Can a Mississippi school district pay more than the average of two appraisals to buy land worth over $50,000?

Plain-English summary

The Hattiesburg Public School District wanted to buy several acres of land across from the high school to build a softball field for the female sports program. The purchase price was well over $50,000, and the seller refused to accept the fair market value as determined by the average of two appraisals. The district's attorney asked whether Section 43-37-3(c)(ii), which allows an administrative settlement above appraised value when negotiations have failed, could be used to pay more than the appraisal average.

The AG said no. The school-district-specific statute (Section 37-7-301(aa)) caps the purchase price at the average of two appraisals when the property is over $50,000. Section 43-37-3 (the general Real Property Acquisition Policies Law) does allow a settlement above appraised value, but it is the more general statute. Under standard Mississippi rules of statutory construction, the more specific statute controls when the two cover the same subject and conflict.

The opinion adds that if the district cannot reach agreement on price with the owner, it "may acquire the property through condemnation proceedings pursuant to Section 11-27-1 et seq."

The AG cited a 2008 Jones opinion that reached the same result on the same statutes, plus 2009 Yoder and 2010 Green opinions on how the appraisal requirements interact: Section 43-37-3 requires one appraisal before negotiations unless the fair market value is $10,000 or less, and Section 37-7-301(aa) requires a second appraisal if the value exceeds $50,000.

The opinion's specific-controls-general analysis follows Lenoir v. Madison County, 641 So. 2d 1124 (Miss. 1994), and Mississippi Gaming Commission v. Imperial Palace, 751 So. 2d 1025 (Miss. 1999).

What this means for you

For school district attorneys and boards

Under the opinion, when a school district buys real property for more than $50,000, Section 37-7-301(aa) sets a hard ceiling: the district "shall not purchase the property for an amount exceeding the fair market value of such property as determined by the average of at least two (2) independent appraisals by certified general appraisers licensed by the State of Mississippi." The opinion concludes the district "may not pay an amount exceeding the average of the two appraisals," even where the owner refuses to accept that figure. The administrative-settlement provision in Section 43-37-3(c)(ii), which can allow a price above appraised value, does not override the school-specific cap.

For school business administrators

The opinion describes how the appraisal requirements stack: Section 43-37-3 requires one appraisal before negotiations begin unless the property's value is $10,000 or less, and Section 37-7-301(aa) requires a second appraisal once the value exceeds $50,000. The maximum the district may pay is the average of the two appraisals.

For sellers in transactions with a school district

The opinion's holding bears directly on what a district can agree to: if the property is worth more than $50,000, the district cannot pay more than the average of two independent appraisals, regardless of the asking price. The opinion notes that if buyer and seller cannot agree, the district "may acquire the property through condemnation proceedings pursuant to Section 11-27-1 et seq.," where compensation is set through the court process rather than negotiation.

For taxpayers

The opinion treats the two-appraisal average as a statutory ceiling on what a school district may pay for land over $50,000. It does not address auditing, enforcement, or any specific past transaction.

Common questions

Q: Can a Mississippi school district pay more than the appraisal average for land worth over $50,000?
A: No. The opinion concludes that under Section 37-7-301(aa) the district "may not pay an amount exceeding the average of the two appraisals," even when the owner will not accept the average as fair market value.

Q: Section 43-37-3 allows paying above appraised value in some cases. Why doesn't that help here?
A: The opinion applies the rule that "when two statutes encompass the same subject matter, one being general and the other specific, the more specific statute will control." Section 37-7-301(aa) is specific to school-board purchases over $50,000, so it controls over the general Real Property Acquisition Policies Law in Section 43-37-3.

Q: How many appraisals does a school district need?
A: Per the opinion, Section 43-37-3 requires one appraisal before negotiations unless the value is $10,000 or less, and Section 37-7-301(aa) requires a second appraisal once the value exceeds $50,000. The appraisers must be certified general appraisers licensed by the State of Mississippi.

Q: What can the district do if it cannot agree on price with the owner?
A: The opinion states the district "may acquire the property through condemnation proceedings pursuant to Section 11-27-1 et seq." It does not discuss other options.

Background and statutory framework

The question came from the Hattiesburg Public School District, which was negotiating to buy several acres across from the high school for a softball field. The purchase price was well above $50,000, and the owner would not accept the average-of-two-appraisals figure. The district's board attorney asked whether Section 43-37-3(c) let the district pay more than that average, or whether Section 37-7-301(aa) capped it.

Section 37-7-301 sets out the powers and duties of public school boards. Subsection (aa) authorizes a board to acquire real property necessary for school construction, renovation, or improvement, and provides that when the price is greater than $50,000 the board "shall not purchase the property for an amount exceeding the fair market value of such property as determined by the average of at least two (2) independent appraisals."

Section 43-37-3 is part of the Real Property Acquisition Policies Law, which applies to "any agency" acquiring real property where public funds are used. A prior opinion (Green, Aug. 27, 2010) treated a school district as an "agency" under that law. Section 43-37-3 requires reasonable negotiation efforts and an appraisal before negotiations, sets the price at the lesser of the best negotiated price or the approved appraisal, but in subparagraph (c)(ii) allows a price above just compensation through an administrative settlement when negotiation at that amount has failed and the agency approves the settlement as reasonable, prudent, and in the public interest.

The opinion found that the two statutes "clearly conflict" on the number of required appraisals and the maximum price. It reconciled the appraisal requirements by reading them together (one appraisal above $10,000, a second above $50,000), then resolved the price-cap conflict with the specific-over-general rule from Lenoir v. Madison County, 641 So. 2d 1124, 1129 (Miss. 1994), and Mississippi Gaming Commission v. Imperial Palace, 751 So. 2d 1025 (Miss. 1999). Because the property cost well above $50,000, the more specific Section 37-7-301(aa) governed. The opinion relied on the earlier Jones (2008), Yoder (2009), Green (2010), Killebrew-Kenney (2003), and Robertson (2017) opinions in reaching that conclusion.

Citations and references

Statutes:

• Miss. Code Ann. § 11-27-1 et seq., eminent domain procedure
• Miss. Code Ann. § 37-7-301(aa), school board real-property purchases; two-appraisal cap above $50,000
• Miss. Code Ann. § 43-37-1, Real Property Acquisition Policies Law applies to acquisitions using public funds
• Miss. Code Ann. § 43-37-3, acquisition procedures including appraisal, negotiation, and administrative settlement

Cases:

• Lenoir v. Madison Cty., 641 So. 2d 1124 (Miss. 1994), specific statute controls when conflicting with general statute on same subject
• Mississippi Gaming Comm'n v. Imperial Palace of Mississippi, Inc., 751 So. 2d 1025 (Miss. 1999), rules of statutory construction applied to ambiguous or conflicting statutes

Prior AG opinions cited:

• MS AG Op., Green (Aug. 27, 2010), school district is "agency" within Section 43-37-3
• MS AG Op., Jones (May 23, 2008), school district cannot pay more than average of two appraisals for property over $50,000
• MS AG Op., Killebrew-Kenney (June 18, 2003), specific statute controls over general
• MS AG Op., Robertson (Sept. 8, 2017), rules of statutory construction
• MS AG Op., Yoder (Feb. 20, 2009), interaction between 37-7-301(aa) and 43-37-3 on appraisal requirements

Source

• Landing page: https://attorneygenerallynnfitch.com/divisions/opinions-and-policy/recent-opinions/
• Original PDF: https://attorneygenerallynnfitch.com/wp-content/uploads/2021/12/P.Watson-December-10-2021-School-District-Purchase-of-Real-Property.pdf

Original opinion text

December 10, 2021

Percy W. Watson, Esq.
Board Attorney, Hattiesburg Public School District
301 Mamie Street
Hattiesburg, Mississippi 39401

Re: School District Purchase of Real Property

Dear Mr. Watson:

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

Background

You state that the Hattiesburg Public School District (the "District") is in negotiations to purchase several acres of land located across from the high school for the construction of a softball field. The softball field is needed by the District to expand the female sports program. The purchase price of the property is greatly in excess of $50,000.00, and the owner of the real estate will not accept the fair market value as determined by the average of the two appraisals.

Question Presented

Does Section 43-37-3(c) of the Mississippi Code permit the District to pay an amount in excess of the average of the two appraisals, or is the District restricted from paying more than the average of the two appraisals as dictated by Section 37-7-301(aa)?

Brief Response

Pursuant to Section 37-7-301(aa), the District may not pay a purchase price in excess of the average of the two appraisals.

Applicable Law and Discussion

Section 37-7-301 specifies the powers and duties of public school boards, and subsection (aa) authorizes a school board to purchase real property:

[t]o acquire in its own name by purchase all real property which shall be necessary and desirable in connection with the construction, renovation or improvement of any public school building or structure. Whenever the purchase price for such real property is greater than Fifty Thousand Dollars ($50,000.00), the school board shall not purchase the property for an amount exceeding the fair market value of such property as determined by the average of at least two (2) independent appraisals by certified general appraisers licensed by the State of Mississippi.

The Real Property Acquisition Policies Law applies to "the acquisition of real property under the laws of this state for use in any project or program in which public funds are used," Miss. Code Ann. § 43-37-1, and any "agency" "acquiring real property for any project or program in which public funds are used" must comply with this law. Miss. Code Ann. § 43-37-3. This office previously has opined that a school district falls within the definition of "agency," as used in Section 43-37-3(c). MS AG Op., Green at *2 (Aug. 27, 2010). Section 43-37-3 states, in part, as follows:

(a) Every reasonable effort shall be made to acquire expeditiously real property by negotiation.

(b) Real property shall be appraised before the initiation of negotiations . . . .

(c)(i) Except as otherwise provided in subparagraph (ii) of this paragraph, the price that shall be paid for real property shall be the lesser of the best negotiated price or the approved appraisal of the fair market value or the price at which the property is offered for sale . . . .

(ii) The purchase price for real property may exceed the amount offered as just compensation for the property when reasonable efforts to negotiate an agreement at that amount have failed, and the person, agency or other entity seeking to acquire the property approves an administrative settlement as reasonable, prudent and in the best interests of the public . . . .

With respect to the number of required appraisals and the maximum price that a school district can pay for real property, Sections 37-7-301(aa) and 43-37-3(b) and (c) clearly conflict. As noted above, according to your request, the purchase price of the property is greatly in excess of $50,000.

"Rules of statutory construction are applied when a statute is ambiguous, has conflicting provisions within it, or conflicts with another statute." MS AG Op., Robertson at *2 (Sept. 8, 2017) (citing Mississippi Gaming Comm'n v. Imperial Palace of Mississippi, Inc., 751 So. 2d 1025 (Miss. 1999)). Under the rules of construction, when the statutes pertain to the same subject, although in apparent conflict, the statutes should, when possible, "be construed in harmony with each other, to give effect to each." Lenoir v. Madison Cty., 641 So. 2d 1124, 1129 (Miss. 1994).

This office has previously addressed how these statutes should be read together, finding that "a school district is authorized to negotiate the purchase of real property and is required to make every reasonable effort to acquire such property expeditiously by negotiation, whenever public funds are used." MS AG Op., Yoder at 2 (Feb. 20, 2009).¹ While Section 37-7-301(aa) does not require an appraisal to be obtained when the purchase price of the real property is $50,000.00 or less, "Section 43-37-3 requires that one appraisal be obtained before negotiations begin, unless the fair market value of the real property is $10,000.00 or less." Id. at 3. "If the appraisal reflects a value in excess of $50,000.00, then a second appraisal will be required by 37-7-301(aa) in order for the school district to pay a purchase price in excess of $50,000.00." Id.; MS AG Op., Green at *2 (Aug. 27, 2010).

However, relative to the maximum price that a school district may pay for real property, governed by Sections 37-7-301(aa) and 43-37-3(c), it is a well-settled principle of statutory interpretation that when two statutes encompass the same subject matter, one being general and the other specific, the more specific statute will control. Lenoir, 641 So. 2d at 1129; MS AG Op., Killebrew-Kenney at *1 (June 18, 2003) (citations omitted). Since your request states that the property will cost well above $50,000, the provisions of Section 37-7-301, the statute more specific to a school board's acquisition of property at a price greater than $50,000, govern, and the District may not pay an amount exceeding the average of the two appraisals. See MS AG Op., Jones (May 23, 2008) (relying on Section 37-7-301 and finding that for property costing in excess of $50,000.00, the school board could not pay more than the fair market value as determined by the average of two appraisals).

If unable to come to an agreement on price with the owner of the real property, the District may acquire the property through condemnation proceedings pursuant to Section 11-27-1 et seq. Miss. Code Ann. § 37-7-301(aa).

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