Can a Mississippi county lease a privately-owned building and let a local food-pantry nonprofit use the space rent-free?

Plain-English summary

A nonprofit food bank in Quitman, Mississippi, has been providing free food to needy residents of Clarke County since 1989. Funded by donations, grants, and food from the Mississippi Food Network, the nonprofit outgrew its current space. The County wanted to help by leasing space in a private building and letting the nonprofit use that space rent-free or at nominal rent.

The County's attorney asked whether this would be legal.

The AG said no. The structure, however well-intentioned, runs into Section 19-3-40(3) (prohibiting use of public funds for any private purpose or grant of donations) and Article 4, Section 66 of the Mississippi Constitution (prohibiting donations except by two-thirds vote of each chamber).

The AG distinguished prior opinions:

• MS AG Op., Ford (Nov. 27, 2018): A county can let a group use a county-owned community center rent-free if the board finds, on its minutes, that the event constitutes sufficient public service to constitute consideration to the County. The County owns the building. The "donation" is access, not money.
• MS AG Op., Gamble (Feb. 6, 2004): Counties may allow private, temporary use of public buildings under uniform policies if any user reimburses the county for utilities and custodial services.

What the County here proposed is structurally different. It involves the County signing a lease for private space and effectively absorbing rent costs that the nonprofit would otherwise pay. That is using public funds to underwrite a private operation. Section 19-5-93 lets counties donate to certain charitable and patriotic societies in narrow ways, but not in this manner.

What this means for you

If you're a Mississippi county wanting to help a nonprofit

Under this opinion, the line is between county-owned space and private space. The AG points to two earlier opinions for what a county can do:

• Allow the nonprofit to use a county-owned building or space rent-free, but only after the board finds on its minutes that the use constitutes sufficient public service to be consideration to the County (MS AG Op., Ford).
• Allow private, temporary use of a public building under a constitutionally sound, uniform policy where the user reimburses the county for utilities and custodial costs (MS AG Op., Gamble).

What the opinion says the county cannot do is spend public funds to lease privately-owned space and then give the nonprofit rent-free or nominal-rent use of it. The AG treats that as an unlawful donation under § 19-3-40(3) and Article 4, § 66, no matter how worthy the nonprofit.

If you're a nonprofit looking for help from local government

Under this opinion, a county cannot lease private space for your operations and let you use it rent-free. The AG leaves open the county-owned-space routes recognized in the Ford and Gamble opinions, and notes that § 19-5-93 authorizes county donations to certain charitable and patriotic societies, but it found that authority does not extend to the donation proposed here.

Common questions

Q: Can the county donate funds to the nonprofit directly?
A: Only if a specific statute authorizes it. Section 19-5-93 lists categories (certain charitable and patriotic organizations), but the food-bank scenario in this opinion did not fit. Without specific authority, direct donation is barred by Section 66.

Q: What if the nonprofit pays fair market rent for the space?
A: Then the County is not subsidizing the lease, and the donation problem disappears. But the question becomes why the County is the leaseholder at all. If the nonprofit pays fair rent, why not rent directly?

Q: Can the county buy the building and let the nonprofit use it?
A: Owning a building and letting a qualified nonprofit use it as a public-service activity is a different scenario, governed by the Ford and Gamble line of opinions. The board would still need a public-service finding on its minutes, and the use would have to be of a public-purpose nature.

Q: Is there any lawful way for the county to provide space?
A: The opinion does not bless an alternative structure, but it distinguishes the county-owned-space scenario it had approved before: a county that owns the building can let a qualified nonprofit use it rent-free if the board makes the public-service finding required by the Ford opinion. The opinion's "no" is specifically about the county leasing private space and passing it to the nonprofit.

Q: What about Section 19-5-93?
A: Section 19-5-93 authorizes county donations to certain charitable and patriotic societies and causes. The AG specifically noted that "that authority does not extend to the type of donation in your request." So this nonprofit would not qualify under § 19-5-93.

Background and statutory framework

Mississippi law restricts county donations to private entities. The opinion rests on two provisions and a line of prior opinions:

1. Article 4, Section 66 of the Mississippi Constitution. Bars any law granting a donation or gratuity except by the concurrence of two-thirds of the members elect of each branch of the Legislature.

2. Section 19-3-40(3). Prohibits counties from using public funds for any private purpose or granting any donation. This is the statutory backbone for the principle the AG applied here.

3. Section 19-5-93. Authorizes county donations to certain charitable and patriotic societies and causes, but the AG found "that authority does not extend to the type of donation in your request."

Around this framework the AG draws a use-versus-donation distinction. Letting a nonprofit use county-owned space rent-free, with a board finding on its minutes that the use is sufficient public service to be consideration to the County (Ford), or under a uniform policy with cost reimbursement (Gamble), stays within bounds. Spending public funds to lease private space and hand it to the nonprofit, by contrast, is an unlawful donation.

Citations and references

Statutes and constitutional provisions:

• Miss. Code Ann. § 19-3-40(3) (prohibition on county donations and use of public funds for private purposes)
• Miss. Code Ann. § 19-5-93 (limited authority for county donations to charitable and patriotic societies)
• Miss. Const. Art. 4, § 66 (donation prohibition)

Prior AG opinions referenced:

• MS AG Op., Krohn (June 13, 2008)
• MS AG Op., Ford (Nov. 27, 2018), county-owned community center may be used rent-free with public-service finding
• MS AG Op., Gamble (Feb. 6, 2004), private use of public space subject to uniform policy and cost reimbursement

Source

• Landing page: https://attorneygenerallynnfitch.com/divisions/opinions-and-policy/recent-opinions/
• Original PDF: https://attorneygenerallynnfitch.com/wp-content/uploads/2023/03/W.Hammack-January-31-2023-Lease-of-Private-Building-by-County-for-Nonprofit.pdf

Original opinion text

January 31, 2023

William C. Hammack, Esq.
Attorney, Clarke County Board of Supervisors
1724A 23rd Avenue
Meridian, Mississippi 39301

Re: Lease of Private Building by County for Nonprofit

Dear Mr. Hammack:

The Office of the Attorney General has received your request for an official opinion.

Background

According to your request, a Mississippi nonprofit corporation with its offices in Quitman has provided free food for needy individuals in Clarke County since 1989. Funding for the nonprofit is provided by donations or grants, and food is provided by the Mississippi Food Network and/or purchased locally. You state that the nonprofit has outgrown its current facility, and the County is considering leasing space in a privately-owned building and allowing the nonprofit to utilize the space for its operations. The nonprofit is a private organization.

Question Presented

Is the Clarke County Board of Supervisors authorized to lease a privately-owned building or space within that building and allow the nonprofit to utilize the building or space for its operations rent-free or for nominal rent?

Brief Response

The County may not spend public funds to lease space in a privately-owned building and subsequently allow the nonprofit to exclusively utilize the private building or space for its operations rent-free or for nominal rent because to do so would amount to an unlawful donation.

Applicable Law and Discussion

Mississippi Code Annotated Section 19-3-40(3) prohibits counties from using public funds for any private purpose or granting any donation. See MS AG Op., Krohn at *2 (June 13, 2008). Additionally, Section 66 of the Mississippi Constitution prohibits the donation of public funds or property to private entities and provides: "No law granting a donation or gratuity in favor of any person or object shall be enacted except by the concurrence of two-thirds of the members elect of each branch of the Legislature, nor by any vote for a sectarian purpose or use." Id.

While Section 19-5-93 authorizes the County to donate funds to certain charitable and patriotic societies and causes, that authority does not extend to the type of donation in your request. We have previously opined that a county board of supervisors could allow groups to use a county-owned community center without paying rent if it finds on its minutes "that a community event constitutes sufficient public service to constitute consideration to the County. . . ." See MS AG Op., Ford at 2 (Nov. 27, 2018); see also MS AG Op., Gamble at 1 (Feb. 6, 2004) (opining that counties may allow private, temporary use of space in a public building so long as a constitutionally sound, uniform policy is implemented and any groups reimburse the county the cost of utilities and custodial services "so that the county is not contributing public funds toward a private purpose."). However, you are asking about the County's authority to spend public funds to pay for a lease in a privately-owned building and subsequently grant a nonprofit the exclusive use of the space without paying rent or at a minimum, paying a nominal fee. There is no authority for the County to do such.

Therefore, we are of the opinion that the County may not spend public funds to lease a privately-owned building or space within it and subsequently allow the nonprofit to utilize the building or space for its operations rent-free or for nominal rent. Such action by the County would amount to an unlawful donation.

If this office may be of any further assistance to you, please do not hesitate to contact us.

Sincerely,

LYNN FITCH, ATTORNEY GENERAL

By: /s/ Gregory Alston
Gregory Alston
Special Assistant Attorney General