Can a Mississippi town sign a 15-year energy savings agreement with a private vendor that would bind the next Board to keep paying after this Board's term ends?

Plain-English summary

The Town of Flora was approached by a vendor proposing to install new lighting in the town's public buildings under a 15-year energy savings agreement. Flora asked whether the long-standing Mississippi rule against one municipal board binding its successor would block the deal. AG Hood said no, the deal is allowed, because Mississippi has a specific statute that authorizes multi-year energy-efficiency contracts.

The general rule in Mississippi is that one municipal board cannot lock in a future board on a long-term contract. The Mississippi Supreme Court has held this for over a century, citing Edwards Hotel & City Street R. Co. v. City of Jackson (1910) and reaffirming it in Firefighters Welfare & Pension Fund of City of Biloxi v. City of Biloxi (2002). Without statutory authority to the contrary, a long-term municipal contract that extends past the current board's term is voidable by the next board.

Section 31-7-14 of the Mississippi Code is the statutory exception that fits this fact pattern. The statute is specifically about energy efficiency contracts (it covers "energy services contracts," "energy performance contracts," and "shared savings contracts"). It builds in three 20-year cap provisions:

• § 31-7-14(1)(b)(vi): lease-purchase of energy-efficient equipment may not exceed the lesser of 20 years or the average useful life of the conservation measures.
• § 31-7-14(2)(c): any lease or lease-purchase for energy efficiency services or equipment may not exceed 20 years.
• § 31-7-14(4)(a): shared-savings, energy services, and energy performance contracts may not exceed 20 years.

So a town operating under § 31-7-14 can sign a 15-year energy savings agreement and bind the next board (and the board after that, and after that). The 15-year term Flora was looking at fits comfortably under the 20-year statutory ceiling.

What the AG explicitly would NOT do: review the specific contract draft Flora attached. Section 7-5-25 limits the AG's opinion jurisdiction to questions of law for future guidance and bars the office from interpreting contracts or making factual determinations. Flora was told to consult its municipal attorney on whether the specific agreement complied with § 31-7-14's procedures.

Currency note

This opinion was issued in 2020. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Currency note

This opinion was issued in 2020. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Q: What is an "energy savings agreement"?
A: A contract under which a private vendor installs energy-efficient equipment (LED lighting, HVAC retrofits, controls, solar, etc.) in a public building, and the public entity pays back the vendor over time from the utility-cost savings the equipment generates. The vendor often guarantees a minimum level of savings. Section 31-7-14 calls these "shared savings contracts," "energy services contracts," or "energy performance contracts" depending on structure.

Q: Why is the "no binding successor board" rule a default in Mississippi?
A: Because municipal boards have term limits and democratic accountability. If one board could lock its successors into 30- or 40-year obligations, voters would lose meaningful control over local government. The Mississippi Supreme Court has been protecting that accountability for over a century, going back to Edwards Hotel in 1910.

Q: How does § 31-7-14 get around that rule?
A: By explicit legislative authorization. The legislature decided that energy-efficiency investments have a unique payback structure that requires multi-year contracts to work financially. Section 31-7-14 carves out a 20-year exception for that specific subject matter, and the courts will honor that exception as long as the contract actually fits the statute's definitions.

Q: What is the practical 20-year cap?
A: Three separate provisions in § 31-7-14 each impose a 20-year cap on different aspects of the deal: lease-purchase term, lease term, and the contract term itself. The shortest applicable cap controls. For equipment with a shorter useful life, the lesser-of cap in § 31-7-14(1)(b)(vi) can shorten the allowable term further.

Q: Why won't the AG review the specific contract?
A: Section 7-5-25 limits AG opinions to questions of law for "future guidance." The AG cannot validate or invalidate past actions, interpret contracts, or make factual determinations. Whether Flora's specific 15-year draft agreement meets § 31-7-14's requirements depends on its actual terms, which is a contract-interpretation and fact question the AG declines to answer.

Q: What should the town do before signing?
A: Three things. First, get its municipal attorney to walk through § 31-7-14 line by line and confirm the proposed agreement uses one of the three authorized contract types. Second, check that the savings calculations and payment schedule conform to the statute. Third, document on the board's minutes the specific § 31-7-14 authority being relied on.

Q: Are there competitive procurement requirements?
A: Section 31-7-14 includes RFP-style procurement procedures for selecting an energy services provider. The exact requirements have changed over the statute's life; the municipal attorney should confirm the current version's requirements before issuing a solicitation.

Background and statutory framework

The two competing legal principles in this opinion are:

1. Successor-board doctrine (default). One municipal board cannot bind the next on long-term obligations absent specific statutory authority. Roots: Edwards Hotel & City Street R. Co. v. City of Jackson, 96 Miss. 547, 51 So. 802 (1910); reaffirmed in Firefighters Welfare & Pension Fund of City of Biloxi v. City of Biloxi, 810 So. 2d 589 (Miss. 2002).

2. Statutory carveout for energy efficiency: § 31-7-14 of the Mississippi Code. Authorizes energy services, energy performance, and shared savings contracts up to 20 years. Includes lease/lease-purchase mechanisms with parallel 20-year caps. Available to "governmental units" including municipalities and counties.

The AG opinion is the bridge between the two: it confirms that § 31-7-14 is sufficient statutory authority to take an energy-efficiency contract out of the Edwards Hotel / Firefighters Welfare prohibition.

Section 7-5-25 limits AG opinion jurisdiction to legal questions, not contract review or factual determinations. The Town of Flora attached a draft 15-year energy savings agreement and asked the AG to review it for additional issues; the AG declined and pointed Flora to its municipal attorney. This is a standard AG practice in Mississippi: legal-rule guidance yes, contract review no.

Citations and references

Statutes: Miss. Code Ann. § 31-7-14 (the operative statute); § 31-7-14(1)(b)(vi) (lease-purchase cap); § 31-7-14(2)(c) (lease/lease-purchase cap); § 31-7-14(4)(a) (contract term cap); § 7-5-25 (AG opinion scope).

Cases: Firefighters Welfare & Pension Fund of City of Biloxi v. City of Biloxi, 810 So. 2d 589 (Miss. 2002); Edwards Hotel & City Street R. Co. v. City of Jackson, 96 Miss. 547, 51 So. 802 (1910).

Prior AG opinions referenced: Collins (Feb. 19, 2010) (AG will not opine on "any other issues" arising from a specific contract draft).

Source

• Landing page: https://attorneygenerallynnfitch.com/divisions/opinions-and-policy/recent-opinions/
• Original PDF: https://attorneygenerallynnfitch.com/wp-content/uploads/2020/07/L.Childress_January-3-2020-Energy-Savings-Agreement.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain, the linked PDF is authoritative.

STATE OF MISSISSIPPI

JIM HOOD
ATTORNEY GENERAL

OPINIONS DIVISION

January 3, 2020

Mr. Leslie Childress
Mayor, Town of Flora
Post Office Box 218
Flora, MS 39071

Re: Energy Savings Agreement

Dear Mr. Childress:

Attorney General Jim Hood is in receipt of your opinion request and has assigned it to me for research and response.

Issue Presented

You ask whether a municipality is prohibited from binding a successor board to an energy savings agreement. Specifically, you provide the following:

The Town of Flora, Mississippi has been approached by Future Energy Solutions with a proposal to install new lighting fixtures and light bulbs in the Town of Flora's public buildings with the goal of saving significant energy costs to the Town of Flora. A copy of a proposed Energy Savings Agreement is attached hereto for your review. The Town of Flora is engaging in its due diligence regarding the proposed Energy Savings Agreement which is for the period of 15 years. One of the questions the Town of Flora has is whether the prohibition against binding successor administrations precludes the Town from entering into such an agreement. We would appreciate your Office's opinion in this regard as well as your Office's opinion on any other issues that your review of the Energy Savings Agreement may disclose.

Response

Pursuant to the authority granted to this office in Section 7-5-25 of the Mississippi Code, official opinions of the Attorney General are limited to questions of law for future guidance of those officials entitled to receive them and can neither validate nor invalidate past action. Furthermore, opinions of this office may not be issued which require our office to interpret contracts or to make factual determinations. Therefore, to the extent that your request requires this office to make determinations that exceed the limitations established in Section 7-5-25, we must decline to respond with an official opinion of this office on those particular issues.

Provided that the municipality is operating under the authority granted in Section 31-7-14, it may enter into an energy savings agreement for a contract term which exceeds the term of its current board; thereby binding a successor board to such energy savings agreement.

Applicable Law and Discussion

Generally, a municipality may not enter into a contract that includes a contract term exceeding the term of its current board, which takes away the successor board's rights and powers conferred by law, unless there is express statutory authority to do so. See Firefighters Welfare & Pension Fund of City of Biloxi v. City of Biloxi, 810 So. 2d 589 (Miss. 2002); Edwards Hotel & City Street R. Co. v. City of Jackson, 96 Miss. 547, 51 So. 802 (Miss. 1910). Thus, as a general rule, a long-term contract would be voidable by a successor board, unless the municipal governing authorities relied on specific statutory authority to the contrary.

In regard to energy efficiency contracts, Section 31-7-14 of the Mississippi Code specifically contemplates long-term contracts for energy efficiency services (i.e., energy services contracts, energy performance contracts and shared savings contracts). For example, Section 31-7-14(1)(b)(vi) provides that the maximum lease-purchase term for energy efficient equipment acquired in accordance with Section 31-7-14 "shall not exceed the lesser of twenty (20) years or the average useful life of the energy conservation measures from the date the energy conservation measures have been completed and accepted by the governmental unit." Furthermore, Section 31-7-14(2)(c) provides that the "term of any lease or lease-purchase agreement for energy efficiency services and/or equipment entered into under this section shall not exceed twenty (20) years, commencing on the completion of the installation of equipment or improvements under the contract." Lastly, Section 31-7-14(4)(a) expressly limits the term of any shared-savings contract, energy services contract, or energy performance contract, entered into pursuant to the provisions of Section 31-7-14, to a term of twenty (20) years or less. Thus, based on the above-referenced language, a municipality may enter into an energy savings agreement, in accordance with Section 31-7-14, for a term of twenty (20) years or less; thereby binding a successor board to such energy savings agreement.

As to your request that we opine "on any other issues" that may arise upon review of the referenced Energy Savings Agreement, we are unable to do so by way of official opinion. MS AG Op., Collins (February 19, 2010). We direct you to the provisions of Section 31-7-14, which provide the mandates and procedures for acquiring energy efficiency contracts. You should consult with your municipal attorney to obtain legal advice on any issues that may arise from the provisions of the agreement itself.

If our office may be of further assistance, please advise.

Sincerely,

JIM HOOD, ATTORNEY GENERAL