied by an explicit warning that the $3.22 million use value was not market value. Knipe told the City that the figure might be used as an opening offer during purchase negotiations, but the City was required by law to put the property up for auction. It could hardly have set the minimum auction price at the highest possible value and expect to receive any bids. The City knew only that the most probable sale price of the building was somewhere between $850,000 and $3.22 million. The property failed to receive a satisfactory bid at $2.5 million. [5] The BRM initially wanted to pay only $1.8 million. Negotiating a $2 million option price, which under the lease would increase as time went on, seems a reasonable solution to the somewhat elusive concept of market value. Having received no viable bids at the auction, the City was not required to begin the entire the process all over again. Because the facility did not sell at the auction, the City Council was specifically empowered by Idaho law to dispose of the property however it believed was in the best interest of the [C]ity. Idaho Code § 50-1403(1). And it did so. Even if the auction had generated a viable bid, the City would not have been required to accept it. No principle of Establishment Clause jurisprudence requires that the government choose a secular entity over a religious one simply because it is secular. Having had problems with CHI's management in the past, the City was not obligated to continue to work with CHI when another opportunity presented itself. CHI was consistently late in providing the required financial audits and rental income reports to the City. CHI faced an allegation of embezzlement, and the President of CHI admitted that CHI had not been able properly to track all of its money. The City had given CHI a chance at helping the City ensure that the Boise homeless would have a place to sleepa chance that lasted nearly ten years. Its decision to give a similar chance to the BRM did not violate the First Amendment.