The district finally put the contract for the purchase of the MLK, Jr. Elementary property to First AME church. I'm no lawyer but maybe someone out there is because there are a few things that strike me.
One is on page 15 section N. It's for something called Exchange Cooperation which is in the U.S. tax code, Section 1031. I can't tell if it was put in as a general course of how you execute this kind of sale or as a prelude to something else coming. From the IRS webpage:
Whenever you sell business or investment property and you have a gain, you generally have to pay tax on the gain at the time of sale. IRC Section 1031 provides an exception and allows you to postpone paying tax on the gain if you reinvest the proceeds in similar property as part of a qualifying like-kind exchange. Gain deferred in a like-kind exchange under IRC Section 1031 is tax-deferred, but it is not tax-free.
Okay, so the district may be able to put off taxes on the sale. But then there's this:
To accomplish a Section 1031 exchange, there must be an exchange of properties. The simplest type of Section 1031 exchange is a simultaneous swap of one property for another. While a like-kind exchange does not have to be a simultaneous swap of properties, you must meet two time limits or the entire gain will be taxable. These limits cannot be extended for any circumstance or hardship except in the case of presidentially declared disasters. It is important to know that taking control of cash or other proceeds before the exchange is complete may disqualify the entire transaction from like-kind exchange treatment and make ALL gain immediately taxable. One way to avoid premature receipt of cash or other proceeds is to use a qualified intermediary or other exchange facilitator to hold those proceeds until the exchange is complete.
Is this pro forma or is there something else going on that made them put this in the Agreement?
Also, on the first page of the Covenant Agreement, they called the building "Martin Luther King Elementary School" but its real name is Martin Luther King, Jr (as that is the name of the man it honored). It is a legal document so I would think this would matter.
Interestingly, the district will still get rent out of this deal if First AME operates or develops the property contrary to an of the agreed-to conditions of the agreement. As well this agreement expires in 40 years.
In regard to a worry from a nearby Jewish resident that First AME's mission statement is Christian-based, there is a nondiscrimination clause stating:
The Purchaser agrees to comply with all local, state, and federal laws prohibiting discrimination with regard to race, creed, religious belief, color, national origin, sex, sexual orientation, marital status, age, or the presence of any sensory, mental, or physical handicap.