Can a Mississippi city give its share of jointly owned surplus property to the county for free so the county can pass it to a nonprofit?

Plain-English summary

The City of Batesville and Panola County jointly own (as tenants in common) the former National Guard Armory building and grounds. Neither the city nor the county is using the property for public purposes; it's surplus. The county wants to give the property to the local Boy Scouts. To do that cleanly, the city would need to first give its co-ownership interest to the county at no cost. The city attorney asked the AG whether that donation is legal.

The AG's answer: not as a straight donation. Under Miss. Code Ann. § 21-17-5(2), a municipality is generally prohibited from granting donations unless the action is "specifically authorized by another statute or law of the State of Mississippi." The general municipal disposal statutes (§ 21-17-1 and § 17-25-25) require some type of consideration when disposing of municipal property, except in extremely limited circumstances the opinion said do not apply here.

There is one workaround: § 17-25-25(5). If the city's governing authority determines that its ownership interest has a fair market value of zero, and enters that finding on its minutes, the city can dispose of the property "in the manner it deems appropriate and in its best interest," with the caveat that no city official or employee can derive any personal economic benefit. Whether the interest actually has zero fair market value is a factual call for the city, not the AG.

If the zero-FMV finding is not credible, the city has to charge consideration for the conveyance.

What this means for you

City attorneys and city governing authorities

The opinion holds there is no explicit authority for the city to donate its interest without consideration: under § 21-17-5(2), a municipality is generally prohibited from granting donations unless specifically authorized by another statute, and §§ 21-17-1 and 17-25-25 require some type of consideration when disposing of municipal property. The one route to a no-cost disposal it identifies is § 17-25-25(5): if the governing authority determines the property has a fair market value of zero and enters that finding on its minutes, it "may dispose of such property in the manner it deems appropriate and in its best interest," provided "no official or employee of the governing authority shall derive any personal economic benefit from such disposal." The opinion stresses that whether the city's interest actually has zero fair market value is a determination of fact for the governing authorities, not the AG.

Nonprofits hoping to receive surplus public property

The opinion does not bless a free transfer from the city. It says the city cannot donate its interest without consideration unless a statute specifically authorizes it, and the only no-cost path it identifies is the city's own § 17-25-25(5) zero-fair-market-value finding. The opinion does not address the county's separate disposal authority.

County attorneys for a co-owning local government

The opinion notes the city and county hold the property as tenants in common but does not change the donation rules: the city must dispose of its interest either for consideration or through a § 17-25-25(5) zero-value finding. It does not analyze how the county may convey the property to the Boy Scouts after acquiring the city's interest.

Common questions

Q: Why are Mississippi cities barred from donating?
A: The opinion explains that under § 21-17-5(2) a municipality is generally prohibited from granting donations unless the action is "specifically authorized by another statute or law of the State of Mississippi."

Q: What about charitable purposes? Doesn't a public benefit count?
A: Not for the donation analysis. The fact that a recipient is a charitable organization does not by itself satisfy Mississippi's requirement of specific statutory authority for a donation.

Q: Does the opinion require consideration to dispose of the property?
A: Yes, as the default. It says §§ 21-17-1 and 17-25-25 require "some type of consideration when disposing of municipal property," except in extremely limited circumstances the opinion found do not apply. It does not define a minimum amount or discuss nominal-dollar sales.

Q: How does the § 17-25-25(5) zero-value finding work?
A: Under the statute the opinion quotes, if the governing authority determines the property has a fair market value of zero and enters that finding on its minutes, it may dispose of the property "in the manner it deems appropriate and in its best interest." The opinion says whether the value is actually zero is a question of fact for the governing authorities.

Q: Can a city official benefit personally from this kind of disposal?
A: No. The opinion quotes § 17-25-25(5): "no official or employee of the governing authority shall derive any personal economic benefit from such disposal."

Background and statutory framework

Mississippi has a layered framework governing municipal property disposal:

• § 21-17-1 governs the sale, conveyance, or lease of surplus municipal property.
• § 17-25-25 gives municipalities general authority to dispose of real property.
• § 21-17-5(2) generally prohibits municipal donations unless specifically authorized by another statute or law.
• § 17-25-25(5) provides a zero-fair-market-value path: when the governing authority finds the property has no value and enters that finding on its minutes, it may dispose of the property in the manner it deems appropriate, with no personal economic benefit to any official or employee.

The default the opinion describes is consideration; donations require specific statutory authorization, and the § 17-25-25(5) zero-value finding is the route to a no-cost disposal.

The opinion notes the city and county hold the property as tenants in common. That co-ownership does not change the donation analysis: the city must dispose of its interest either for consideration or through a credible § 17-25-25(5) zero-value finding. The opinion does not address the county's own disposal authority.

Citations and references

Statutes:

• Miss. Code Ann. § 17-25-25 (general municipal authority to dispose of real property)
• Miss. Code Ann. § 17-25-25(5) (zero fair market value finding allows disposal "in the manner it deems appropriate")
• Miss. Code Ann. § 21-17-1 (sale, conveyance, or lease of surplus municipal property)
• Miss. Code Ann. § 21-17-5(2) (general prohibition on municipal donations absent specific statutory authority)

Source

• Landing page: https://attorneygenerallynnfitch.com/divisions/opinions-and-policy/recent-opinions/
• Original PDF: https://attorneygenerallynnfitch.com/wp-content/uploads/2023/09/C.Mitchell-September-14-2023-Conveyance-of-City-Surplus-Property.pdf

Original opinion text

September 14, 2023

Colmon S. Mitchell, Esq.
Attorney, City of Batesville
Post Office Drawer 1586
Batesville, Mississippi 38606

Re: Conveyance of City Surplus Property

Dear Mr. Mitchell:

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

Background

The City of Batesville ("City") and Panola County ("County") own, as tenants in common, the former National Guard Armory building and its grounds. This real property is not being used for municipal purposes and is surplus property. The County wants to convey the real property to the local Boy Scouts.

Questions Presented

1. May the City convey its interest in this real property to the County as a donation with no consideration for the conveyance?
2. If the answer to Question 1 is yes, must the conveyance be subject to any conditions or reservations?

Brief Response

1. While there is no explicit authority for the City to donate its ownership interest in the real property to the County without consideration, Mississippi Code Annotated Section 17-25-25 may provide a method of disposal at no cost if the City makes the requisite finding of zero fair market value and enters such finding on its minutes.
2. Please see our response to Question 1.

Applicable Law and Discussion

Although Section 21-17-1 governs the sale, conveyance, or lease of surplus municipal property, and Section 17-25-25 gives municipalities general authority to dispose of real property, a municipality is generally prohibited from granting donations unless such action is "specifically authorized by another statute or law of the State of Mississippi. . . ." Miss. Code Ann. § 21-17-5(2). Except in extremely limited circumstances, which do not apply to your set of facts, Sections 21-17-1 and 17-25-25 require some type of consideration when disposing of municipal property. However, Section 17-25-25(5) does state that if the governing authority of a municipality determines that real property belonging to the municipality has a fair market value of zero, "and this finding is entered on the minutes of the authority, then the governing authority may dispose of such property in the manner it deems appropriate and in its best interest, but no official or employee of the governing authority shall derive any personal economic benefit from such disposal." Whether the fair market value of its ownership interest in the real property in question is zero, which could facilitate the City's conveyance of its property interest to the County pursuant to Section 17-25-25(5), is a determination of fact to be made by the governing authorities.

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