Can a Mississippi city declare an active refuse transfer station surplus and sell it for industrial use?
Plain-English summary
Brookhaven wanted to take property currently used as a refuse location and transfer station, declare it surplus, improve it, and sell or lease it for commercial or industrial purposes under Section 57-7-1.
The AG: only if it's actually surplus. Section 57-7-1 has a specific scope: "surplus . . . lands which are not needed for . . . governmental purposes." The city must first make a factual determination that the property is no longer needed for governmental purposes. That's the city's call, subject to State Auditor review.
If the property is genuinely surplus, the city can:
- Improve it (utilities, roads, drainage, etc.) for industrial/commercial development
- Operate it
- Lease or sell it on terms the city sets
Cost of improvements can be paid from sale or lease proceeds.
On consideration: not required to be fair market value, but must be good and valuable. Donation is not allowed (Section 66 still applies). The 2002 Crowell opinion and 2020 Flaggs opinion confirm this framework.
On lease terms: a lease that exceeds the current board's term is voidable by successor boards (no-binding-successors doctrine, per the 2007 Bobo opinion).
The 2014 Manley opinion confirmed Section 57-7-1 authority is limited to commercial or industrial sale/lease purposes. The 2017 Turnage opinion confirmed surplus determinations are factual decisions for the city.
What this means for you
For municipal attorneys
The Section 57-7-1 process:
- Council formally finds on the minutes that property is no longer needed for governmental purposes
- Council designates the property as surplus
- Council can authorize improvements (utilities, roads, etc.) using sale/lease proceeds
- Council sets sale or lease terms (good and valuable consideration; not donation)
- Document the consideration analysis on the minutes
- For leases longer than the current board's term, include language acknowledging voidability or get successor-board ratification
For an active facility (like a refuse station), the surplus determination is harder. The Council needs to identify alternative arrangements before the property is "no longer needed for governmental purposes." If the city is moving refuse operations to a new facility, document that.
For city councils
Walk through the analysis on the record:
- What is this property currently used for?
- What's the alternative if we declare it surplus?
- Has the alternative been arranged?
- What's the proposed disposition (sale or lease)?
- What's the consideration?
- Why is the consideration good and valuable (not a donation)?
Skipping any step invites State Auditor scrutiny. The City of Brookhaven's specific situation — designating an active refuse facility as surplus — is unusual and needs particularly clear documentation.
For industrial and commercial developers
If you're interested in city-owned property that's being declared surplus, the Section 57-7-1 framework is favorable for you:
- The city can lease or sell at less than market value
- The city can fund improvements from your eventual payment
- Terms are negotiable
But the city's process needs to be clean. If the surplus determination is challenged, the deal could be undone. Help the city:
- Document the public benefit (jobs, tax base, infrastructure use)
- Provide written commitments
- Allow the Council to make findings supporting the consideration
For state auditor personnel
When reviewing Section 57-7-1 dispositions, look for:
- Surplus finding on the minutes (with supporting facts)
- Alternative arrangements for the property's prior use (if it was active)
- Consideration analysis (why good and valuable; benefit to city)
- Improvement budget (if improvements are planned)
- Lease terms (and binding-successor compliance)
Active facilities being declared "surplus" deserve closer scrutiny than long-vacant properties.
Common questions
Q: What is Section 57-7-1?
A: Mississippi statute authorizing municipalities, counties, and other public bodies to dispose of surplus airport land and other lands "not needed for . . . governmental purposes" by sale or lease for industrial and commercial purposes. The statute also authorizes improvements to make the land suitable for those purposes.
Q: How does Section 57-7-1 differ from general surplus disposition?
A: General surplus property disposition often falls under Section 19-7-3 (counties) or municipal surplus statutes. Section 57-7-1 is specific to industrial/commercial reuse and authorizes improvements before sale, with broader flexibility on terms.
Q: What does "no longer needed for governmental purposes" mean?
A: A factual determination the city makes. The 2014 Manley opinion confirms surplus status is the prerequisite. Active use for governmental purposes typically defeats the surplus finding, unless the city has plans to terminate that use.
Q: Can the city continue to use the property partially while leasing the rest?
A: Possibly. Mixed-use arrangements need careful documentation. The portion being sold/leased must be surplus; the portion retained remains for governmental purposes.
Q: What's "good and valuable consideration" for surplus property?
A: Less than fair market value is OK, but actual value must be received. Job creation, tax base expansion, retention of business, public infrastructure improvements all support the analysis. Documentation on the minutes is critical.
Q: How long can a Section 57-7-1 lease run?
A: The statute doesn't cap term length. But the no-binding-successors doctrine applies: a lease beyond the current board's majority term is voidable. Long-term leases need either successor-board ratification or specific statutory authority.
Q: What if the State Auditor disagrees with the surplus finding?
A: The State Auditor has authority to review public expenditures and dispositions. A finding that the surplus determination was inadequate can result in demand letters, recovery actions, or political consequences. Document carefully.
Q: Can city employees or officials buy surplus property?
A: Mississippi's Ethics in Government Laws apply. Conflicts of interest and self-dealing are prohibited. Refer to Section 25-4-105 and consult the Ethics Commission.
Q: Does this apply to school districts and counties too?
A: Section 57-7-1 specifically addresses municipalities and certain public bodies. Counties and school districts have their own surplus statutes (Section 19-7-3 for counties, school district statutes). Review the appropriate statute for the entity.
Q: What if the property has environmental issues (refuse contamination)?
A: Environmental due diligence is critical. Sale of contaminated property creates liability concerns. Phase I and Phase II environmental assessments are typical. The city may need to disclose known issues; buyers may need to assume cleanup obligations.
Background and statutory framework
Section 57-7-1 is part of Mississippi's economic development authority framework. It empowers municipalities to leverage surplus public land for industrial and commercial growth.
The statutory text:
In the event that any municipality . . . shall have surplus . . . lands which are not needed for . . . governmental purposes, then such property so designated and described may be set aside and improved for industrial and commercial purposes and the same may thereafter be operated or the same may be leased or sold upon such terms and conditions as a municipality . . . shall prescribe.
In order to provide for the improvement of such property for industrial and commercial purposes, the municipality . . . shall be authorized to provide all necessary utilities therefor and to lay out, construct and/or improve and hard-surface roadways, streets, driveways and access roads, railroads and spur tracks, and provide for the grading, drainage, sewer, lights and water, and all other necessary or proper utilities as may be necessary or proper to make such land desirable or useful as a site or sites for industrial and commercial enterprises. The cost and expense of such improvements to said real estate shall be paid for from funds made available from the lease or sale of such lands to the extent such funds are available.
The statute thus provides:
- Authority to designate surplus property for industrial/commercial reuse
- Authority to make improvements
- Authority to lease or sell on flexible terms
- Self-funding mechanism (improvements from sale/lease proceeds)
The 2014 Manley opinion limits the authority to industrial/commercial purposes specifically (not residential, public-purpose, etc.). The 2017 Turnage opinion confirms the surplus determination is factual.
The 2020 Flaggs opinion reiterates that consideration is discretionary but must be good and valuable, not a donation. The 2002 Crowell opinion stated the same principle. The 2007 Bobo opinion applies the no-binding-successors doctrine to leases extending beyond board terms.
Citations and references
Statutes:
- Miss. Code Ann. § 57-7-1, surplus property for industrial/commercial use
Prior AG opinions cited:
- MS AG Op., Manley (Sept. 10, 2014), Section 57-7-1 limited to industrial/commercial purposes
- MS AG Op., Turnage (July 28, 2017), surplus determination is factual; State Auditor reviewable
- MS AG Op., Flaggs (Nov. 24, 2020), good and valuable consideration required
- MS AG Op., Crowell (July 26, 2002), donation prohibited
- MS AG Op., Bobo (Feb. 2, 2007), leases voidable beyond board term
Source
- Landing page: https://attorneygenerallynnfitch.com/divisions/opinions-and-policy/recent-opinions/
- Original PDF: https://attorneygenerallynnfitch.com/wp-content/uploads/2022/07/B.Moak-July-11-2022-Disposal-of-Surplus-Municipal-Property-under-Section-57-7-1.pdf
Original opinion text
July 11, 2022
Bobby Moak, Esq.
Attorney, City of Brookhaven
402 Monticello Street
Bogue Chitto, Mississippi 39629
Re: Disposal of Surplus Municipal Property under Section 57-7-1
Dear Mr. Moak:
The Office of the Attorney General has received your request for an official opinion.
Background
According to your request, property located within the City of Brookhaven (the "City") is currently being used as a refuse location as well as a refuse transfer station. However, the City wants to designate the property as surplus and improve it for sale or lease for commercial or industrial purposes under Mississippi Code Annotated Section 57-7-1.
Question Presented
May the City designate property currently being used as a refuse location and refuse transfer station as surplus to be disposed of in accordance with Section 57-7-1?
Brief Response
The City may only dispose of property under Section 57-7-1 for industrial and commercial purposes if it determines that the property is no longer needed for governmental purposes.
Applicable Law and Discussion
Section 57-7-1 governs the disposal of surplus airport land or other lands no longer needed for other governmental purposes and states, in pertinent part:
In the event that any municipality . . . shall have surplus . . . lands which are not needed for . . . governmental purposes, then such property so designated and described may be set aside and improved for industrial and commercial purposes and the same may thereafter be operated or the same may be leased or sold upon such terms and conditions as a municipality . . . shall prescribe.
In order to provide for the improvement of such property for industrial and commercial purposes, the municipality . . . shall be authorized to provide all necessary utilities therefor and to lay out, construct and/or improve and hard-surface roadways, streets, driveways and access roads, railroads and spur tracks, and provide for the grading, drainage, sewer, lights and water, and all other necessary or proper utilities as may be necessary or proper to make such land desirable or useful as a site or sites for industrial and commercial enterprises. The cost and expense of such improvements to said real estate shall be paid for from funds made available from the lease or sale of such lands to the extent such funds are available.
The authority granted in Section 57-7-1 is limited to a sale or lease of surplus property for commercial or industrial purposes. MS AG Op., Manley at *2 (Sept. 10, 2014).
A municipality must determine whether the property in question is surplus, i.e., no longer needed for municipal purposes, before a sale or lease can take place. Id.; MS AG Op., Turnage at 3 (July 28, 2017). Therefore, the City must determine whether municipal property currently in use for refuse disposal and transfer is indeed surplus and no longer needed for governmental purposes. Such determinations "are ultimately factual ones to be made by the municipality itself subject to review by the Office of the State Auditor." Turnage at 3.
If the City determines that the subject property is indeed surplus as contemplated by Section 57-7-1, it has discretion as to the sale or lease price. The determination of such consideration should be reflected in the municipal minutes. MS AG Op., Flaggs at 2 (Nov. 24, 2020). "We have previously opined that, while sales and leases pursuant to Section 57-7-1 do not necessarily require fair market value, such disposal 'should be made for good and valuable consideration and may not be such as would constitute a donation.'" Flaggs at 2 (quoting MS AG Op., Crowell at 2 (July 26, 2002)). When leasing surplus property, while any such lease may exceed the term of the current municipal board, such lease would be voidable at the option of successor boards because there is no authority to bind successor boards to the terms of a proposed lease. MS AG Op., Bobo at 1 (Feb. 2, 2007).
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
Assistant Attorney General