Memorandum of Agreement to Build and Operate a Sewage Plant
In Lobolito, Inc. v. North Pocono School District, 562 Pa. 380, 755 A.2d 1287 (2000), the Supreme Court held that a memorandum of agreement between a previous school board and a developer, under which the developer proposed to construct and operate a sewage plant, essentially encompassed the governmental function of constructing a new school rather than the arguably proprietary function of providing sewage treatment services.
In reaching this conclusion, the Court stated:
Unless the school was built, no sewage disposal services would be necessary.
Thus, the driving force behind the Memorandum of Agreement was construction of the new school.
The services aspect of the agreement would be devoid of meaning without the school board's predicate promise to build the school.
Given that the authority to build schools rests with local boards and that decisions concerning the creation and operation of schools is a basic governmental function, we find the successor school board was not obligated to honor the agreement entered into by the predecessor school board and Lobolito. to require such a contract to be enforced would be to inappropriately compel the successor board to either follow the governmental policies of its predecessor or be faced with substantial liability, including the possibility of consequential damages, for merely seeking to implement its own policies. Id. at 387-88, 755 A.2d at 1291.