Can a Mississippi city let private organizations or the chamber of commerce use the municipal auditorium without paying a fee?

Plain-English summary

The City of Okolona's attorney asked two practical questions about the city's auditorium, which doubled as a court and meeting space. Could the city let outside groups use the auditorium without charging a rental fee? And could it specifically waive fees for the local chamber of commerce by recording the waiver in the city's minutes as part of the city's contribution to the chamber?

The AG's answer to the first question was yes-but. Yes, a city is not required to charge a rental fee, even for commercial use under a uniform policy. It must recover direct costs such as cleaning, utilities, and municipal personnel unless the uncompensated use is a donation authorized by law. The AG cited Article 4, Section 95 of the Mississippi Constitution for the prohibition on unauthorized donations.

For the chamber of commerce question, the answer was also yes, but with a more careful framing than earlier opinions had used. Mississippi statutes specifically authorize cities to donate funds and in-kind support to chambers of commerce and local economic development organizations. But the city's governing authorities had to make a fact-based finding that the chamber qualified to receive a donation under the relevant statutes. A blanket "chambers of commerce automatically qualify" position from older opinions was modified.

The opinion also required a uniform use policy and said a city may not favor one organization or individual over another. Any donation-based waiver depends on a finding that the recipient qualifies under applicable law.

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.

What the opinion said for each audience, at the time

For Mississippi city attorneys drafting facility-use policies

The opinion required a uniform facility-use policy enacted by the municipal governing authorities. A fee is optional, but fees charged should reasonably match direct expenses. Where use imposes direct costs and the city does not recover them, that uncompensated use needs statutory donation authority. The governing authorities must determine, on the facts, whether a proposed waiver recipient qualifies.

For mayors and boards of aldermen

Free auditorium use sounds like a goodwill gesture, but the AG warned that without cost recovery, it crosses into an unconstitutional donation. The opinion names utilities and custodial or other municipal personnel as possible direct costs. If the city absorbs such costs, the use becomes a donation requiring legal authorization.

For chambers of commerce in 2020

Cities could donate office space, in-kind services, and even waive auditorium fees, but only if the city's governing authorities made a factual finding that the chamber qualified for the donation under § 21-19-44 / § 21-19-44.1 (Main Street and economic development organizations) or § 21-17-1(3) (qualified bona fide not-for-profit civic or eleemosynary corporations). The blanket rule from older AG opinions, that chambers automatically qualified, was no longer the office's position.

For other civic groups, churches, or nonprofits seeking free use

Similar analysis. The city had to find a statutory basis for the donation (e.g., bona fide nonprofit status under § 21-17-1) and document the basis on the record. Without that, the free use risked being challenged as a donation in violation of Article 4, Section 95.

For private commercial users

The opinion quotes Hatcher: a city may adopt a policy allowing free city-hall use even for commercial ventures such as insurance sales, or restrict use to nonprofit purposes. Under this opinion, a uniform policy still applies, and the city must recover direct costs unless the uncompensated use is an authorized donation.

Common questions

Q: Did Mississippi cities have to charge a rental fee for facility use?
A: No. The opinion says a municipality may allow free use, including commercial use under a uniform policy. It must recover direct costs caused by the use unless an authorized donation supports the waiver.

Q: What is the "donation clause" in Article 4, Section 95?
A: It bars Mississippi municipalities from donating land or money owned by public entities to private corporations or individuals, unless specifically authorized by law. The classic example is a city building gifted free of charge to a private nonprofit. Without statutory authority, that is constitutionally forbidden.

Q: Why did the AG modify the older opinions on chambers of commerce?
A: Older opinions (Denton 2012, Farmer 2002, Jones 2000) said chambers of commerce qualified, more or less per se, to receive a donation. The 2020 opinion required a fact-based finding by the local governing authority that the specific chamber qualified for the specific donation under the applicable statute. This was a more rigorous, case-by-case approach.

Q: What kind of "uniform policy" does the city need?
A: A policy enacted by the municipal governing authorities that applies the same terms to similarly situated users. Selective waivers that favor one organization or individual over another are barred. The policy can include a fee schedule, but the fees should compensate the city for expenses directly related to the use rather than turn a profit.

Q: Can a Mississippi city give the chamber of commerce free office space?
A: Yes, under § 21-19-44 / § 21-19-44.1, with proper findings. The earlier opinion (Farmer 2002) said this was allowed; the 2020 opinion clarified that the governing authority still had to make a factual determination that the donation was permissible under the statute.

Q: Does the city have to recover utilities and cleaning costs?
A: Yes, if use causes those expenses and no statutory donation authority covers the uncompensated use. The city need not charge a separate rental fee merely to permit the use.

Background and statutory framework

Article 4, Section 95 of the Mississippi Constitution is the donation clause: "Lands belonging to or under the control of the state shall never be donated, directly or indirectly, to private corporations or individuals…" The Mississippi Supreme Court has read this provision broadly to require that public-property uses by private parties be supported either by fair compensation to the public entity or by specific statutory authorization for the donation.

Sections 21-19-44 and 21-19-44.1 authorize Mississippi municipalities to contribute funds and in-kind support to "Main Street programs" and "local economic development organizations." Chambers of commerce sometimes qualified under these provisions, but the AG's 2020 view was that this qualification could not be assumed across the board: it required a finding by the governing authority specific to the chamber and the donation.

Section 21-17-1(3) authorizes cities to make donations to "bona fide, not-for-profit, civic or eleemosynary corporation[s]" upon a finding that the recipient qualified. This is another route for permissible donations, but again requires a specific finding.

Earlier AG opinions on facility use (Short 2009, Barefield 2003, Baum 2006) had laid out the uniform-policy requirement: any policy regulating facility use must apply equally to similarly situated organizations, must be tied to actual cost recovery, and cannot be used to play favorites among private organizations.

Citations and references

Constitutional provisions:

• Miss. Const. art. 4, § 95, donation clause prohibiting gifts of public lands to private parties without statutory authority

Statutes:

• Miss. Code Ann. § 21-19-44, municipal authority to fund Main Street programs and local economic development organizations
• Miss. Code Ann. § 21-19-44.1, related authority
• Miss. Code Ann. § 21-17-1(3)(a)(1), municipal authority to donate to bona fide nonprofits
• Miss. Code Ann. § 21-17-1(3)(b)(ii), related authority

Prior AG opinions cited and modified:

• MS AG Op., Short (Apr. 24, 2009), uniform-policy requirement
• MS AG Op., Barefield (June 13, 2003), no policy may favor one organization over another
• MS AG Op., Baum (Feb. 17, 2006), fees should compensate for direct costs, waivers require donation-eligibility findings
• MS AG Op., Hatcher (Nov. 16, 2001), city may limit use to nonprofit purposes
• MS AG Op., Manley (May 1, 2015), donation clause analysis
• MS AG Op., Gamble (Feb. 6, 2004), churches must reimburse for utility and custodial costs
• MS AG Op., Jones (Aug. 4, 2000), MS AG Op., Farmer (Dec. 20, 2002), MS AG Op., Denton (Mar. 12, 2012), all modified to require case-by-case finding for chamber donations

Source

• Landing page: https://attorneygenerallynnfitch.com/divisions/opinions-and-policy/recent-opinions/
• Original PDF: https://attorneygenerallynnfitch.com/wp-content/uploads/2020/12/G.Barton_October-5-2020-Use-of-municipal-auditorium-by-private-organizations.pdf

Original opinion text

October 5, 2020

Gene Barton, Esquire
City Attorney, City of Okolona
Post Office Box 147
Okolona, Mississippi 38860

Re: Use of municipal auditorium by private organizations

Dear Mr. Barton:

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

Background Facts

Your letter states that the City of Okolona (the "City") has an auditorium that is used for municipal court and board meetings. The City's policy in the past has been to allow entities, other than the City, to rent the auditorium on a fee schedule basis.

Questions Presented

You ask the following questions:

1. Is it necessary to charge a fee to entities, other than the City, when such entities are not working in concert with the City for the use of the auditorium?
2. May a fee be waived with respect to the local chamber of commerce if it is put in the minutes that it is part of the City's contribution to the chamber of commerce?

Brief Response

With respect to your first question, no. A municipality is not required to charge a fee when allowing non-municipal individuals or entities to use municipal property. However, such use must accord with a uniform policy enacted by the municipal governing authorities. Furthermore, the municipality must collect from the user any expenses that the municipality is required to expend as a result of the municipal facility being used, i.e., cleaning fees or charges for utilities; otherwise, such uncompensated use would constitute a donation, which is prohibited by Article 4, Section 95 of the Mississippi Constitution unless explicitly authorized by law.

Turning to your second question, should the City's governing authorities determine, consistent with the facts, that the local chamber of commerce is qualified to receive a donation, the governing authorities may waive any fee charged for using municipal facilities.

Applicable Law and Discussion

"Public entities are authorized to permit the use of [their] facilities, provided that a uniform policy, which passes constitutional muster, is established and implemented for the organizations/individuals using the space in the facility." MS AG Op., Short at 1 (Apr. 24, 2009). A county or municipality may not enact a use policy that favors one organization or individual over another. MS AG Op., Barefield at 1 (June 13, 2003). We have opined that such "[p]olicies may include fees to be charged for the use of the property or facility." MS AG Op., Baum at *1 (Feb. 17, 2006). "Fees which are charged for the use of municipal facilities are not for the purpose of bringing a profit to the municipality, but should be reasonably tailored to compensate the municipality for expenses directly related to the use of the property by the organization, group or individual (use of utilities, municipal personnel, janitorial services, etc.)." Id.

However, we are aware of no requirement that a municipality charge a fee for use of municipal property. See MS AG Op., Hatcher (Nov. 16, 2001) ("Although the governing authorities may adopt a policy of allowing individuals and groups to use the city hall free of charge for commercial ventures, such as insurance sales, the governing authorities may also adopt a policy that individuals, groups and organizations may only use the city hall for nonprofit purposes.").

"As a general rule, a municipality is prohibited from donating land owned or controlled by public entities to private corporations or individuals in accordance with Article 4, Section 95 of the Mississippi Constitution." MS AG Op., Manley at 2 (May 1, 2015). Accordingly, while there is no requirement to charge a fee for using municipal property, such use must not result in an unconstitutional donation. See MS AG Op., Gamble at 1 (Feb. 6, 2004) ("However, it is important to note that the church should reimburse the county for the use of the facility, such as the cost of utilities and custodial services, so that the county is not contributing public funds toward a private purpose.").

Turning to your second question, municipalities are specifically authorized to contribute, donate or appropriate funds from the general funds to Main Street programs and local economic development organizations. Miss. Code Ann. § 21-19-44 to 44.1. We have also opined that municipal governing authorities may, in their discretion, waive all, or part, of the fees charged for use of municipal property, upon a finding that the group, organization or individual is qualified to receive a donation, in accordance with Sections 21-17-1(3)(a)(1) and 21-17-1(3)(b)(ii), relating to a qualified bona fide, not-for-profit, civic or eleemosynary corporation. MS AG Op., Manley at *1 (May 1, 2015).

Citing Section 21-19-44, this office has previously addressed a municipality's authority to provide space within a municipal building to a local chamber of commerce:

> We have stated by prior opinion that a municipality may provide space in a municipal building rent free for the Chamber of Commerce pursuant to Section 21-19-44 and 21-19-44.1. MS AG Op., Jones (August 4, 2000). Municipalities may contract to provide office space or in kind services to the Main Street Project or local economic development organizations for consideration. Municipalities may donate to the Main Street Project and local economic development organizations office space and in kind services pursuant to the above statutes.

MS AG Op., Farmer at 2 (Dec. 20, 2002); see also MS AG Op., Jones at 2-3 (Aug. 4, 2000); see also MS AG Op., Denton at *1 (Mar. 12, 2012) ("It is clear that a municipality is authorized to donate office space to the local Chamber of Commerce, in accordance with Mississippi Code Annotated Sections 21-19-44 and 21-19-44.1.").

While the above-cited opinions issued by this office have concluded that a local chamber of commerce is, per se, qualified to receive a donation by a municipality, it is the opinion of this office that the governing authorities of a municipality must determine, consistent with the facts, that the local chamber of commerce may receive a donation pursuant to Sections 21-19-44 to 44.1, Section 21-17-1(3)(a)(1), (3)(b)(ii), or another applicable statute. MS AG Op., Baum at *1 (Feb. 17, 2006) ("On a case-by-case basis, the municipal governing authorities may, in their discretion, entertain a request to waive fees established in a policy providing for use of municipal facilities, and upon a finding that the group, organization or individual is qualified to receive a donation, the governing authority may determine to waive all or a part of the fees."). To the extent this opinion conflicts with our prior opinions, namely, our Denton, Farmer, and Jones opinions cited herein, the conflicting portions of those prior opinions are hereby modified.

Accordingly, should the City's governing authorities determine, consistent with the facts, that the local chamber of commerce is qualified to receive a donation, the governing authorities may waive any fee charged for using municipal facilities.

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/ Phil Carter
Phil Carter
Special Assistant Attorney General