Can a Mississippi city repave a street with public money and then close the street so a private business gets the property?

Plain-English summary

The City of Laurel has a street running between a major industrial plant and the plant's employee parking lot. The plant employs 2,000+ people. The city was contemplating vacating the street under § 21-37-7 to enhance plant safety and security. The street was in poor condition. The city wondered whether it could repave the street first (using public money) and then vacate it shortly afterward.

The Laurel city attorney asked the AG. The street is held by the city only as an easement; the underlying fee is owned by the industrial plant. So if the city vacates the street, the property reverts to the plant.

The AG said no. The sequence (city repaves with public funds, then vacates so the property reverts to the private business) effectively donates the value of the repaving to the private business. § 21-17-5(2)(g) prohibits municipal donations unless specifically authorized.

Two key strands:

1. Vacation under § 21-37-7 itself is permissible if it is for the public good and not solely to benefit a private party. Mill Creek Properties, Inc. v. City of Columbia, 944 So. 2d 67 (Miss. Ct. App. 2006), confirms that vacation must be for the public good. Compensation must first be made to abutting landowners for any damages.
2. But repaving first changes the calculation. Spending public money to improve property that will revert to a private owner makes the expenditure look like a private benefit, regardless of how the underlying vacation is justified.

The AG suggested the City consider contacting the State Auditor's Technical Assistance Division for further guidance on the public-funds question. The AG also noted § 57-7-1 as a contrast: that statute specifically authorizes the improvement of surplus government land prior to lease or sale for industrial or commercial purposes. The Laurel scenario is different because the city has only an easement, not surplus land it owns.

What this means for you

City attorneys and city officials

The opinion finds "no authority for a municipality to expend public funds to improve a municipal street only to vacate the street for the benefit of the local business," because doing so "could be considered an impermissible use of public funds or a donation prohibited by Section 21-17-5(2)(g)." It distinguishes the vacation itself, which § 21-37-7 permits if the city finds it is for the public good (and after compensating abutting landowners), from spending public money on improvements that will revert to the private fee owner once the street is vacated. Because Laurel holds only an easement and the plant owns the underlying fee, the opinion notes the street would revert to the plant on vacation, citing the Purdie and Herring opinions.

State auditors reviewing municipal expenditures

The opinion frames the repave-then-vacate sequence as a potential donation under § 21-17-5(2)(g). It also expressly suggested the city "contact the Technical Assistance Division at the Office of the State Auditor for additional assistance" on the public-funds aspect.

Businesses and the public

The opinion does not bar the city from vacating the street; under Mill Creek Properties, a vacation must be for the public good and cannot be solely to benefit a private party. What it flags is the use of public funds to repave a street that will revert to the private owner. For contrast, the opinion points to § 57-7-1, which authorizes improving surplus government land before lease or sale for industrial or commercial purposes, but notes that statute presupposes the city owns the land rather than holding a mere easement.

Common questions

Q: When can a Mississippi city vacate a street?
A: Under § 21-37-7, the governing authorities of municipalities have the power to close and vacate any street or alley, or any portion thereof. Compensation must first be made to abutting landowners for any damages. The vacation must be for the public good (Mill Creek Properties, 944 So. 2d at 69).

Q: Can the city vacate solely to help one private business?
A: No. Mill Creek Properties (944 So. 2d at 70) says a road cannot be closed just to benefit a private party. There has to be a public-good basis. Public benefits can include traffic safety, traffic flow improvement, public-purpose redevelopment, and similar concerns.

Q: What happens to the property when the city vacates a street?
A: It depends on the city's underlying interest. If the city has an easement only (typical for streets), the property reverts to the owner of the underlying fee, often the abutting landowners. If the city had fee title, the disposition is governed by other statutes.

Q: What is the donation prohibition?
A: § 21-17-5(2)(g) prohibits municipal donations unless specifically authorized by another statute. Repaving a street so it reverts to a private owner approximates a donation of the paving value.

Q: How is § 57-7-1 different?
A: § 57-7-1 authorizes a city or county to improve surplus government land before leasing or selling it for industrial or commercial purposes. That statute presupposes that the city owns the underlying fee. It does not apply when the city has only an easement.

Q: What is the core problem the opinion identifies?
A: Spending public funds to improve a street that, once vacated, reverts to the private fee owner. The opinion says that "could be considered an impermissible use of public funds or a donation prohibited by Section 21-17-5(2)(g)." It does not address alternative ways to fund the work.

Q: Should the city consult the State Auditor's Office?
A: The AG explicitly recommended contacting the Technical Assistance Division at the Office of the State Auditor for guidance on the public-funds aspect. That is a useful resource for cities navigating the line between proper public expenditure and impermissible private benefit.

Background and statutory framework

§ 21-37-7 is the municipal street vacation statute:

The governing authorities of municipalities shall have the power to close and vacate any street or alley, or any portion thereof. No street or alley or any portion thereof shall be closed or vacated, however, except upon due compensation being first made to the abutting landowners upon such street or alley for all damages sustained thereby.

The Mississippi Court of Appeals in Mill Creek Properties, Inc. v. City of Columbia (944 So. 2d 67 (Miss. Ct. App. 2006)) read into this statute a public-good requirement: the vacation must benefit the public, and a vacation solely to benefit a private party is impermissible.

The donation prohibition comes from the municipal home rule statute, § 21-17-5(1) (general municipal authority) and § 21-17-5(2)(g) (no donations unless specifically authorized).

The key insight in this opinion is the temporal one. Vacation alone is fine if there is a public-good basis. Repaving alone is fine if the city owns the property. Combining repaving with imminent vacation, where the underlying fee belongs to a private party, creates a donation problem because the public funds end up benefiting the private party.

The AG also gestured at § 57-7-1 as the contrast. Where the city does own surplus land and is preparing to dispose of it for industrial or commercial purposes, the Legislature has authorized pre-disposition improvement. The Laurel scenario doesn't fit because the city has only an easement.

Citations and references

Statutes:

• Miss. Code Ann. § 21-17-5(1) (municipal home rule: care, management, and control of municipal affairs)
• Miss. Code Ann. § 21-17-5(2)(g) (no donations unless specifically authorized by another statute)
• Miss. Code Ann. § 21-37-7 (closing and vacating municipal streets and alleys; compensation to abutting landowners)
• Miss. Code Ann. § 57-7-1 (authority to improve surplus government land before lease or sale for industrial or commercial purposes)

Case:

• Mill Creek Properties, Inc. v. City of Columbia, 944 So. 2d 67, 69-70 (Miss. Ct. App. 2006) (street vacation must be for the public good; cannot be solely to benefit a private party)

Prior AG opinions referenced:

• MS AG Op., Purdie (Aug. 31, 2020): when a mere easement is taken for a public highway, the soil and freehold remain in the owner of the land, encumbered only with the easement; on discontinuance, soil and freehold revert.
• MS AG Op., Herring (Sept. 11, 2006): once vacation procedures under § 21-37-7 are followed, the property reverts to owners of the underlying fee.

Source

• Landing page: https://attorneygenerallynnfitch.com/divisions/opinions-and-policy/recent-opinions/
• Original PDF: https://attorneygenerallynnfitch.com/wp-content/uploads/2023/11/D.Bassi-November-3-2023-Vacating-and-Closing-Municipal-Streets.pdf

Original opinion text

November 3, 2023

Deidre J. Bassi, Esq.
Attorney, City of Laurel
Post Office Drawer 1409
Laurel, Mississippi 39441

Re: Vacating and Closing Municipal Streets

Dear Ms. Bassi:

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

Background

According to your request, the city of Laurel ("City") has a street that runs between a local industrial plant and the parking lot for employees of the plant. This local business employs over 2,000 people and provides significant economic benefit to Laurel and the surrounding municipalities and counties. Laurel is contemplating vacating the property pursuant to Mississippi Code Annotated Section 21-37-7. You state this would not deprive any person of access to the street and would enhance the safety and security of the local business. The street is currently in poor condition and in need of repaving. We understand from a later conversation with you that Laurel has an easement in the street, and the local business owns the underlying fee.

Question Presented

May the City expend public funds to repave a city street with the intention of vacating the street pursuant to Section 21-37-7 shortly thereafter?

Brief Response

We find no authority for a municipality to expend public funds to improve a municipal street only to vacate the street for the benefit of the local business. To do so could be considered an impermissible use of public funds or a donation prohibited by Section 21-17-5(2)(g) ("Unless such actions are specifically authorized by another statute or law of the State of Mississippi, this section shall not authorize the governing authorities of municipalities to . . . grant any donation . . . .").

Applicable Law and Discussion

Municipalities may close and vacate streets in accordance with Section 21-37-7, which provides:

The governing authorities of municipalities shall have the power to close and vacate any street or alley, or any portion thereof. No street or alley or any portion thereof shall be closed or vacated, however, except upon due compensation being first made to the abutting landowners upon such street or alley for all damages sustained thereby.

In order to close and vacate a street under this statute, the municipality must find that the closing is for the public good. Mill Creek Properties, Inc. v. City of Columbia, 944 So. 2d 67, 69 (Miss. Ct. App. 2006). However, the road may not be closed just to benefit a private party. Id. at 70. If the local industrial plant is indeed the owner of the underlying fee, because Laurel has only an easement in the property, when it vacates the street the property will revert to the local industrial plant upon whose land the street lies. See MS AG Op., Purdie at 3 (Aug. 31, 2020) ("[W]here a mere easement is taken for a public highway, the soil and freehold remains in the owner of the land, encumbered only with the easement, and that, upon the discontinuance of the highway, the soil and freehold revert to the owner of the land.") (internal quotations and citation omitted); MS AG Op., Herring at 2 (Sept. 11, 2006) ("[O]nce the appropriate procedures to vacate the street have been followed as set out in Section 21-37-7, the property in question would revert to the owners of the underlying fee . . . .").

The municipal home rule statute grants municipalities "the care, management and control of the municipal affairs" so long as the municipality acts in accordance with the laws of the state. Miss. Code Ann. § 21-17-5(1). However, this statute further provides that "[u]nless such actions are specifically authorized by another statute or law of the State of Mississippi, this section shall not authorize the governing authorities of municipalities to . . . grant any donation . . . ." Id. at (2)(g). We find no authority for a municipality to expend public funds to improve a municipal street with the intention of vacating the street to revert it back to the private landowner. To do so could be considered an impermissible use of public funds or a donation by the municipality. Compare § 21-17-5(2), with Miss. Code Ann. § 57-7-1 (allowing for the improvement of surplus government land prior to the lease or sale of the land for industrial or commercial purposes). Because your question involves the expenditure of public funds, you may also wish to contact the Technical Assistance Division at the Office of the State Auditor for additional assistance.

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