An out-of-state arbitrator has recommended that Salt Lake School District sell the soon-to-be-vacant South High School to the state for $1 million - the value of the land - but that the state should allow the district to continue using the pool and other recreational facilities.

"The state should not be asked to pay any more for the property than what a potential developer would pay," wrote Jared Huish, an arbitrator with the American Arbitration Association.Huish also said the vacant hull of the former Lincoln Junior High School near South is a reminder of what could happen to South. In fact, he said, the state may be doing the community a service by purchasing the building.

"The state is probably doing the district and the taxpayers a service in its willingness to step forward and take on a huge remodeling program in order to convert a beautiful old high school complex to a modern and functional campus that will benefit the taxpayers and the educational needs of all citizens," Huish wrote.

The decision, which is nonbinding, is good news for the state, which wants to buy the high school for Salt Lake Community College but hasn't wanted to pay the district's $5 million asking price.

"I wouldn't characterize it as, `We won over those folks (the school district),' " Neal P. Stowe, director of the Division Facilities Construction and Management, said in response to the release of the letter. "But he (the arbitrator) principally supports my entire position, so I'm absolutely delighted."

It does not, however, please school Superintendent John W. Bennion. "I'm somewhat disappointed. I thought the arbitrator might recognize the genuine value beyond the value of the land," Bennion said.

In a letter received Wednesday by the state and the school district, the arbitrator recommended the $1 million

price tag, saying it is a fair value of the land, Bennion reported.

The issue went to an arbitrator when the school district and the state could not agree on a price for the high school.

The arbitrator also suggested that the school district be allowed continued use of the building's pool, food-storage facilities, gyms, shops and vocational-education facilities for 10 years at no cost except its share of operating expenses.

Stowe said some sort of continued use by the school district could probably be agreed upon, but he said that is a negotiating point. He said that arrangement might work during a transitional period and that the community college might some day have a use for the pool, gyms and shops.

Bennion said the arbitrator's reasoning for the $1 million price was that the school district probably can't find another buyer, plus the school will have to undergo extensive remodeling to be brought up to the fire and other building codes necessary to transform it into a community college.

However, the arbitrator also recommended that if the state does not spend $7 million remodeling South High - the amount it has suggested would be required - that any money left over be given to the school district as part of the purchase price.

Bennion disagrees that the district will be left with a white elephant if it doesn't sell to the state. He said there are other options such as moving the district's alternative program, Salt Lake Community High School, from Horace Mann to South, and then renting out any additional space to the college.

The district sold a much smaller school - Roosevelt Junior High School - to the private Rowland Hall-St. Mark's School for $1 million, he said.

"That building (South) is in very good condition. There is value there other than the land," the superintendent said.

Because the arbitrator's recommendation is nonbinding, the district may or may not decide to sell South to the state. The Salt Lake Board of Education will discuss the issue in an executive session on May 17, but a decision won't necessarily be made that day.

Bennion won't guess at the outcome, since board members were only mailed copies of the arbitrator's report Thursday. "I have no feeling (about what the board will do). It would be premature to speculate."

Stowe said he hopes an agreement can reached soon. "We're anxious for the school board to look at the findings carefully so we can resolve it."

South's neighbors have been rooting for a state purchase. At the last school board meeting, representatives of the South High Community Council urged the board to sell the property, saying they are worried South could become another Lincoln Junior High, the nearby school that sits vacant and deteriorating.

If the state purchases South, it would be a while before the community college could move in because of the necessary remodeling. Salt Lake Community College spokesman Jay Williams estimates fall quarter 1989 as the earliest occupancy date. Within five years, the college would like to see a student body of 7,000 at the converted high school.