(1) Except as authorized by subsection (2) or (3) of this section, if lands, buildings, or lands and buildings are sold by a school district, the proceeds, less the costs, of such sale shall be deposited in and expended from either the bond redemption fund or the capital reserve fund, or both such funds of the school district, as determined by the board of education. This provision shall apply also to the proceeds from any insurance which may accrue as a result of fire, explosion, or other casualty when such insurance proceeds cannot be used in an advantageous manner to repair the property to which the damage occurred.

(2) (a) Prior to July 1, 2005, a school district may sell land, buildings, or land and buildings and deposit in and expend from its general fund the proceeds, less costs, of the sale if:

(I) The board of education of the school district declares a fiscal shortfall emergency pursuant to paragraph (b) of this subsection (2);

(II) The school district sells the property to a lessor, including but not limited to the state treasurer pursuant to section 22-54-110 (2)(d), who, at the time of the sale, leases all of the property back to the district pursuant to a lease-purchase agreement that is subject to annual appropriation by the school district and has a term of no more than one year; and

(III) The state treasurer approves in writing the terms of the sale and lease-purchase agreements.

(b) A board of education of a school district may declare a fiscal shortfall emergency if:

(I) The district either:

(A) Is denied a loan by the state treasurer pursuant to section 22-54-110; or

(B) Notifies the state treasurer that the district is unable to repay a loan obtained pursuant to section 22-54-110 in the same state fiscal year that the loan was made;

(II) The board of education of the school district holds at least one public hearing, after full and timely notice to the public, on the existence of a fiscal shortfall emergency; and

(III) At a public meeting held after the hearing held pursuant to subparagraph (II) of this paragraph (b), at least two-thirds of the members of the board of education of the school district approve a resolution declaring the fiscal shortfall emergency.

(3) The proceeds, less the costs, of the sale of lands, buildings, or lands and buildings that are sold by a school district may be applied, in the discretion of the board of education, to pension liabilities of the district or to make payments to the public employees' retirement association of Colorado or to the refinancing of any transaction entered into for such purposes. Notwithstanding any other provision of law, any such proceeds that are held in a separate account to secure the school district's obligation to make payments to the association may be invested by the district in any investment in which moneys of the association may be invested.