Can a Mississippi economic development district amend its industrial-use covenants to allow a hospital to convert a business park building into medical offices?
Plain-English summary
The Simpson County Economic Development District (the "District") owned an 80-acre business park in Magee, Mississippi. The District had recorded restrictive covenants on the property limiting use to industrial and warehouse purposes. The District had sold two parcels with buildings to a private buyer; those parcels had since been foreclosed. Covington County Hospital wanted to buy one of the buildings to use as medical offices for its physicians. The District's attorney asked whether the District could amend the restrictive covenants to allow the medical-office use.
The AG split the analysis between (1) property already sold by the District and (2) property still owned by the District:
Property already sold: The 2021 opinion (consistent with a 2011 opinion to the same attorney) said amendment was permissible if (a) the covenants permitted amendment, (b) the District owned a majority of the acreage so it could vote the amendment through, and (c) the new use complied with applicable zoning. There is no Mississippi statute requiring industrial-park land, once sold, to remain in industrial or warehouse use forever.
Property still owned by the District: Section 19-5-99(5)(a) requires economic development districts to convey land "for industrial and warehouse use." Whether a particular use qualifies as industrial or warehouse is a fact question. The AG declined to address all possible future amendment scenarios as too broad, but did note that for property still in District hands, the statute mandates industrial/warehouse-use conveyance.
A footnote noted that economic development districts could also separate "surplus" land that is no longer suitable for industrial purposes and dispose of it under § 19-7-3, providing an additional pathway for non-industrial repurposing.
Currency note
This opinion was issued in 2021. 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 economic development districts
The 2021 framework gave districts flexibility on covenant management for resold property:
1. If the covenants permit amendment by majority owner vote, and the district holds majority ownership, the district can vote to amend.
2. New uses must comply with zoning.
3. State law does not lock in industrial use forever after the original conveyance.
For property still owned by the district, the rule is stricter: § 19-5-99(5)(a) mandates conveyance for industrial or warehouse use. Districts wanting to convey for non-industrial uses need to use the surplus-property mechanism under § 19-7-3.
For Covington County Hospital
The 2021 opinion was favorable: medical offices were not "industrial," so they couldn't be the original conveyance use under § 19-5-99(5)(a). But because the property had already been sold and was now being resold, the District could amend the covenants to allow medical use, provided zoning permitted it. The hospital just needed the District to vote the amendment and the city/county zoning to permit medical offices on the parcel.
For zoning officials in Magee
Zoning compliance was the gating issue. The AG cited Hudson v. Morrison Heights Baptist Church (2001): "[R]egardless of what the covenants say, restrictive covenants can never allow uses of property that are forbidden by zoning laws." So even if the District amended the covenants to allow medical offices, the city's zoning ordinances had to also permit that use on the specific parcel.
For attorneys advising on industrial park conversions
The 2021 opinion is a useful framework for the recurring question of whether industrial parks can adapt to changing economic conditions. As traditional manufacturing has declined and healthcare, logistics, and office uses have grown, industrial parks across Mississippi have faced reinvention pressure. The AG opinion provides a path forward, with appropriate constraints.
For other public economic development entities (port authorities, IDAs, etc.)
The reasoning is specific to economic development districts under § 19-5-99. Other public real-estate entities have their own enabling statutes with their own restrictions. But the basic principle, that public-property conveyance restrictions need a statutory basis and can be amended absent statutory prohibition, applies broadly.
Common questions
Q: What is an economic development district under § 19-5-99?
A: A unit established by a county board of supervisors "to secure and further industrial development of the county." It can buy, sell, lease, and trade industrial sites and rail lines, develop industrial parks, and execute deeds and easements. Its conveyance authority is statutorily limited to industrial and warehouse use.
Q: Why does the original conveyance have to be for industrial or warehouse use?
A: Section 19-5-99(5)(a) imposes that limitation. The legislative judgment was that economic development districts should focus on industrial activity, leaving non-industrial development to other tools (downtown redevelopment, planning commissions, etc.). The statute is the basis for the district's existence and its authority is correspondingly bounded.
Q: Once industrial property is sold, why can it become medical offices?
A: Because the original conveyance restriction has done its job: the property entered private ownership for industrial use. After private ownership, market forces and private ownership rights take over. The District retains an interest only through its recorded covenants. If those covenants permit amendment, and the District holds majority ownership of remaining acreage allowing it to vote the amendment, the District can change the use restriction.
Q: What if the covenants don't permit amendment?
A: Then the original use restriction continues to bind the property, even after multiple ownership changes. The buyer would have to either find an industrial/warehouse use or seek a court action to modify the covenants under common-law principles (changed circumstances, etc.).
Q: How does zoning interact with covenants?
A: Zoning is a public regulatory restriction; covenants are private (or quasi-private, in this case) contractual restrictions. Both can apply simultaneously. The Hudson case confirms that covenants cannot allow uses zoning prohibits. So even with covenant amendment, zoning compliance is required.
Q: What's the surplus-property pathway under § 19-7-3?
A: A separate statute lets economic development districts dispose of land that is "surplus and no longer suitable for industrial purposes." This provides a route for non-industrial repurposing of district-owned land. The Moseley 2006 AG opinion (cited in this opinion's footnote) addresses the surplus-property mechanism.
Background and statutory framework
Mississippi's economic development districts are part of a broader state strategy to encourage industrial development at the county level. The legislature has authorized counties to establish these districts (under § 19-5-99) and given them broad authority to acquire, hold, develop, and convey property for industrial purposes. The structure is one of many tools Mississippi uses to attract industrial investment, alongside the Mississippi Development Authority, port authorities, regional industrial parks, and specific incentive programs.
The 2011 Welch AG opinion (referenced extensively in this 2021 opinion) had already laid out the framework: districts can amend covenants on resold property when the covenants permit amendment, and state law does not require perpetual industrial use after the original conveyance. The 2021 opinion confirmed that framework with a specific application to Covington County Hospital's medical-office plan.
The interplay between covenants and zoning matters in Mississippi as elsewhere. Hudson v. Morrison Heights Baptist Church (2001) is the leading state-court case on the rule that covenants cannot override zoning. The 2021 AG opinion incorporates that doctrine, ensuring that any covenant amendment still has to clear zoning review.
The surplus-property pathway under § 19-7-3 provides additional flexibility for districts whose land is no longer industrially suitable. As economic patterns change, districts can use this mechanism to convert excess industrial inventory to other public or private uses.
Citations and references
Statutes:
- Miss. Code Ann. § 7-5-25, AG opinions limited to state law and prospective questions
- Miss. Code Ann. § 19-5-99, county economic development districts
- Miss. Code Ann. § 19-5-99(1), purpose of districts ("to secure and further industrial development")
- Miss. Code Ann. § 19-5-99(5)(a), conveyance authority limited to industrial and warehouse use
- Miss. Code Ann. § 19-7-3, disposition of surplus land
Cases cited:
- Hudson v. Morrison Heights Baptist Church, 782 So. 2d 726, 732 (Miss. 2001), restrictive covenants cannot allow uses zoning prohibits
Prior AG opinions cited:
- MS AG Op., Welch (July 1, 2011), economic development district may amend covenants on resold property
- MS AG Op., Nowak (June 13, 2008), zoning takes precedence over covenants
- MS AG Op., Moseley (Aug. 24, 2006), surplus-land disposition under § 19-7-3
Source
- Landing page: https://attorneygenerallynnfitch.com/divisions/opinions-and-policy/recent-opinions/
- Original PDF: https://attorneygenerallynnfitch.com/wp-content/uploads/2021/07/D.-Welch-June-23-2021-Amending-Restrictive-Covenants-on-Property-Previously-Sold-by-the-District.pdf
Original opinion text
June 23, 2021
Danny Welch, Esq.
Simpson County Economic Development District
224 North Main Street
Mendenhall, Mississippi 39114
Re: Amending Restrictive Covenants on Property Previously Sold by the District
Dear Mr. Welch:
The Office of the Attorney General has received your request for an official opinion.
Background
According to your request, the Simpson County Economic Development District (the "District") purchased a tract of land containing approximately 80 acres for development as a business park in Magee, Mississippi (the "Business Park"), and the District executed and recorded restrictive covenants for the property. The covenants provide for amendment by the owners of a majority of the acreage. The District is the current owner of a majority of the acreage in the business park.
The District previously sold two parcels of land within the Business Park to an entity that built two buildings. However, these properties have since been foreclosed. Covington County Hospital is considering purchasing one of the buildings to use as medical offices for its physicians, among other potential uses. Covington County Hospital has requested that the District amend the restrictive covenants to allow the hospital to utilize the property for the above-listed purposes.
Questions Presented
-
Does the District have legal authority to amend the restrictive covenants to allow for the intended uses set forth above by Covington County Hospital?
-
Are there any limitations on the uses or purposes that may be allowed by future amendments by the District to the restrictive covenants covering the remaining property still owned by the District, which may be conveyed to future purchasers of property in the Business Park?
Brief Response
-
With respect to property being conveyed by a party who originally purchased such property from the District, so long as the covenants permit their amendment and so long as any changes comport with applicable zoning requirements, we find no statutory prohibition on the District amending the covenants to remove the industrial/warehouse use restriction for the property. MS AG Op., Welch at *2 (July 1, 2011).
-
Your second question is too broad to address by official opinion. However, for your guidance only, property owned by the District must comply with Mississippi Code Annotated Section 19-5-99 and may be conveyed solely for industrial or warehouse use.
Applicable Law and Discussion
Pursuant to Section 7-5-25, the Office of the Attorney General is authorized to issue official opinions upon questions of state law only. Thus, we cannot by official opinion interpret the terms or provisions of an agreement or contract or infer facts that may be relevant to our opinion. This opinion does not interpret the terms or provisions of the District's restrictive covenants, a copy of which was enclosed with your request.
As you noted in your request, this office has previously issued an opinion to you in your capacity as counsel for the District. MS AG Op., Welch (July 1, 2011). Much like your current request, in 2011, you asked, among other things, whether the District had authority to amend the restrictive covenants to remove the "industrial/warehouse" restrictions only as to property already sold by the District, so the owners of those properties could develop it for commercial use. Id. at *2. In response, we stated:
Assuming the terms of the covenants permit their amendment as you have described, we know of no impediment in state statutes to the District amending the covenants to remove the "industrial/warehouse use" restrictions to the property which has already been sold by the district. We also find no provision of state law that would require that industrial park land, once sold, to continue to be utilized for industrial or warehouse purposes.
Id. (emphasis added). Consistent with our previous opinion to you, we find nothing in the District's enabling statute that requires the District to put restrictions on the title mandating perpetual industrial or warehouse use. However, any amendments allowing for uses other than industrial and warehouse must conform to applicable zoning laws and ordinances. MS AG Op., Nowak at *3 (June 13, 2008) (quoting Hudson v. Morrison Heights Baptist Church, 782 So. 2d 726, 732 (Miss. 2001) ("[R]egardless of what the covenants say, restrictive covenants can never allow uses of property that are forbidden by zoning laws.")).
What uses are allowable under relevant zoning requires a factual determination, which this office cannot make by official opinion. As we have previously opined in our 2011 opinion to you, with respect to property being conveyed by a party who originally purchased such property from the District, so long as the covenants permit their amendment and so long as any changes comport with applicable zoning requirements, we find no statutory prohibition on the District amending the covenants to remove the industrial/warehouse use requirement. MS AG Op., Welch at *2 (July 1, 2011).
Your second question, which asks us to identify "any limitations on the uses or purposes" of property owned by the District, is too broad to address by official opinion. However, for informational purposes, we provide the following.
Section 19-5-99 authorizes county boards of supervisors to establish economic development districts in an effort "to secure and further industrial development of the county. . . ." Miss. Code Ann. § 19-5-99(1). The statute states, in part:
(5) Economic development districts established under this section are authorized and empowered:
(a) To sell, lease, trade, exchange or otherwise dispose of industrial sites or rail lines situated within industrial parks to individuals, firms or corporations, public or private, for industrial and warehouse use . . . upon such terms and conditions, and for such considerations, with such safeguards as will best promote and protect the public interest, convenience and necessity, and to execute deeds, leases, contracts, easements and other legal instruments necessary or convenient therefor.
Miss. Code Ann. § 19-5-99(5)(a) (emphasis added). According to this section, when the District conveys land, it must be for industrial or warehouse use.[1] Whether a particular use is industrial or warehouse requires a factual determination that this office is unable to make by official opinion.
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/ Misty Monroe
Misty Monroe
Special Assistant Attorney General
[1] In previous opinions, including the opinion we issued to you in 2011, discussed above, we have noted that economic development districts may separate land that is surplus and no longer suitable for industrial purposes and dispose of it pursuant to Section 19-7-3. See e.g., MS AG Op., Moseley at *2 (Aug. 24, 2006).