Can a Mississippi urban renewal authority loan state-appropriated funds (like Gulf Coast Restoration Fund money) to a private developer for an urban renewal project?
Plain-English summary
The Pascagoula Redevelopment Authority (PRA) is a city urban renewal agency. It receives money from the State (notably the Gulf Coast Restoration Fund, GCRF) and wanted to loan part of that money to private developers working on urban renewal projects in PRA's project area. The PRA's attorney asked whether the Urban Renewal Law authorized that.
The AG's answer was yes. Section 43-35-15(e) lets the urban renewal agency borrow money or accept advances, loans, grants, or contributions from the State (or other public bodies). Section 43-35-15(f) lets it then make loans from those subsection (e) funds. The text of (f) ties only the first kind of loan, the loans to property-owning individuals under the federal Housing and Community Development Act of 1974, to that federal statute. The second clause of (f), authorizing loans from subsection (e) funds, is not limited to that federal program.
The opinion notes that two earlier opinions, Moran (2015) and Abide (2018), read subsection (f) as applying only to Housing and Community Development Act of 1974 funds. The 2021 opinion expressly modifies those opinions to align with this broader reading.
Practically, this means an urban renewal agency that receives GCRF money or other state assistance can pass that money through to a private developer in the form of a loan, as long as the loan supports an urban renewal project in the urban renewal area. Any GCRF-specific spending restrictions in the appropriations bill or in the GCRF authorizing statute (Section 57-119-1 et seq.) still apply.
What this means for you
For redevelopment and urban renewal authority boards
The AG opened a financing tool that earlier opinions seemed to close. If your authority gets state money, you can use Section 43-35-15(f) to loan some of it to a developer who is going to do work in your urban renewal area. Document in your minutes:
- That the loan is from funds received under subsection (e)
- That the project is an urban renewal project in an urban renewal area
- That the loan terms (interest rate, repayment, security) are commercially reasonable
- That any appropriations-bill or GCRF-specific restrictions are honored
The Moran and Abide opinions are not gone, they are modified. Cite this 2021 opinion for the proposition that subsection (f) loans from subsection (e) funds are not limited to the 1974 federal program.
For city attorneys advising redevelopment authorities
Read Section 43-35-15(f) carefully. It actually contains two distinct loan authorities:
1. Loans to individuals who own property in the designated area and qualify under the federal Housing and Community Development Act of 1974, made from funds received under that federal Act or from subsection (e) funds.
2. Loans from funds derived from subsection (e), or from the proceeds of revenue bonds issued under Section 43-35-21.
The 2021 opinion's reading is that the second authority stands alone. The funds source (subsection (e) or revenue bonds) controls, not the federal program restrictions. Plan your loan documents and authority resolutions accordingly.
For private developers and contractors
If you are working on an urban renewal project in Mississippi, the local urban renewal authority can be a source of below-market or non-traditional financing if it has received state appropriations. Ask the authority whether it has subsection (e) funds available. Be ready for the authority to require:
- A specific urban renewal project tied to the urban renewal plan
- Reasonable loan terms (the authority is loaning public money and must defend the deal)
- Compliance with any state appropriations restrictions on the source funds
For state legislators and appropriations staff
If a particular GCRF appropriation is intended only for direct authority spending and not for loans to private developers, the appropriations bill must say so. The default rule, after this opinion, is that an urban renewal authority can loan subsection (e) funds. Restrictions need to be in the bill text or the GCRF statute itself.
For Gulf Coast officials
GCRF money is governed by Section 57-119-1 et seq. and by the specific appropriations bills. The 2021 opinion does not relieve an urban renewal authority of those restrictions. Read the appropriations language for any project-type, geographic, or use limits before structuring a developer loan from GCRF dollars.
Common questions
Q: Does this mean any urban renewal authority can loan to any developer?
A: No. The loan must be for an urban renewal project in an urban renewal area, and it must be from funds the authority received under subsection (e). And any GCRF or appropriations restrictions still apply.
Q: What kind of "financial assistance from the State" qualifies under subsection (e)?
A: The statute lists "advances, loans, grants, contributions and any other form of financial assistance." GCRF appropriations qualify. Direct state grants qualify. Other public-body assistance (a county or another municipality) also qualifies.
Q: What changed because of the 2021 opinion?
A: Two prior opinions (Moran 2015, Abide 2018) read subsection (f) as limiting all loans to the federal Housing and Community Development Act of 1974 framework. The 2021 opinion read the statute again, focused on the second clause of (f), and concluded that loans from subsection (e) funds are a separate authority and are not tied to the 1974 federal program. Authorities relying on those earlier opinions should re-evaluate.
Q: Does the developer need to qualify under the federal Housing and Community Development Act of 1974?
A: Only for the first type of loan in subsection (f), the loans to qualifying individuals who own property in the designated area. For the second type, the loans from subsection (e) funds, the federal program qualification is not required.
Q: Can the authority loan revenue-bond proceeds to a developer?
A: Yes. Subsection (f) also authorizes loans from "the proceeds of revenue bonds issued pursuant to the authority of Section 43-35-21." The 2021 opinion does not change that.
Q: What loan terms are required?
A: The Urban Renewal Law does not specify terms. The authority should set commercially reasonable terms (rate, repayment schedule, security) and document the rationale in the minutes. The authority is spending public money and the loan must be defensible if challenged.
Q: What if the project fails and the developer defaults?
A: The authority should secure the loan (mortgage, lien, guarantee) to protect public funds. The Urban Renewal Law gives broad powers to "give such security as may be required and to enter into and carry out contracts in connection therewith" under subsection (e).
Q: Does this apply only to Pascagoula?
A: No. The Urban Renewal Law (Section 43-35-1 et seq.) applies to all Mississippi municipalities that have created an urban renewal agency. The opinion's analysis applies to any such agency.
Background and statutory framework
Mississippi's Urban Renewal Law, Section 43-35-1 et seq., authorizes municipalities to address slum and blighted areas through redevelopment plans, property acquisition, demolition, and resale or lease for new uses. The municipality typically creates a separate urban renewal agency or authority (in Pascagoula's case, the PRA) to carry out the plan.
Section 43-35-15 enumerates the agency's powers. Subsection (e) gives the borrowing-and-accepting-money power. Subsection (f) gives two distinct loan-making powers:
The first sentence of subsection (f) is keyed to the federal Housing and Community Development Act of 1974 (P. L. 93-383). It lets the agency accept federal funds under that Act and make grants or loans to property-owning individuals in the designated area who qualify under the federal Act, drawing on either federal funds or subsection (e) funds.
The second part of subsection (f), the part the 2021 opinion focuses on, authorizes the agency "to make loans from funds derived from subsection (e) of this section or from the proceeds of revenue bonds issued pursuant to the authority of Section 43-35-21." That clause stands alone. It is not tied to the 1974 Act, not tied to qualifying individuals, and not tied to the property-owner framework.
The Gulf Coast Restoration Fund (GCRF), Section 57-119-1 et seq., was created to handle Mississippi's BP oil spill settlement money and similar Gulf Coast restoration funds. Specific appropriations bills then channel GCRF money to specific projects and entities, sometimes including urban renewal authorities for redevelopment projects in the coastal counties. Those appropriations bills can carry their own use restrictions.
The 2021 opinion's main legal move is statutory interpretation: read subsection (f) by its plain terms, and the second clause is independent. The opinion expressly modifies Moran and Abide, both of which had read the federal-Act framing as covering all of subsection (f).
Citations and references
Statutes:
- Miss. Code Ann. § 43-35-1 et seq., Urban Renewal Law (general framework)
- Miss. Code Ann. § 43-35-15, powers of urban renewal agencies
- Miss. Code Ann. § 43-35-15(e), borrowing and accepting financial assistance
- Miss. Code Ann. § 43-35-15(f), loan-making authority
- Miss. Code Ann. § 43-35-21, revenue bonds
- Miss. Code Ann. § 57-119-1 et seq., Gulf Coast Restoration Fund
Federal law:
- Housing and Community Development Act of 1974, P. L. 93-383
Prior AG opinions modified:
- MS AG Op., Moran (Apr. 10, 2015), grant program under Section 43-35-15(f)
- MS AG Op., Abide (Oct. 12, 2018), same
Source
- Landing page: https://attorneygenerallynnfitch.com/divisions/opinions-and-policy/recent-opinions/
- Original PDF: https://attorneygenerallynnfitch.com/wp-content/uploads/2021/07/A.St_.Pe_June-30-2021-Loans-Made-to-Private-Developers-Pursuant-to-the-Urban-Renewal-Law.pdf
Original opinion text
June 30, 2021
Amy Lassitter St. Pé, Esq.
Pascagoula Redevelopment Authority
2901 Magnolia Street
Pascagoula, Mississippi 39567
Re: Loans Made to Private Developers Pursuant to the Urban Renewal Law
Dear Ms. St. Pé:
The Office of the Attorney General has received your request for an official opinion.
Background
The Pascagoula Redevelopment Authority ("PRA") is the urban renewal agency of the City of Pascagoula, organized and existing under the Urban Renewal Law, Mississippi Code Annotated Section 43-35-1 et seq. According to your request, the PRA has received financial assistance from the State in the form of funds appropriated from the Gulf Coast Restoration Fund ("GCRF") and anticipates receiving additional GCRF funds and other forms of financial assistance from the state.
Question Presented
Does Section 43-35-15, particularly subsection (e) read together with subsection (f), authorize the PRA to loan developers funds that the PRA receives as financial assistance from the State to be utilized on an urban renewal project in an urban renewal area?
Brief Response
Yes, the PRA may loan funds that it receives from the State pursuant to Section 43-35-15(e) to a developer pursuant to Section 43-35-15(f) to be utilized for an urban renewal project in accordance with the Urban Renewal Law.
Applicable Law and Discussion
Section 43-35-15 grants municipalities the powers:
(e) To borrow money and to apply for and accept advances, loans, grants, contributions and any other form of financial assistance from the federal government, the state, county, or other public body, or from any sources, public or private, for the purposes of this article, and to give such security as may be required and to enter into and carry out contracts in connection therewith . . . .
(f) To accept funds under the provisions of the Housing and Community Development Act of 1974, P. L. 93-383, or amendments thereto, and to make grants or loans to individuals who own property in the designated area and who qualify according to the provisions of the act, such grants or loans to be made from funds accepted under the provisions of said P. L. 93-383, as amended, or from the grants and contributions derived under the provisions of subsection (e) of this section; and to make loans from funds derived from subsection (e) of this section or from the proceeds of revenue bonds issued pursuant to the authority of Section 43-35-21, Mississippi Code of 1972.
Miss. Code Ann. § 43-35-15 (emphasis added.) Subsection (f), by its plain terms, grants municipalities the power to make loans from funds derived from subsection (e), which would include funds obtained as advances, loans, grants, contributions, or any other financial assistance from the State, for the purposes of the Urban Renewal Law.[^1]
Notably, any expenditure of GCRF funds must be in accordance with any restrictions imposed by applicable appropriations bills and Section 57-119-1 et seq., which creates and governs the GCRF.
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/ Beebe Garrard
Beebe Garrard
Special Assistant Attorney General
[^1]: To the extent that previous opinions of this office have analyzed Section 43-35-15(f), finding that a municipality may only provide loans to individuals who own property in a designated renewal area and qualify under the provisions of the Housing and Community Development Act of 1974, those opinions do not appear to have analyzed the latter portion of subsection (f), which authorizes municipalities "to make loans from funds derived from subsection (e) of this section . . . ." MS AG Op., Moran at 2 (Apr. 10, 2015) (analyzing grant program under Section 43-35-15(f)); MS AG Op., Abide at 3 (Oct. 12, 2018) (same). Reading this language together with subsection (e), we find no requirement that funds acquired under subsection (e) and loaned pursuant to the latter portion of subsection (f) relate to the Housing and Community Development Act of 1974. The phrase "and to make loans from funds derived from subsection (e) of this section" provides authority to loan funds wholly separate from the Housing and Community Development Act of 1974. To the extent Moran and Abide are inconsistent with our findings here, they are modified to conform hereto.