Megillah 26A

יקחו ספרים. ספרים ⁠— לוקחין תורה.

they may purchase scrolls of the Prophets and the Writings. If they sold scrolls of the Prophets and Writings, they may purchase a Torah scroll.

אבל אם מכרו תורה ⁠— לא יקחו ספרים. ספרים ⁠— לא יקחו מטפחות. מטפחות ⁠— לא יקחו תיבה. תיבה ⁠— לא יקחו בית הכנסת. בית הכנסת ⁠— לא יקחו את הרחוב.

However, the proceeds of a sale of a sacred item may not be used to purchase an item of a lesser degree of sanctity. Therefore, if they sold a Torah scroll, they may not use the proceeds to purchase scrolls of the Prophets and the Writings. If they sold scrolls of the Prophets and Writings, they may not purchase wrapping cloths. If they sold wrapping cloths, they may not purchase an ark. If they sold an ark, they may not purchase a synagogue. If they sold a synagogue, they may not purchase a town square.

וכן במותריהן.

And similarly, the same limitation applies to any surplus funds from the sale of sacred items, i.e., if after selling an item and purchasing something of a greater degree of sanctity there remain additional, unused funds, the leftover funds are subject to the same principle and may be used to purchase only something of a degree of sanctity greater than that of the original item.

גמ׳ בני העיר שמכרו רחובה של עיר. אמר רבה בר בר חנה אמר רבי יוחנן: זו דברי רבי מנחם בר יוסי סתומתאה, אבל חכמים אומרים: הרחוב אין בו משום קדושה.

Talmud: The Mishnah states: Residents of a town who sold the town square may purchase a synagogue with the proceeds. Concerning this Mishnah, Rabba bar bar Ḥana said that R' Yoḥanan said: This is the statement of R' Menaḥem bar Yosei, cited unattributed. However, the Rabbis say: The town square does not have any sanctity. Therefore, if it is sold, the residents may use the money from the sale for any purpose.