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Iowa state auditor critical of Davenport CSD's sale of former Lincoln Elementary building, citing conflict of interest

The auditor takes issue with the sale to a nonprofit for a sum far lower than other offers the district received, in part due to a conflict of interest.

DAVENPORT, Iowa — The Iowa State Auditor took issue with and made recommendations on the Davenport Community School District's sale of the former Lincoln Elementary School building due to a conflict of interest.

Auditor Rob Sand made several observations from the details of the sale after its approval in 2019, noting aspects of the transaction that were unusual.

The Davenport CSD Board took offers for the building from 2016 to 2019, and landed on selling it to Together Making a Better Community, a local non-profit organization for a sum of $30,000.

Sand first points out the irregularity of accepting this proposal, noting that two other buyers had made much larger offers, with one offering $290,000 for the property; almost 10x the price of TMBC's.

The auditor notes that a higher-price sale would add the building's value to Scott County tax rolls and create a revenue stream to the District.

Instead, the building was set to go to a non-profit organization that is exempt from property taxes, which creates an ongoing loss of revenue in addition to the low sale price.

With these points, Auditor Sand said that it should be the Board's responsibility to make decisions that benefit the District and its taxpayers.

It is also his belief that the heavily-discounted sale of the building to a non-profit effectively makes it a donation; which would be in violation of Article III of the Constitution of Iowa and a violation of guidance made by the Attorney General.

Sand also reports a clear-cut conflict of interest in the transaction that was ignored when the decision was made.

Together Making a Better Community is affiliated with Third Missionary Baptist Church. Linda Hayes, the Board member who had made the motion to sell to TMBC, was employed by Third Missionary Baptist Church during the process. 

Despite her disclosing the conflict of interest in March 2018, she continued to contribute to discussions of the sale, including considerations of TMBC's offer. Although she made the motion to sell to TMBC, she did abstain from the voting process.

With these observations, Auditor Sands made recommendations that the Board ensures their actions comply with Iowa law and Attorney General guidance, take the necessary steps to ensure transparency in all decisions, and review the decision in light of the conflict of interest.

District officials later met with Iowa State auditors, and they say that the District will be following the recommendations.