The Naylor Act Explained: How California School Districts Handle Surplus Playgrounds, Playing Fields, and Recreational Property

When a California school district closes a school and starts the process of selling or leasing the site, the Naylor Act is one of the first complications counsel raises. If any meaningful portion of the property includes a playground, playing field, or other outdoor recreational space, the district may be required to offer that portion to local public agencies first — at a price that can be as low as 25% of fair market value.

This is the kind of statutory framework that costs districts money quietly. Boards that do not understand the Naylor Act early enough can find themselves with property dispositions that produce a fraction of expected revenue. Districts that understand the framework can structure transactions to minimize the impact, qualify for exemptions, or design around it entirely.

This guide walks through the Naylor Act statute, when it applies, how the pricing formula actually works, what exemptions are available, and how it interacts with the broader surplus property and 7-11 committee process.

What the Naylor Act actually is

The Naylor Act is codified at Education Code sections 17485 through 17500. Originally adopted in 1981 (then later recodified during 1996 reorganization), the Act was named for Assemblymember Robert Naylor and reflects a specific legislative concern: as California school districts dispose of surplus property, the loss of playgrounds and playing fields would permanently reduce recreational space available to surrounding communities — communities that, in many cases, had assumed those facilities would be permanently available.

Education Code 17485 sets out the legislative intent directly:

"The Legislature is concerned that school playgrounds, playing fields, and recreational real property will be lost for those uses by the surrounding communities even if those communities in their planning process have assumed that the properties would be permanently available for recreational purposes. It is the intent of the Legislature in enacting this article to allow school districts to recover their investment in surplus property while making it possible for other agencies of government to acquire the property and keep it available for playground, playing field or other outdoor recreational and open-space purposes."

The Act is, in other words, a balancing statute. It tries to honor the district's interest in monetizing surplus property while preserving the community's interest in continued recreational access. That balance is achieved through a priority-offer process at a discounted price, with caps on how much of a district's portfolio can be acquired this way.

When does the Naylor Act apply?

Education Code 17486 specifies the three conditions that must all be present for the Naylor Act to apply to a particular surplus property:

Condition 1 — Recreational use. All or a portion of the property is used for school playground, playing field, or other outdoor recreational purposes and open-space land particularly suited for recreational purposes.

Condition 2 — Eight-year occupancy. The land has been used for such recreational purposes for at least eight years immediately preceding the board's decision to sell or lease the property.

Condition 3 — No comparable alternative. No other available publicly owned land in the vicinity is adequate to meet the existing and foreseeable needs of the community for playground, playing field, or other outdoor recreational and open-space purposes. This determination is made by the governing body of the agency that proposes to purchase or lease land from the district.

All three conditions must apply. If the property has not been used for recreational purposes for at least eight years, the Naylor Act does not apply. If the acquiring agency cannot make the no-comparable-alternative finding, the Act does not require the discounted-price offer.

The "vacant land never used for recreation" example is a common district question. Vacant land that has not been and is not now used for playground, playing field, or recreation purposes is not subject to the Naylor Act. The district may dispose of vacant land through other surplus property procedures without the Naylor Act priority offer.

The priority offer sequence

When the Naylor Act applies, the district must offer the recreational portions of the property to specific public agencies in a defined priority order before disposing to the general public. The priority sequence under Education Code 17489 and related sections:

1. First priority — any city within which the land is situated.
2. Second priority — any park or recreation district within which the land is situated.
3. Third priority — any regional park authority having jurisdiction within the area in which the land is situated.
4. Fourth priority — any county within which the land is situated.

Each notified agency has 60 days to respond in writing after receiving the district's notification. The notice must include enough information for the agency to evaluate the offer: property description, intended terms of sale or lease, and the Naylor Act pricing applicable.

If an agency expresses interest, the district must enter into good-faith negotiations. If no agency responds within the 60-day window, the district may proceed with disposition to the general public through other surplus property procedures under Education Code 17455 et seq.

The pricing formula: how Naylor Act discount actually works

This is where the Act produces its largest financial consequences. The pricing formula for Naylor Act sales is one of the more complex provisions in California school property law.

The price ceiling

Under Education Code 17491, the sales price for property sold under the Naylor Act shall not exceed the district's cost of the original acquisition, with two adjustments:

Adjustment 1 — CPI inflation. The original acquisition cost is adjusted for any percentage increase or decrease in the Consumer Price Index from the original date of purchase to the year in which the offer of sale is made.

Adjustment 2 — Improvements. Add the cost of any improvements to the land made by the school district since the original acquisition.

So if a district purchased a 10-acre school site in 1965 for $250,000, made $1.5 million in improvements over the decades, and CPI has multiplied roughly tenfold since 1965, the Naylor Act ceiling might be approximately ($250,000 × 10 CPI factor) + $1.5 million in improvements = $4 million. Even if the actual fair market value is $25 million, the Naylor Act ceiling caps the sale at $4 million.

This is the central tension. Surplus school property in California has often appreciated dramatically beyond original cost — particularly in coastal and urban markets — but the Naylor Act prevents the district from recovering that appreciation when selling to a public agency exercising priority rights.

The price floor

Education Code 17491 also establishes a floor: the final sale price shall not be less than 25% of the fair market value of the land, or less than the amount necessary to retire the share of local bonded indebtedness plus the amount of the original cost of approved state aid applications on the property — whichever is greater.

So in the example above, if fair market value is $25 million, the Naylor Act floor would be 25% of that, or $6.25 million. The price ceiling at $4 million is below the floor of $6.25 million — so the floor controls, and the price would be $6.25 million.

In practice, the price floor often determines the actual sale price for Naylor Act transactions on appreciated property. The ceiling controls on properties where original cost plus improvements remains above 25% of current fair market value, which is increasingly rare.

The California Supreme Court addressed this framework in City of Moorpark v. Moorpark Unified School Dist. (1991), which construed the Naylor Act's predecessor provisions (then sections 39390-39404) and confirmed the price-floor structure.

Lease rates

Under Education Code 17491(c), the Naylor Act also sets a maximum annual lease rate when the property is leased rather than sold. The calculation produces a lease rate substantially below market rate, reflecting the same intent of preserving public recreational access at affordable cost.

The 30% portfolio cap

Education Code 17497 establishes a critical limitation on the cumulative impact of the Naylor Act on any single district. No more than 30% of the total surplus school acreage owned by a school district may be purchased or leased by public agencies through the Naylor Act. This cap includes both developed and undeveloped property.

For districts with substantial surplus property, this cap can be significant. A district with 100 acres of surplus school land can have at most 30 acres acquired by public agencies under Naylor Act terms; the remaining 70 acres can be disposed of through other surplus property procedures at fair market value.

The cap is district-wide, not per-property. Districts disposing of multiple properties over time need to track cumulative Naylor Act acquisitions against the cap.

Exemptions: when the Naylor Act doesn't apply

Several pathways allow districts to exempt property from the Naylor Act framework:

Statutory exemptions under Education Code 17497

Under Education Code 17497, a district may exempt surplus properties from the Naylor Act under specific circumstances:

Two-for-one exemption for school site acquisition. A district may exempt two surplus properties from the Naylor Act for each planned school site acquisition, provided the district has an immediate need for an additional school site and is actively seeking to acquire one.

One-for-one exemption for classroom expansion. A district may exempt one surplus property from the Naylor Act if the district is seeking immediate expansion of the classroom capacity of an existing school by 50% or more.

These exemptions are particularly relevant for districts that are simultaneously growing in some areas and contracting in others — a common pattern in California, where some regions (Central Valley) are growing while others (coastal Bay Area, Los Angeles) are declining.

The eight-year rule

If the property has not been used for recreational purposes for at least eight years immediately preceding the disposition decision, the Naylor Act does not apply. Districts that close a school and want to dispose of the site quickly sometimes face the question of whether prior recreational use triggers the Naylor Act. The eight-year measurement starts from the board's decision to sell or lease, looking backward.

The "no comparable alternative" test

If the acquiring agency cannot make the determination that no other available publicly owned land in the vicinity is adequate to meet community recreational needs, the Naylor Act priority offer is not triggered. In areas with substantial existing parks and recreational facilities, this finding can be difficult for cities or park districts to make in good faith.

Property never used as a school

Property that was never used as a school site — vacant land, maintenance yards, district office sites — is generally not subject to the Naylor Act because the recreational-use condition is not met. This is also relevant to the 7-11 committee framework under SB 820, which made the 7-11 committee optional for such properties.

The Surplus Land Act layer

The Naylor Act applies on top of, not in place of, the Surplus Land Act (Government Code 54220 et seq.). Districts disposing of surplus recreational property must satisfy both statutory frameworks.

The Surplus Land Act requires offers to housing sponsors and other public agencies before disposition to the general public. The Naylor Act requires offers to cities, park districts, regional park authorities, and counties for recreational purposes at the priority pricing.

Under AB 130 (signed June 30, 2025), the Surplus Land Act framework changed materially for school districts. The exemption that previously applied to properties going through the 7-11 committee process was removed. This means districts disposing of recreational property must now run both the Naylor Act analysis and the Surplus Land Act analysis in parallel, and identify which (if any) Surplus Land Act exemption applies.

The new "agency use" exemption that AB 130 added — for property dispositions where proceeds will directly further the district's work — appears broadly available to school districts but does not exempt the property from the Naylor Act. The two frameworks operate independently.

How the Naylor Act interacts with the 7-11 committee process

The 7-11 committee — California's required advisory committee under Education Code 17387 et seq. — reviews surplus property and recommends uses to the board. The committee's work is separate from the Naylor Act offer process, but the two often run in parallel.

A typical sequence for surplus recreational property:

Months 1-2. Board adopts resolution forming the 7-11 committee. Legal counsel begins Naylor Act analysis (was property used for recreation for 8+ years? are there comparable alternatives in the vicinity?).

Months 3-6. 7-11 committee conducts public meetings, gathers community input, evaluates recreational use of the property. Counsel completes Surplus Land Act analysis and Naylor Act analysis in parallel.

Month 7. 7-11 committee submits report to board. Board considers report and decides whether to declare property surplus. Naylor Act applicability determined.

Months 8-9. If Naylor Act applies, the district issues priority offers to cities, park districts, regional park authorities, and counties. Each has 60 days to respond.

Months 10-12. Negotiations with responding agencies. If no agency responds, district proceeds with disposition through standard Surplus Land Act and Education Code 17455 et seq. procedures.

Months 13-15. Final board action approving sale or lease. Recording and close.

The Naylor Act adds three to six months to a typical surplus property timeline, primarily through the 60-day response window for priority offers and any subsequent negotiations.

Strategic considerations for districts

For districts approaching surplus recreational property disposition, several strategic considerations matter:

Document recreational use history. If the property's recreational use lasted less than eight years, the Naylor Act does not apply. Reliable documentation — district facility records, work orders, scheduling history, community use logs — supports the analysis.

Engage local cities and park districts early. A city that genuinely wants to acquire recreational property at Naylor Act pricing will make the no-comparable-alternative finding. A city that does not particularly want the property may not make the finding. Early conversations clarify which scenario applies.

Calculate the Naylor Act floor honestly. The 25%-of-fair-market-value floor often produces meaningful disposition revenue even on appreciated property. Districts that assume the Naylor Act will produce a token payment sometimes underestimate the floor calculation.

Consider partial disposition. A property where only part of the site was used for recreation may allow disposition of the non-recreational portion at fair market value, with only the recreational portion subject to Naylor Act pricing.

Pursue exemptions where applicable. If the district is also acquiring new sites or expanding existing school capacity by 50% or more, the Education Code 17497 exemptions can apply.

Coordinate with the 7-11 committee and Surplus Land Act analyses. Districts that treat the Naylor Act as an afterthought during the 7-11 committee process produce reports that miss critical disposition constraints. Integrated analysis is faster, cheaper, and more defensible.

A real-world example: the Pacific View Elementary case

The Pacific View Elementary site in Encinitas (San Dieguito Union High School District) became a high-profile example of Naylor Act issues. The school had closed and the district sought to monetize the site. Community advocates argued that the Naylor Act required the district to offer the property to the city at substantially below market rates because the playground had been used for community recreation for decades.

The case illustrated the political and legal complexity that surrounds Naylor Act dispositions. Community pressure, city interest in acquiring at Naylor Act pricing, and district financial interest in market-rate disposition often pull in different directions. The case eventually resolved through negotiation, but it highlighted how community engagement, the 7-11 committee process, and the Naylor Act framework can become entangled in contentious disposition decisions.

Districts that face similar dynamics should expect community advocacy organizations to surface the Naylor Act early in the process. The advocacy is sometimes legally sound and sometimes not — but it is consistently part of the political environment surrounding California school closures.

Frequently asked questions

What is the Naylor Act?

The Naylor Act is California Education Code sections 17485 through 17500, which require school districts to offer surplus property used as playgrounds, playing fields, or other outdoor recreational space to specific public agencies in a priority order — cities, park districts, regional park authorities, and counties — at limited prices before disposing to the general public. The purpose is to preserve community access to recreational space that may have been part of community planning for decades.

When does the Naylor Act apply to surplus school property?

The Naylor Act applies when three conditions are all present: (1) all or a portion of the property is used for school playground, playing field, or other outdoor recreational purposes; (2) the land has been used for such purposes for at least eight years immediately preceding the board's decision to sell or lease; and (3) no other available publicly owned land in the vicinity is adequate to meet community recreational needs. All three conditions must be met under Education Code 17486.

What is the Naylor Act sale price?

The Naylor Act sale price is bounded by both a ceiling and a floor. The ceiling is the district's original acquisition cost, adjusted for CPI inflation and any improvements made by the district. The floor is the greater of 25% of fair market value or the amount necessary to retire the share of local bonded indebtedness plus the amount of original state aid applications. On appreciated property, the 25% floor typically controls.

Can a school district avoid the Naylor Act?

Yes, in specific circumstances. Education Code 17497 allows exemptions: two surplus properties per planned school site acquisition (where the district has immediate need for a new site), or one surplus property if the district is expanding existing school classroom capacity by 50% or more. The Act also does not apply if the property has not been used for recreational purposes for at least eight years preceding the disposition, or if comparable alternative public recreational land is available in the vicinity.

How long does the Naylor Act process take?

The Naylor Act priority offer process adds three to six months to a typical surplus property disposition. After the district issues the priority offers, each notified agency has 60 days to respond. If an agency expresses interest, good-faith negotiations follow. Total disposition timelines including Naylor Act priority offers typically run twelve to fifteen months from initial board action to close.

What is the 30% acreage cap?

Education Code 17497 limits the cumulative impact of the Naylor Act on any single district. No more than 30% of the total surplus school acreage owned by a school district — including both developed and undeveloped property — may be purchased or leased by public agencies through the Naylor Act. The cap is district-wide and tracks cumulative acquisitions over time.

Does the Naylor Act apply to lease transactions?

Yes. Education Code 17491 establishes pricing rules for both sales and leases under the Naylor Act. The lease rate calculation produces an annual rate substantially below market, reflecting the same statutory intent of preserving public recreational access at affordable cost. Leases longer than 30 days trigger the same priority offer sequence as sales.

Does the Naylor Act apply to vacant land?

Generally no. If the property has not been used for playground, playing field, or recreational purposes, the Naylor Act does not apply. Vacant land — including unused district-owned parcels, maintenance yards, and district office sites — typically falls outside the Naylor Act framework, though it remains subject to other surplus property procedures including the Surplus Land Act.

How does the Naylor Act interact with the Surplus Land Act?

The two frameworks operate independently and both can apply simultaneously. The Naylor Act requires priority offers to cities, park districts, and counties for recreational purposes. The Surplus Land Act requires offers to housing sponsors and other public agencies. After AB 130 (June 2025), the previous Surplus Land Act exemption based on the 7-11 committee process was removed. Districts disposing of recreational property must satisfy both statutory frameworks.

Can a city use the Naylor Act to block disposition entirely?

Not exactly. A city can exercise priority rights to acquire the recreational portion at Naylor Act pricing — which prevents disposition at fair market value to a private buyer for that portion. But the city must actually acquire the property within the negotiation window and pay the applicable price. If the city fails to follow through, the district may proceed with disposition to the general public.

What to do this quarter

For districts considering disposition of surplus property that includes recreational space:

1. Have counsel run the Naylor Act analysis early. Was the property used for recreation for 8+ years? Are comparable alternatives available? Which exemptions might apply? These questions should be answered before the 7-11 committee process begins.

2. Engage your city or county recreation department. A clear conversation about whether the city or park district intends to exercise priority rights — and at what price — saves months of process.

3. Run Naylor Act and Surplus Land Act analyses in parallel with the 7-11 committee process. Integrated analysis is faster and more defensible than sequential analysis.

4. Calculate disposition revenue honestly. The Naylor Act floor at 25% of fair market value often produces meaningful revenue. Boards that assume zero Naylor Act revenue may underestimate their disposition options.

---

School Leaders supports California school districts through surplus property disposition, including Naylor Act analysis, Surplus Land Act compliance, 7-11 committee processes, and the broader disposition framework for closed schools. We work with boards, superintendents, CBOs, and district counsel to maximize property value while protecting community trust and state funding eligibility.

Contact our team for a confidential conversation about your district's surplus property strategy.

Related reading: Surplus Property & 7-11 Committee Guide | School Closures & AB 1912 Guide | Fiscal Stabilization Playbook | Five-Year Master Plan Guide