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 is "depends on which statute applies." The starting point is Section 21-17-5(2), which prohibits municipalities from making donations unless specifically authorized by statute. A lease at far below fair market value is a donation in substance, even if it is structured as a lease in form. So a city cannot just decide to lease property for $1 unless it can point to a statute that authorizes the move.

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 specifically, the AG raises an additional concern. Mississippi case law (Northeast Mental Health v. Cleveland, 2016) holds that a municipality cannot bind successor governing authorities through a long-term contract unless expressly authorized by statute. So a 50-year or 75-year lease entered into without express statutory authority is voidable by a future council. Section 21-37-53 is one of the few statutes that gives express authority for long-term leases (up to 75 years) and is therefore the most common path for that kind of arrangement.

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

If you are a city attorney advising a municipality on a non-profit lease

Don't just lean on the city's general police power or its desire to support the non-profit. Find a specific statute that authorizes the deal. The most useful options are:

1. Section 21-7-1(3) for general non-profit leases below fair market value (no fixed term limit in this section).
2. Section 21-37-53 for long-term leases (up to 75 years) of property "not used for governmental purposes" and "not purchased with public funds." This is your go-to for major below-market or nominal-rent deals on land the city owns but is not actively using.
3. Section 57-7-1 for surplus land leases for industrial or commercial purposes; the AG (Griffin 2025) confirmed these need "good and valuable consideration" but not fair market value.
4. Section 21-19-44 for funding economic development organizations.
5. Sections 21-19-65 and 21-17-1(8) for matching donations (cash plus in-kind contributions like donated office space).

Document in the resolution authorizing the lease which statute the city is relying on. That gives you the cleanest defense if the lease is later challenged.

If you are a non-profit organization seeking a lease from a Mississippi municipality

Be patient with the city's process. The city is not just being slow; it has to actually fit the lease into a statutory authorization, and you may need to help by showing how your non-profit's purpose lines up with one of the available frameworks (community development, economic development, public welfare, surplus-land redevelopment). A clean, well-documented lease structure protects both you and the city, especially because a successor council can void a defectively-authorized long-term lease.

If you are a council member or alderman voting on this kind of lease

Ask the city attorney which statute the lease is authorized under, before the vote. If the answer is vague ("general municipal authority," "police power," "public welfare"), the deal is exposed to challenge. Get the specific statutory citation in the resolution. If the deal is for more than a year or two, also confirm that the chosen statute gives express authority for long-term leases (Section 21-37-53 is the workhorse for that).

If you are an economic development practitioner advising a community on attracting a non-profit anchor

The Mississippi statutory framework is unusually rich for non-profit redevelopment, but you have to pick the right tool. Section 21-37-53 is broadest in time horizon and consideration flexibility but is limited to property not used for governmental purposes. Section 57-7-1 fits surplus-land deals where the non-profit will be doing industrial or commercial work. Section 21-7-1(3) is your general fallback. Counsel the city to explicitly identify the statutory basis early.

Common questions

Q: Why is a $1 lease a "donation" under state law?
A: Because the substance of the deal is a transfer of value from the city to the non-profit. The city gives up the use of its property; the non-profit pays nothing meaningful. Mississippi treats that as a donation regardless of how the paperwork is structured. Section 21-17-5(2) blocks donations unless statute authorizes them.

Q: How long is "long-term" for purposes of the successor-governing-body rule?
A: Mississippi courts have generally treated multi-year contracts as long-term, but the precise line varies by context. Anything more than the term of the current governing body's seats is risky without express statutory authority. Section 21-37-53's 75-year cap is far longer than any typical council term.

Q: Can the city pick its non-profit lessee, or does the lease have to be put out for competitive bidding?
A: This opinion does not directly address bidding. Some Mississippi statutes (especially Section 31-7-13) do require competitive procurement for certain government contracts, but the lease-to-non-profit context is governed by the specific statutes that authorize below-market terms. Read the chosen statute carefully; some have procedural requirements, others don't.

Q: What is "good and valuable consideration" under Section 57-7-1?
A: The AG's 2025 Griffin opinion (cited here) said it does not require fair market value, but does require something more than nominal. The non-profit's commitment to use the property for a specific purpose (job creation, redevelopment, community benefit) can serve as part of the consideration. The city should document the consideration in the lease.

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: Per Cleveland (2016), the successor council can treat the lease as voidable. That means it can either continue performing or refuse to continue. A non-profit relying on the lease should make sure the underlying statutory authority is rock-solid; otherwise the long-term commitment is not actually long-term.

Background and statutory framework

Mississippi cities have a baseline rule against donations of municipal funds and property: Section 21-17-5(2) prohibits any donation unless specifically authorized by statute. The constitutional underpinning is Article 4, Section 95 of the Mississippi Constitution, which limits the legislature's ability to authorize gifts of public property and (by extension) limits cities' ability to do the same.

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. This is the most flexible statute for major non-profit deals.
• 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 cleanest source of express authority for long-term municipal leases, with its 75-year cap. Cities trying to enter a long-term non-profit lease typically structure the deal under Section 21-37-53 if the property is not used for governmental purposes; if it is, they look to Section 21-7-1(3) and accept that the lease term may be more limited.

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