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 cap is firm. If the district cannot agree on price within the appraisal-average ceiling, the alternatives are:
- Walk away (no purchase)
- Negotiate further to bring the seller's price within the cap
- Use eminent domain (condemnation under Section 11-27-1 et seq.)
The AG cited a 2008 Jones opinion that reached the same result on the same statutes, plus a 2009 Yoder opinion (and 2010 Green opinion) on how the appraisal requirements interact between Section 37-7-301(aa) (which requires two appraisals when the price exceeds $50,000) and Section 43-37-3 (which requires at least one appraisal when the value exceeds $10,000).
The opinion's specific-controls-general analysis follows Lenoir v. Madison County, 641 So. 2d 1124 (Miss. 1994). The Mississippi Supreme Court has consistently used this rule when two statutes cover the same ground.
What this means for you
For Mississippi school district attorneys
When advising the district on a real-property purchase:
- Get at least one appraisal once the property's likely value exceeds $10,000 (Section 43-37-3 requirement).
- If the price will exceed $50,000, get two independent appraisals from certified general appraisers licensed by Mississippi (Section 37-7-301(aa) requirement).
- The maximum purchase price is the average of the two appraisals. The district cannot legally pay more, even if the seller demands more.
- If the seller will not sell at the appraisal-average price, your options are: walk away, renegotiate (which may include design changes that reduce the property need), or proceed via eminent domain.
The condemnation route is governed by Section 11-27-1 et seq. The district acquires the property and pays just compensation as determined by the court. The compensation may end up higher than the appraisal average (depending on the jury's determination), but the process is structured to protect both the district and the property owner.
For school board members
If a property purchase is presented to you and the price is above the appraisal average, do not approve. The board's vote does not authorize a purchase price that violates Section 37-7-301(aa).
If the board wants the property and cannot get it at the average-of-appraisals price:
- Ask the superintendent and attorney to renegotiate
- Consider whether the project can be redesigned to use less land or different land
- Consider whether condemnation is appropriate (it has political and litigation costs but is legally available)
- Consider whether the project should proceed at all
For school business administrators
Track the appraisal-and-cap requirements as a built-in check on real-property transactions. The two-appraisal requirement triggers at $50,000+. The appraisers must be Mississippi-licensed certified general appraisers.
For internal control purposes, document:
- The two appraisals
- The mathematical average
- The negotiated purchase price
- Confirmation that the price does not exceed the average
If the district has paid more than the average in past transactions, those transactions may be vulnerable. The State Auditor may flag them.
For real estate agents and sellers in transactions with school districts
Sellers should understand the cap. If the school district is interested in your property, the maximum price is the average of two appraisals. You can ask for more, but the district cannot legally agree to more.
If you genuinely believe your property is worth more than the appraisal average, the dispute may end up in eminent domain proceedings, where a jury determines just compensation. That process can yield a higher number, but it is uncertain and time-consuming.
For taxpayers concerned about district spending
The two-appraisal cap is a taxpayer-protective mechanism. It prevents the district from overpaying for land in negotiated transactions. If you observe a district paying above the appraisal average, that may be a sign of a procedural problem.
The State Auditor's Technical Assistance Division provides guidance to districts and audits transactions for compliance.
Common questions
Q: What if the two appraisals come in dramatically different?
A: The statute requires the average. If the appraisals are very different (one says $100,000 and one says $300,000), the average is $200,000, and that is the cap. Some districts seek a third appraisal in that situation, though the statute requires only two. The third can inform the negotiation but does not change the legal cap (which is the average of the two).
Q: Who pays for the appraisals?
A: The district. The cost is part of the acquisition expense.
Q: Does this rule apply to land donations?
A: No. Donations involve no purchase price, so the cap does not apply.
Q: What about exchanges (district trades land for other land)?
A: Section 37-7-301(aa) speaks of "purchase." Land exchanges may have different rules. Consult counsel for the specific transaction.
Q: Does this rule apply to the purchase of buildings?
A: Yes, "real property" includes land and buildings. Buildings purchased separately (e.g., a building on leased land) are also covered.
Q: Can the district pay a portion in cash and a portion in services or other consideration to get above the cap effectively?
A: This would be a structural workaround that the AG has rejected in similar contexts. The cap is on the value paid, not just the cash. Trying to get above the cap by adding non-cash consideration would likely be flagged as a violation.
Q: What if the property is on a tax sale and the district is buying through the tax-sale process?
A: Tax-sale purchases have specific procedures and may have different rules. The general two-appraisal cap is for negotiated purchases.
Q: What is "fair market value" in this context?
A: The price at which the property would change hands between a willing buyer and a willing seller, neither under compulsion to act, both with reasonable knowledge of relevant facts. This is the standard appraisal definition.
Q: How long are the appraisals good for?
A: The statute does not specify. Reasonable practice is to use appraisals less than a year old. If significantly older, get fresh appraisals before negotiating.
Q: Does the rule apply to leases?
A: This statute is about purchases. Leases have separate rules.
Q: What happens if the seller dies or sells to a third party during negotiations?
A: Standard real-estate principles apply. The district has no rights until a binding contract is signed. The cap applies to the purchase the district enters; it does not lock in the seller's commitment.
Background and statutory framework
Mississippi has overlapping real-property acquisition statutes:
- Section 37-7-301(aa) (school districts)
- Section 43-37-1 et seq. (general acquisition by public agencies using public funds)
- Section 11-27-1 et seq. (condemnation by entities with eminent domain authority)
The 2021 Watson opinion focuses on the conflict between Section 37-7-301(aa) and Section 43-37-3.
Section 37-7-301(aa) is part of the general powers and duties of public school boards. It says school boards may acquire real property necessary for school construction or improvement, but adds a procedural cap: when the price is above $50,000, two independent appraisals are required, and the price cannot exceed the average.
Section 43-37-3 is the Real Property Acquisition Policies Law. It applies broadly to "any agency" acquiring property using public funds. It requires reasonable negotiation efforts, appraisals before negotiation, and pricing not above appraised value, EXCEPT that an administrative settlement above appraised value is permissible when reasonable efforts to negotiate at appraised value have failed and the agency approves the settlement as reasonable, prudent, and in the best interests of the public.
The two statutes conflict on whether settlements above appraised value are permissible. The Watson opinion (and the earlier Jones, Yoder, and Green opinions) read them as follows:
- The two-appraisal requirement of 37-7-301(aa) and the one-appraisal requirement of 43-37-3 are reconciled by reading them together: at $10,000+, one appraisal; at $50,000+, two appraisals. School districts comply with both.
- The price cap conflict is resolved by specific-over-general. Section 37-7-301(aa) is specific to school district purchases above $50,000. Section 43-37-3 is general. The school-specific statute controls.
The Lenoir v. Madison County and Imperial Palace cases support the specific-over-general rule. The Mississippi Supreme Court has consistently applied it.
The condemnation alternative under Section 11-27-1 et seq. is meaningful. It lets the district proceed when negotiation fails, with court-supervised valuation. The district pays just compensation as determined by the process, which may end up higher than the appraisal average but is procedurally bounded.
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
[^1]: On February 20, 2009, this office issued two separate opinions to Mr. Richard Yoder. The opinion referenced herein is opinion number 2009-00052.