Can a Mississippi city give a long-term lease of city property to a non-profit for $1, or some token amount?

Plain-English summary

The City of McComb wanted to enter a long-term lease of municipal property to a non-profit organization for $1 (or some other nominal amount), on the theory that the lease would promote community development and serve the public welfare. The city attorney asked the AG whether that was lawful under Mississippi law.

The AG's answer depends on which statute applies. Section 21-17-5(2) prohibits municipalities from making donations unless specifically authorized by statute, and the AG says this includes leasing property for nominal consideration. The city needs statutory authority for the proposed arrangement.

Several statutes do. Section 21-7-1(3) lets municipalities lease real property to non-profit organizations for less than fair market value. Section 21-37-53 lets a municipality lease property not used for governmental purposes (and not purchased with public funds) for any consideration the governing authorities deem proper, up to 75 years. Section 57-7-1 lets municipalities lease certain surplus lands for industrial or commercial purposes; the AG has previously held those leases need not be at fair market value but must be for "good and valuable consideration." Section 21-19-44 lets a municipality fund economic development organizations under certain conditions.

For long-term leases, the AG cites Northeast Mental Health v. Cleveland for the rule that municipal governing authorities cannot bind their successors by contract unless expressly authorized by law. A long-term contract without that authority is voidable by a successor board. Section 21-37-53 expressly allows a lease of qualifying property for up to 75 years.

The AG decides only the legal framework; whether any particular statute fits a particular factual scenario is a determination the city's governing authorities have to make.

What this means for you

City attorneys advising a municipality on a non-profit lease

The opinion holds that, unless a statute authorizes it, a municipality cannot lease property for nominal consideration because Section 21-17-5(2) treats that as a prohibited donation. It identifies several statutes that do authorize below-market leases to non-profits: Section 21-7-1(3) (non-profit entities), Section 21-37-53 (property not used for governmental purposes), Section 57-7-1 (surplus land for industrial or commercial purposes), and Section 21-19-44 (economic development organizations). The opinion adds that matching donations are authorized under Sections 21-19-65 and 21-17-1(8). It states that whether any of these statutes fits the city's facts is a determination for the governing authorities, and that procedural requirements, contract limitations, and adequacy of consideration are outside the scope of an AG opinion.

Non-profit organizations seeking a lease from a Mississippi municipality

Under the opinion, a city can lease to a non-profit for less than fair market value only when a specific statute authorizes it. For a long-term lease, the opinion notes that a municipality cannot bind successor governing authorities without express statutory authority, and that such a lease is voidable by the successor board; Section 21-37-53 supplies express authority for leases up to 75 years on property not used for governmental purposes.

Council members and aldermen voting on this kind of lease

The opinion frames the choice of statutory authority and the application of these statutes to the facts as determinations for the governing authorities. It declines to opine on procedural requirements, contract limitations, or whether the consideration is adequate.

Economic development practitioners

The opinion lays out the statutory menu: Section 21-37-53 (up to 75 years, property not used for governmental purposes, consideration the authorities deem proper), Section 57-7-1 (surplus land, "good and valuable consideration" but not necessarily fair market value, per the Griffin opinion), Section 21-7-1(3) (non-profit leases below fair market value), and Section 21-19-44 (economic development organizations). It does not recommend one over another.

Common questions

Q: Can a city lease public property to a nonprofit for $1?
A: The AG treats a lease for nominal consideration as a donation, which Section 21-17-5(2) prohibits unless specifically authorized by statute. The opinion identifies statutes that may allow below-market or nominal leases, depending on the property and proposed use, but does not decide whether any applies to McComb's proposal.

Q: What is the rule for long-term leases?
A: The opinion relies on Cleveland (2016): municipal governing authorities cannot bind their successors by contract unless expressly authorized by law, and a long-term contract entered without that authority is voidable by the successor board. The opinion points to Section 21-37-53, which expressly authorizes leases up to 75 years on qualifying property.

Q: Can the city pick its non-profit lessee, or does the lease have to be put out for competitive bidding?
A: The opinion does not decide bidding or other procedural requirements. It expressly places "general procedural requirements" outside the scope of its answer.

Q: What is "good and valuable consideration" under Section 57-7-1?
A: The AG quotes its Griffin opinion: sales and leases under Section 57-7-1 "do not necessarily require fair market value, but should be made for good and valuable consideration." It does not decide whether the proposed consideration is adequate and says that question is outside the scope of the opinion.

Q: Can the city donate property outright (not just lease it)?
A: Generally no, unless a specific statute authorizes the donation. Section 21-19-65 and Section 21-17-1(8) are the matching-donation statutes; outside those, outright donation of municipal property is barred by Section 21-17-5(2).

Q: What happens if a successor council inherits a long-term lease without express statutory authority?
A: Citing Cleveland, the AG says a long-term contract made without express statutory authority is voidable by a successor board. It does not decide whether McComb's proposed lease has that authority.

Background and statutory framework

Section 21-17-5(2) prohibits municipal donations unless specifically authorized by statute. The opinion applies this rule to a proposed lease for nominal consideration and then identifies statutes that may provide authority, depending on the facts.

That base rule has many statutory exceptions specific to particular policy goals:

• Section 21-7-1(3) allows leases below fair market value to non-profit organizations.
• Section 21-37-53 allows leases of up to 75 years on property "not used for governmental purposes" and "not purchased with public funds," at consideration the governing authorities deem proper.
• Section 57-7-1 is the surplus-land statute, allowing leases for industrial or commercial purposes; the AG has held these need not be at fair market value but require "good and valuable consideration" (MS AG Op., Griffin, Sept. 24, 2025).
• Section 21-19-44 authorizes municipal funding of economic development organizations.
• Sections 21-19-65 and 21-17-1(8) authorize matching donations and in-kind contributions (the AG's 2012 Chambers opinion read in-kind to include donated office space).

The long-term-contract issue overlays all of this. Northeast Mental Health-Mental Retardation Comm'n v. Cleveland, 187 So. 3d 601, 604 (Miss. 2016), held that a municipality cannot bind successor governing authorities through a long-term contract unless expressly authorized by statute. A long-term contract entered into without express statutory authority is voidable by the successor board. The AG has applied that holding to lease-of-municipal-property questions, including in MS AG Op., Webb (Apr. 14, 2017).

Section 21-37-53 is the example of express long-term lease authority quoted in the opinion. It applies only to property that meets the conditions in its text. The AG leaves the question of which statute applies to McComb's proposal to the city's governing authorities.

Citations and references

Statutes:

• Miss. Code Ann. § 21-7-1 (lease to non-profits below fair market value)
• Miss. Code Ann. § 21-17-1(8) (matching donations)
• Miss. Code Ann. § 21-17-5 (donation prohibition)
• Miss. Code Ann. § 21-19-44 (economic development organizations)
• Miss. Code Ann. § 21-19-65 (matching donations to non-profits)
• Miss. Code Ann. § 21-37-53 (lease of non-governmental-use property up to 75 years)
• Miss. Code Ann. § 57-7-1 (surplus land)

Cases:

• Ne. Mental Health-Mental Retardation Comm'n v. Cleveland, 187 So. 3d 601 (Miss. 2016) (municipal long-term contracts require express statutory authority; otherwise voidable by successor board)

Prior AG opinions referenced:

• MS AG Op., LeSure (Dec. 10, 2010) (no donation to non-profits without specific statutory authority)
• MS AG Op., Griffin (Sept. 24, 2025) (Section 57-7-1 leases need good and valuable consideration but not fair market value)
• MS AG Op., Chambers (Sept. 21, 2012) (in-kind donations under Section 21-19-65 include donated office space)
• MS AG Op., Webb (Apr. 14, 2017) (cannot rely on Section 21-17-1 alone for long-term contract authority)

Source

• Landing page: https://attorneygenerallynnfitch.com/divisions/opinions-and-policy/recent-opinions/
• Original PDF: https://attorneygenerallynnfitch.com/wp-content/uploads/2025/12/J.-Collins-December-30-2025-Lease-of-Municipal-Property-to-Non-Profit-Organization.pdf

Original opinion text

December 30, 2025

Jennifer Riley Collins, Esq.
Attorney, City of McComb
Post Office Box 667
McComb, Mississippi 39649-0667

Re: Lease of Municipal Property to Non-Profit Organization

Dear Ms. Collins:

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

Question Presented

Does the City of McComb ("City") have the legal authority under Mississippi law to enter a long-term lease of public property with a non-profit organization for nominal consideration of one dollar or other reasonable minimal amount less than fair market value when the City determines that such lease to the non-profit organization will promote and foster the development and improvement of the community and serves the public welfare?

Brief Response

Unless specifically authorized by statute, a municipality is prohibited from granting any donation, which would include leasing property for nominal consideration. However, multiple statutes allow a municipality to lease public property to a non-profit organization for less than fair market value. See Miss. Code Ann. §§ 21-7-1(3) (specific to non-profit entities), 21-37-53 (Property Not Used for Governmental Purposes), 57-7-1 (Surplus Land) 21-19-44 (Economic Development Organizations; Funding). Additionally, a municipality must have specific statutory authority, such as that found in Mississippi Code Annotated Section 57-7-1, to enter a long-term lease. Whether any of the referenced statutes are applicable to your factual scenario is a determination to be made by the municipal governing authorities.

Applicable Law and Discussion

According to your request, the City wishes to enter long-term leases with qualified non-profit organizations for nominal consideration. However, questions regarding general procedural requirements, contract limitations and restrictions, and whether consideration is adequate are not prospective questions of state law and are outside the scope of this opinion.

As to whether a municipality can lease property to a nonprofit for less than fair market value or for nominal consideration, Section 21-17-5(2) prohibits municipalities from granting any donation unless specifically authorized by statute. See MS AG Op., LeSure at 1 (Dec. 10, 2010) (opining that "[a] municipality may not donate municipal funds or municipal real or personal property to a private nonprofit corporation without specific statutory authority to do so."). Section 21-17-1(3) allows municipalities to lease for less than fair market value municipally owned real property to non-profit organizations. Section 57-7-1 also authorizes municipalities to lease certain surplus lands for industrial or commercial purposes. "[S]ales and leases pursuant to Section 57-7-1 do not necessarily require fair market value, but should be made for good and valuable consideration." MS AG Op., Griffin at 2 (Sept. 24, 2025) (internal citations omitted).

Depending upon the specific facts, other statutes may allow the City to lease property to a non-profit organization for less than fair market value or for nominal consideration. See, e.g., Miss. Code Ann. §§ 21-37-53, 21-19-44. Additionally, Sections 21-19-65 and 21-17-1(8) authorize municipalities to make matching donations to non-profit organizations. See MS AG Op., Chambers at *2 (Sept. 21, 2012) (internal citations omitted) (opining that "Section 21-19-65 authorizes the donation of funds to match any other funds, as well as the provision of 'in-kind' services, which includes the donation of office space"). Ultimately, whether any of the referenced statutes apply to your situation is a determination to be made by the City's governing authorities.

With respect to whether the City can enter a long-term lease with a non-profit organization, it is well settled that municipal governing authorities "may not bind their successors in office by contract, unless expressly authorized by law, because to do so would take away the discretionary rights and powers conferred by law upon successor governing bodies." Ne. Mental Health-Mental Retardation Comm'n v. Cleveland, 187 So. 3d 601, 604 (Miss. 2016). Any long-term contract entered into without express statutory authority is voidable by the successor board. Id. This office has previously opined that "a municipality may not rely on the authority in Section 21-17-1 as its [sole] express authority to enter into long-term contracts." MS AG Op., Webb at *2 (Apr. 14, 2017) (internal citations omitted). Section 21-37-53 does allow a municipality to enter into a long-term lease and provides in relevant part:

> Any municipality which holds title to property, real, personal, or mixed, which was not purchased with public funds and which is not used for governmental purposes, is hereby authorized to lease same at and for such consideration as the governing authorities may deem proper for a period or periods not to exceed seventy-five years, and may contract with private individuals, firms, or corporations with respect to the use and development thereof.

Which statutes may apply to your scenario is a determination to be made by the governing authorities of the City.

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