Can the Mississippi Development Authority sell, auction, or donate state property in Columbus below appraised fair market value?

Plain-English summary

The Mississippi Development Authority made a loan to a Columbus manufacturer secured by the manufacturer's real estate. The company went bankrupt, and MDA ended up holding the property. 2019 Senate Bill 2810 authorized MDA to "sell, lease or otherwise dispose of, in whole or in part, in a manner as determined in the sole discretion of the authority." But subsection (3) added a critical constraint: any sale must be at not less than current fair market value, set by averaging two appraisals (one chosen by DFA, both certified by the Mississippi Real Estate Appraiser Licensing and Certification Board).

MDA wanted to know how flexible the "otherwise dispose of" language is. Specifically:
1. Can we auction the property below appraised value?
2. Can we negotiate a sale below appraised value?
3. Can we declare the property surplus and sell below appraised value?
4. Can we donate the property?

The AG addressed the four questions in turn:

1, 2, and 3: No to all three sub-appraised-value sales. An auction is a sale. A negotiated transfer for money is a sale. Surplus disposition by sale is still a sale. Section 1(3) flatly prohibits selling below appraised value, with no exceptions. Pitalo makes the "shall" mandatory.

Twist on the partial-sale path: the authority granted is to dispose of the property "in whole or in part." So if MDA finds that a portion of the property can be sold at or above its proportional appraised value, that portion can be sold, even if a sale of the whole at the same per-unit price would not work. This is the only legitimate flexibility.

4. Donation. Constitutional limit. Article IV, § 95 of the Mississippi Constitution prohibits the donation of state-controlled lands "directly or indirectly, to private corporations or individuals, or to railroad companies." So MDA absolutely cannot donate the Columbus property to a private business or person.

But the question of whether SB 2810's "dispose" language permits donation to non-private recipients (other public entities, charitable nonprofits in some configurations, etc.) is a factual statutory-construction call the AG punted to MDA. If MDA decides that "dispose" includes donation, donation is permissible only to recipients not barred by Section 95.

Practical bottom line: this property is unlikely to leave MDA's hands at any price below its full appraised value. MDA's main flexibility is to subdivide and sell off pieces.

What this means for you

If you are a state agency holding real property authorized for disposal

Read your authorizing statute carefully. If the statute uses "shall be sold for not less than" appraised value, you are locked in at that floor. If your statute is silent on price, you may have more discretion, but Section 95 still bars donations to private parties. Don't assume "otherwise dispose of" gives unfettered discretion; Cork shows it doesn't.

If you are bidding on or negotiating to buy state property from MDA or another agency

The price floor is set by appraisals. Don't expect to negotiate below the appraised price unless the state has authority you can identify in writing. MDA may agree to sell a partial parcel if you are flexible on what you're buying.

If you are at the Mississippi Development Authority

This opinion is a roadmap. Your Columbus property options are: (1) sell the whole at appraised value or above, (2) subdivide and sell pieces at appraised values, (3) lease, or (4) consider donation only to recipients permitted by Section 95 (public bodies, certain configurations). You cannot sell below appraisal, even via creative auction or surplus declaration.

If you are a state legislator drafting future property-disposal authorizations

Decide upfront whether you want a price floor. If you include "for not less than current fair market value" or similar language, you bind the agency to that floor with no exceptions. If you omit a price floor, the agency has broader pricing discretion but still hits the Section 95 donation prohibition. Be explicit if you intend to allow below-appraised dispositions for special purposes (community development, brownfield redevelopment).

If you are an economic developer trying to land an MDA property for a project

Be ready to pay appraised value or work with MDA on a partial-parcel transaction. If you cannot meet the appraised-value floor, you will need legislative action to authorize a different transaction. That's a multi-month process at best.

Common questions

Q: What is "fair market value" in this context?
A: SB 2810 Section 1(3) defines it as "the average of two (2) appraisals by qualified appraisers." One appraiser is chosen by the Department of Finance and Administration; both must be certified and licensed by the Mississippi Real Estate Appraiser Licensing and Certification Board.

Q: What does "sell, lease or otherwise dispose of, in whole or in part" mean?
A: MDA can sell, lease, or otherwise dispose of all or any part of the property in its sole discretion as to manner. The price floor in Section 1(3) only applies to sales, not necessarily to leases or non-sale dispositions. The "in whole or in part" language allows MDA to subdivide and treat parts differently.

Q: Why does Article IV, § 95 of the Mississippi Constitution matter here?
A: Section 95 says: "Lands belonging to, or under the control of the State, shall never be donated directly or indirectly, to private corporations or individuals, or to railroad companies. Nor shall such land be sold to corporations or associations for a less price than that for which it is subject to sale to individuals." This is a constitutional bar on giveaways of state land to private parties.

Q: Can MDA lease the property below market rates?
A: SB 2810's price floor is specifically for sales ("In the event that any or all of the [property] is sold"). Lease pricing is not addressed in subsection (3). The general "sole discretion" language in subsection (1) governs leases, but agencies should be cautious about substantially below-market leases that might be characterized as donations.

Q: What does declaring property "surplus" mean?
A: Mississippi has separate state surplus property procedures for state-owned property generally. SB 2810 is special legislation for this specific Columbus parcel. The AG concluded that even using the surplus mechanism for this parcel cannot evade SB 2810's price floor; if the surplus disposition is a sale, the price floor applies.

Q: Can MDA accept payment in something other than cash?
A: SB 2810 Section 1(3) requires sale at fair market value but doesn't specify payment form. In-kind payment, financing arrangements, or future-value consideration would need careful structuring to ensure the value transferred to MDA equals or exceeds appraised value.

Q: What if the appraisals come in much higher than what the market will pay?
A: That's a real risk in distressed-property situations. The statute doesn't have a relief valve for this. The property could sit unsold at the floor price. MDA's options are to subdivide, lease, hold, or seek legislative relief.

Q: Could MDA donate to a city or county for economic development?
A: Section 95 prohibits donations to "private corporations or individuals, or to railroad companies." Donation to a public entity (city, county, state agency, public university) is not within Section 95's prohibition. The question of whether SB 2810's "dispose" includes donation is a factual statutory-construction question MDA must resolve, but if it does, donation to a public entity could be authorized.

Background and statutory framework

2019 Senate Bill 2810 is a special-property authorization. The Legislature periodically passes bills that authorize specific state property to be sold, leased, or disposed of, often when an agency has acquired land through bankruptcy, foreclosure, eminent domain, or similar mechanisms and the standard surplus property processes don't fit.

SB 2810 has three key provisions:

• Section 1(1): Authorizes MDA to "sell, lease or otherwise dispose of, in whole or in part, in a manner as determined in the sole discretion of the authority" the listed properties, including the Columbus property.
• Section 1(3): "In the event that any or all of the [subject Property] is sold, the real property shall be sold for not less than the current fair market value as determined by the average of two (2) appraisals by qualified appraisers, one of whom shall be selected by the Department of Finance and Administration, and both of whom shall be certified and licensed by the Mississippi Real Estate Appraiser Licensing and Certification Board."

The bill does not define "dispose." That ambiguity is what generates the donation question.

The constitutional backdrop is Mississippi's strong policy against giveaways of state land. Article IV, § 95 was put in the constitution to prevent precisely the kind of crony giveaways to railroads that were common in the 19th century. The provision is broad: "private corporations or individuals, or to railroad companies."

The AG's reasoning is essentially:
- "Sell" = sell, with no exceptions to the appraisal floor.
- "Otherwise dispose of" probably includes options other than sale, but those options are still constrained by Section 95 if they amount to giveaways.
- "In whole or in part" allows partial dispositions, which preserves some operational flexibility.

The opinion represents a fairly typical AG approach to special property authorizations: take the price floor at face value, look for partial-disposition flexibility, and cross-reference the Section 95 constitutional limit on donations.

Citations and references

Constitution:
- Miss. Const. art. IV, § 95 (no donation of state land to private corporations, individuals, or railroad companies; no sale to corporations at less than the price for individuals)

Statutes:
- 2019 Mississippi Senate Bill No. 2810 (special legislation authorizing MDA to dispose of specific properties including the Columbus parcel)

Cases:
- Pitalo v. GPCH-GP, Inc., 933 So. 2d 927 (Miss. 2006) (use of "shall" indicates mandatory requirement, "may" is discretionary)

Source

• Landing page: https://attorneygenerallynnfitch.com/divisions/opinions-and-policy/recent-opinions/
• Original PDF: https://attorneygenerallynnfitch.com/wp-content/uploads/2024/02/B.Cork-February-8-2024-Disposal-of-Property-Pursuant-to-Senate-Bill-2810.pdf

Original opinion text

February 8, 2024

Bill Cork, Executive Director
Mississippi Development Authority
Post Office Box 849
Jackson, Mississippi 39205

Re: Disposal of Property Pursuant to Senate Bill 2810

Dear Mr. Cork:

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

Background

According to your request, the Mississippi Development Authority ("MDA") made a loan for a manufacturing company located in Columbus, Mississippi, which was secured with a lien on the company's real property (the "Property"). The company subsequently filed bankruptcy, and MDA acquired the Property as part of the bankruptcy proceedings.

Under 2019 Mississippi Senate Bill No. 2810 ("S.B. 2810") Section 1(1), the Legislature authorized MDA "to sell, lease or otherwise dispose of, in whole or in part, in a manner as determined in the sole discretion of the authority" certain state property, including the subject Property located in Columbus, Mississippi. S.B. 2810 Section 1(3) further states:

In the event that any or all of the [subject Property] is sold, the real property shall be sold for not less than the current fair market value as determined by the average of two (2) appraisals by qualified appraisers, one of whom shall be selected by the Department of Finance and Administration, and both of whom shall be certified and licensed by the Mississippi Real Estate Appraiser Licensing and Certification Board.

The bill does not define the term "dispose."

Questions Presented

1. Based on the "otherwise dispose of" language, if MDA makes the appropriate findings, may MDA dispose of the Property by auctioning it to the highest bidder below the appraised fair market value?

2. If MDA makes the appropriate findings, may the agency convey the Property on the basis of negotiation below the appraised fair market value?

3. If MDA makes the appropriate findings, may MDA declare the Property to be surplus and convey the Property below the appraised fair market value?

4. Based on the "otherwise dispose of" language, if MDA makes the appropriate findings, may MDA donate all or a portion of the Property?

Brief Response

1. An auction is a type of sale, and S.B. 2810 Section 1(3) explicitly prohibits the sale of the Property below the current appraised market value without exception. However, the authority granted to sell, lease or otherwise dispose of the property applies to said Property "in whole or in part." Thus, if MDA determines that a part of the subject Property may be sold at auction, conveyance by negotiation, conveyance as surplus, or otherwise for a price that meets or exceeds its fair market value, that part may be sold.

2. See answer to question one.

3. See answer to question one.

4. Article 4, Section 95 of the Mississippi Constitution prohibits the donation of "[l]ands belonging to, or under the control of the State . . . to private corporations or individuals, or to railroad companies." However, if MDA makes the factual determination that the definition of dispose as set forth in S.B. 2810 Section 1(1) includes donation, MDA may donate all or a portion of the Property so long as it is not donated to a private company or individual or to a railroad company.

Applicable Law and Discussion

Your request concerns the meaning of S.B. 2810, specifically the phrase "otherwise dispose of" as set forth in Section 1(1). As stated supra, S.B. 2810 Section 1(1) authorizes MDA "to sell, lease or otherwise dispose of, in whole or in part, in a manner as determined in the sole discretion of the authority" certain state property, including the subject Property located in Columbus, Mississippi.

Regarding the sale of the Property specifically, S.B. 2810 Section 1(3) further mandates:

In the event that any or all of the [subject Property] is sold, the real property shall be sold for not less than the current fair market value as determined by the average of two (2) appraisals by qualified appraisers, one of whom shall be selected by the Department of Finance and Administration, and both of whom shall be certified and licensed by the Mississippi Real Estate Appraiser Licensing and Certification Board.

(emphasis added).

Put simply, S.B. 2810 Section 1(3) explicitly prohibits the sale of the Property below the current appraised market value. See Pitalo v. GPCH-GP, Inc., 933 So. 2d 927, 929 (Miss. 2006) ("Simply stated, 'shall' is mandatory, while 'may' is discretionary."). Furthermore, S.B. 2810 provides no exceptions to this prohibition. Your first three questions concern various scenarios in which MDA would be selling the Property below the current appraised fair market value. Accordingly, it is the opinion of this office that MDA may not: (1) dispose of the Property by auctioning it to the highest bidder below the appraised fair market value, (2) convey the Property on the basis of negotiation below the appraised fair market value, or (3) declare the Property to be surplus and convey the Property below the appraised fair market value. However, the authority granted to sell, lease or otherwise dispose of the property applies to said Property "in whole or in part." Thus, if MDA determines that a part of the subject Property may be sold at auction, conveyance by negotiation, conveyance as surplus, or otherwise for a price that meets or exceeds its fair market value, that part may be sold.

Regarding your fourth question, Article IV, Section 95 of the Mississippi Constitution provides, in part:

Lands belonging to, or under the control of the State, shall never be donated directly or indirectly, to private corporations or individuals, or to railroad companies. Nor shall such land be sold to corporations or associations for a less price than that for which it is subject to sale to individuals.

Accordingly, it is the opinion of this office that the Property owned by MDA, a state agency, may not be donated to a private corporation or individual or to a railroad company. See MS AG Op., Bryant at *1 (Mar. 11, 1992) (providing sale of property owned by a state agency would be governed by Section 95 of the Mississippi Constitution).

Beyond this, whether donating the Property would be considered "disposing" of the Property is a question of fact, and this office may only issue official opinions addressing prospective questions of law. MS AG Op., Barton at *1 n.2 (May 17, 2021). Thus, it is the opinion of this office that if MDA determines the definition of dispose as set forth in S.B. 2810 Section 1(1) includes donation, MDA may donate all or a portion of the Property so long as it is not donated to a private corporation or individual or to a railroad company.

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/ Maggie Kate Bobo
Maggie Kate Bobo
Special Assistant Attorney General