Can a West Virginia county commission lease county land to a Convention and Visitors Bureau when the CVB plans to sublease or partner with a for-profit business that will run an escape room game on the property?

Plain-English summary

The Fayetteville Convention and Visitors Bureau had previously leased a county-owned building from the Fayette County Commission and used it as an historic jail and law enforcement museum. The CVB wanted to renew, but with a twist: a for-profit company called Epic Pories would either be a co-lessee or would sublease from the CVB to operate an "escape room" game on the property. Epic would pay the CVB a percentage of customer fees in exchange. Either way, the operative use of the building would be Epic's commercial business.

The Fayette County Prosecuting Attorney asked the Attorney General whether either structure was lawful. The AG said neither one works on these facts.

The legal framework. A West Virginia county commission has only the powers expressly granted by the Constitution and the Legislature, plus those "reasonably and necessarily implied" in the exercise of those express powers (State ex rel. W. Va. Parkways Auth. v. Barr; W. Va. Const. art. IX, § 11). Implied authority cannot exceed express authority (Barr; State Line Sparkler v. Teach). Ambiguity in scope is resolved against finding the power exists (McCallister v. Nelson).

For real property leases, county commissions have only two express grants:

• § 7-1-3k: lease "county-owned buildings, lands, and other properties" to "nonprofit organizations" for certain enumerated purposes.
• § 7-1-3hh: lease "any of its real or personal property" to the federal government, or "to the state or any agency or instrumentality thereof," provided the lease is "for a public purpose."

Anything outside those two grants is outside the commission's power, unless it falls within their narrow implied edges. The opinion treats Epic, a for-profit business, as outside both express grants without difficulty: a for-profit is not a "nonprofit organization" under § 7-1-3k, and is not a government instrumentality under § 7-1-3hh.

Joint-lessee structure fails. Naming the CVB as a co-lessee with Epic does not bring Epic inside the statute. The party Epic remains a private for-profit business, and any lease that includes Epic as a lessee exceeds § 7-1-3k and § 7-1-3hh. Implied authority cannot help, because leasing to a private for-profit "for economic gain" is neither reasonably nor necessarily implied in the express powers.

Sole-lessee structure fails too. The trickier proposal was for the CVB to be the sole named lessee while contemplating a sublease or "partnership agreement" with Epic. The AG assumed for purposes of the opinion that the CVB qualifies as a state "instrumentality" under § 7-1-3hh, citing a 1986 AG opinion (61 W. Va. Op. Atty. Gen. 72) that reached that conclusion for the Charleston Convention Bureau. So the threshold question becomes whether a lease to the CVB for the purpose of a sublease to Epic satisfies the "public purpose" requirement.

It does not. The public purpose test comes from State ex rel. City of Charleston v. Coghill, 156 W. Va. 877 (1973). Coghill upheld a city sale of a limited number of public parking spaces to private buyers, on the rationale that "a parking facility designed for an acknowledged public purpose is constitutional, even though it confers ancillary and incidental benefits upon private persons." But the test cuts both ways. A use is impermissible where the "private benefits to the private business occupants are so overwhelming, compared with the public benefits, that the nature of the government's project changes from a public purpose with private ancillary benefits to a private purpose with public ancillary benefits." The "primary and dominant purpose" of the proposed use of public land has to be public.

Applying that test, the proposed Fayetteville CVB-Epic structure is upside-down. The escape room is a for-profit Epic operation. Epic gets the building's primary, day-to-day use; Epic captures the great majority of revenue; only an unspecified slice flows back to the CVB. That contrasts sharply with Coghill, where the City of Charleston was running a public parking facility and selling a limited number of spaces. Here, the entire facility (or vast majority of it) would be devoted to private commerce. The opinion compares this to a 2014 AG opinion (2014 WL 1875639) that rejected a county commission's plan to lease the third floor of a county building as a private residence. The 2018 opinion notes the present case is even further over the line: more square footage, less public benefit.

The pass-through rule. A creative structuring move, lease to the CVB and let the CVB sublease to Epic, does not fix the problem. "[T]o conclude that Section 7-1-3hh prohibits the Commission from leasing directly to a private entity for private purposes, but not indirectly where the Fayetteville CVB is essentially an intermediary between the Commission and Epic, would permit an end-run around the statute's text and purpose." If the dominant use is private gain, the statute fails regardless of which name appears on the lease line.

The available legitimate path. The AG flagged a structurally different option: the CVB itself could operate the escape room facility as a public attraction, paying Epic or another contractor to manage day-to-day operations. That arrangement is closer to Coghill's parking-garage model: a government entity running a public attraction, with private contractor benefits as ancillary to the primary public purpose. The opinion does not bless the alternative outright (still fact-bound), but it points the way.

Currency note

This opinion was issued in 2018. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Q: What if Epic paid market rent for its use, would that change the analysis?
A: Probably not under the opinion's logic. The "public purpose" test under Coghill is about what the property is being used for, not whether the public is being adequately compensated. A market-rate sublease that still puts a private business in primary control of public property would still likely flunk the dominant-purpose test. Coghill and the 2014 AG opinion both treat fair compensation as relevant but insufficient on its own.

Q: Is there any way to do this without legislative action?
A: The opinion suggests one: have the CVB itself run the escape room as a public attraction and contract with Epic for management services. That puts the public entity in primary control and treats Epic as a paid contractor. Whether the resulting arrangement actually qualifies as "public purpose" is fact-bound, but the structural setup at least matches Coghill. The opinion cautions that economics alone are not the sole criterion (Coghill at 156 W. Va. 884), so the public-attraction framing has to be genuine, not pretextual.

Q: How much private benefit is "ancillary"?
A: Coghill does not draw a numerical line. It allowed a small percentage of parking spaces to be sold to private buyers within a public parking facility. The 2014 AG opinion rejected leasing the top floor of a three-story building (one-third of the space) for private residential use. The 2018 opinion treats "the entire building (or at least the vast majority of it)" for a private business as far over the line. The question is qualitative: who is the property primarily serving?

Q: Does the analysis change for surplus or unused county property?
A: Not on the face of these statutes. § 7-1-3k and § 7-1-3hh do not have a "surplus property" carve-out. Whatever the property's prior use, the lease must still go to a nonprofit (§ 7-1-3k) or government entity (§ 7-1-3hh), and § 7-1-3hh requires public purpose. A separate sale-of-surplus-property statute might allow disposition through different channels, but the opinion does not analyze that route.

Q: Could the Legislature fix this?
A: Yes. The opinion expressly identifies "an amendment to allow county commissions to lease land to for-profit entities or to expand the scope of permitted 'public purposes'" as a path forward. Without that, the proposal as structured stays outside county commission authority.

Background and statutory framework

The two express lease grants.

§ 7-1-3k authorizes a county commission to lease "county-owned buildings, lands, and other properties" to "nonprofit organizations" for purposes the section enumerates. The opinion treats this as inapplicable because Epic is a for-profit company.

§ 7-1-3hh authorizes a county commission to lease "any of its real or personal property" to the federal government or "to the state or any agency or instrumentality thereof," provided the lease is "for a public purpose." The opinion assumes the Fayetteville CVB qualifies as a state instrumentality (citing 61 W. Va. Op. Atty. Gen. 72 (Feb. 3, 1986), which concluded that the Charleston Convention Bureau is an instrumentality of the City of Charleston). The dispositive issue therefore becomes whether a lease facilitating Epic's commercial operation satisfies "public purpose."

Implied powers and Barr. State ex rel. W. Va. Parkways Auth. v. Barr, 228 W. Va. 27 (2011), restates the rule that a county commission's powers are only those "expressly conferred by the Constitution and the legislature, together with such as are reasonably and necessarily implied in the full and proper exercise of the powers so expressly given." Implied powers cannot exceed express powers (Barr; State Line Sparkler v. Teach). Where express powers are narrow, implied powers are narrow too. State ex rel. Farley v. Spaulding illustrates how broad implied powers can be when express authority is broad (security personnel for a county judicial facility); the present case is on the other end of the spectrum.

Public purpose: Coghill. State ex rel. City of Charleston v. Coghill, 156 W. Va. 877 (1973), is the controlling West Virginia authority. The case construed § 8-16-4a(a) (the City of Charleston parking-facility statute) and held that:

• A government project does not lose its "public purpose" character merely because it confers "ancillary and incidental benefits upon private persons."
• A project loses its public character when the "private benefits to the private business occupants are so overwhelming, compared with the public benefits, that the nature of the government's project changes from a public purpose with private ancillary benefits to a private purpose with public ancillary benefits."
• The test is the project's "primary and dominant purpose."

West Virginia Citizens Action Group v. West Virginia Economic Development Grant Commission, 213 W. Va. 255 (2003), confirms that "public purpose" is not a static definition; it shifts with changing societal needs. The opinion uses Citizens Action Group to acknowledge the test's flexibility while still landing on the conclusion that the proposed arrangement here flunks any reasonable formulation.

Resolving ambiguity. McCallister v. Nelson, 186 W. Va. 131 (1992), holds that any ambiguity about the scope of county commission powers must be resolved against finding such authority. That tilts the analysis toward "no" in close cases.

The 2014 precedent. A 2014 AG opinion (2014 WL 1875639, May 6, 2014) rejected a similar arrangement: county commission lease of the third floor of a county-owned building to a private individual for use as a private residence. The 2014 opinion read § 7-1-3hh's "public purpose" requirement to forbid that arrangement. The 2018 opinion treats the present proposal as a stronger violation, more square footage, more commercial use.

The 1986 instrumentality opinion. 61 W. Va. Op. Atty. Gen. 72 (Feb. 3, 1986) concluded that the Charleston Convention Bureau is an instrumentality of the City of Charleston. The 2018 opinion assumes the same conclusion for the Fayetteville CVB. Whether a particular CVB qualifies will depend on its formation documents and degree of governmental control; the opinion treats it as a working assumption rather than a holding.

Citations and references

Statutes and constitutional provisions:
- W. Va. Code § 5-3-2 (AG advisory authority)
- W. Va. Code § 7-1-3hh (lease to government for public purpose)
- W. Va. Code § 7-1-3k (lease to nonprofit)
- W. Va. Code § 8-16-4a(a) (Charleston parking facility statute discussed in Coghill)
- W. Va. Const. art. IX, § 11 (Powers of county commissions)

Cases:
- State ex rel. W. Va. Parkways Auth. v. Barr, 228 W. Va. 27 (2011)
- State ex rel. State Line Sparkler of W. Va., Ltd. v. Teach, 187 W. Va. 271 (1992)
- State ex rel. Farley v. Spaulding, 203 W. Va. 275 (1998)
- McCallister v. Nelson, 186 W. Va. 131 (1992)
- State ex rel. City of Charleston v. Coghill, 156 W. Va. 877 (1973)
- State ex rel. West Virginia Citizens Action Grp. v. West Virginia Econ. Dev. Grant Comm., 213 W. Va. 255 (2003)

Earlier AG opinions:
- 61 W. Va. Op. Atty. Gen. 72 (Feb. 3, 1986) (Charleston Convention Bureau as state instrumentality)
- 2014 WL 1875639 (May 6, 2014) (no county commission lease for private residence)

Source

• Landing page: https://ago.wv.gov/media/17781/download?inline
• Original PDF: https://ago.wv.gov/media/17781/download?inline

Original opinion text

State of West Virginia
Office of the Attorney General
State Capitol
Building 1, Room 26-E
Charleston, WV 25305-0220
Patrick Morrisey
Attorney General

(304) 558-2021
Fax (304) 558-0140
June 6, 2018

Larry E. Harrah, II
Fayette County Prosecuting Attorney
108 East Maple Avenue
Fayetteville, West Virginia 25840

Dear Prosecutor Harrah:

You have asked for an Opinion of the Attorney General concerning the authority of a county commission to lease real property with the understanding that the land will be used to operate a for-profit business. This Opinion is being issued pursuant to W. Va. Code § 5-3-2, which provides that the Attorney General "may consult with and advise the several prosecuting attorneys in matters relating to the official duties of their office." To the extent this Opinion relies on facts, it is based upon the factual assertions provided in your correspondence with the Office of the Attorney General.

You explain that the Fayetteville Convention and Visitors Bureau ("Fayetteville CVB") previously leased county-owned property from the Fayette County Commission ("Commission"), and that the property has historically been used as a jail and law enforcement museum. The Fayetteville CVB would like to renew the lease as either a joint lessee with Epic Pories ("Epic"), the owner of the for-profit company Epic Escape Game New River Gorge, or as the sole lessee, but with an intent to form a "partnership agreement" or sublease with Epic. Under either arrangement, Epic would operate a for-profit escape room game facility at the site. In exchange for access to and management of the property, Epic would pay the Fayetteville CVB a percentage of the fees it charges each participant.

Your letter raises the following legal question:

Whether a county commission has authority to lease county-owned property to a governmental entity and a for-profit business as joint lessees, or to the governmental entity alone where it intends to enter into a subletting or similar arrangement designed to allow the company to operate a for-profit enterprise on the property?

We conclude that, under the facts you have described, neither type of lease would be permissible under West Virginia Code Sections 7-1-3hh and 7-1-3k.

Discussion

A county commission is "possessed only of such powers as are expressly conferred by the Constitution and the legislature, together with such as are reasonably and necessarily implied in the full and proper exercise of the powers so expressly given." Syl. Pt. 4, State ex rel. W. Va. Parkways Auth. v. Barr, 228 W. Va. 27, 716 S.E.2d 689 (2011); see generally W. Va. Const., art. 9, § 11 ("Powers of county commissions"). With respect to lease agreements, a county commission's express authority flows from two statutory provisions. First, it may lease "county-owned buildings, lands, and other properties" to "nonprofit organizations" for certain enumerated purposes. W. Va. Code § 7-1-3k. Second, a county commission may lease "any of its real or personal property" to the federal government or "to the state or any agency or instrumentality thereof," provided that the lease is "for a public purpose." Id. § 7-1-3hh.

A county commission's implied authority to lease property is similarly constrained. "Implied authority" is that which is "reasonably and necessarily implied in the full and proper exercise of" the commission's express powers. Syl. Pt. 4, Barr, 228 W. Va. 27, 716 S.E.2d 689. Notably, a commission's implied power to lease its property may not exceed its express authority. Id.; Syl. Pt. 1, State ex rel. State Line Sparkler of W. Va., Ltd. v. Teach, 187 W. Va. 271, 418 S.E.2d 585 (1992). Thus, while a county commission may exercise substantial implied authority in contexts where it possesses broad express powers, see, e.g., State ex rel. Farley v. Spaulding, 203 W. Va. 275, 283, 507 S.E.2d 376, 384 (1998) (implied authority to employ security personnel at county judicial facility), here the narrow scope of the commission's express powers constrains its implied authority as well.

Finally, any ambiguity about the scope of the powers granted to a county commission must be resolved against finding the existence of such authority. See Syl. Pt. 1, McCallister v. Nelson, 186 W. Va. 131, 411 S.E.2d 456 (1992).

Applying these principles, we first conclude that the Commission may not lease county property to Epic, even as a joint lessee with the Fayetteville CVB. The Commission has express authority to enter into leases with non-profit organizations for certain purposes or governmental entities for a "public purpose." W. Va. Code §§ 7-1-3k, 7-1-3hh. Because Epic is a private, for-profit business, any lease including Epic as a party would exceed these limits. Similarly, power to lease property to a private company for economic gain is neither "reasonably" nor "necessarily" implied in the exercise of the Commission's express powers.

We reach the same conclusion where the Fayetteville CVB is the sole lessee, but the purpose of the lease is to facilitate a sublease or other arrangement that would permit Epic to operate the property as a for-profit escape room facility. We assume in this Opinion that the Fayetteville CVB is an "instrumentality" of the State for purposes of Section 7-1-3hh. See 61 W. Va. Op. Atty. Gen. 72, 1986 WL 288932, at *2-3 (Feb. 3, 1986) (concluding that the Charleston Convention Bureau is an instrumentality of the City of Charleston). This means that the Commission may lease county property to the Fayetteville CVB provided that the lease serves a "public purpose." W. Va. Code § 7-1-3hh. Unlike the Commission's previous lease with the Fayetteville CVB, however, where the property was used as an historic jail and law enforcement museum, a lease designed to allow a private company to conduct for-profit business activities does not satisfy the public purpose test. Thus, the fact that the Fayetteville CVB would be the sole signatory would not bring the arrangement proposed here within the scope of Section 7-1-3hh.

This Office addressed a similar question in a 2014 Opinion of the Attorney General, and concluded that a county commission could not lease or rent the third floor of a county-owned building to a private individual for use as a private residence. 2014 WL 1875639 (May 6, 2014). In that Opinion, we explained that the term "public purpose" is not defined in the statute, and the Supreme Court of Appeals has not addressed the meaning of the term for purposes of Section 7-1-3hh. Nevertheless, our Supreme Court has addressed the concept in other contexts. See State ex rel. City of Charleston v. Coghill, 156 W. Va. 877, 882, 207 S.E.2d 113, 117 (1973) (holding that a government entity does not act for a public purpose where its action has "as its primary and dominant purpose the conferring of private benefits, with only ancillary public benefits"); State ex rel. West Virginia Citizens Action Grp. v. West Virginia Econ. Dev. Grant Comm., 213 W. Va. 255, 278, 580 S.E.2d 869, 892 (2003) (explaining that "public purpose" is not a static definition but instead changes based upon societal needs).

In Coghill, the Court analyzed the term "public purpose" as used in West Virginia Code § 8-16-4a(a) in connection with a statutory provision that permitted the City of Charleston to sell a limited number of parking spaces in a public parking garage to private individuals. 156 W. Va. at 878-84, 207 S.E.2d at 114-18. The Court held that such sales were permissible, explaining that "a parking facility designed for an acknowledged public purpose is constitutional, even though it confers ancillary and incidental benefits upon private persons." Id. at 884, 207 S.E.2d at 118. By contrast, a proposed use would be impermissible where the "private benefits to the private business occupants are so overwhelming, compared with the public benefits, that the nature of the government's project changes from a public purpose with private ancillary benefits to a private purpose with public ancillary benefits." Id. The critical question is thus whether the "primary and dominant purpose" of a proposed use of government land is to confer public benefits. Id. (emphasis added).

Consistent with Coghill and the analysis in our 2014 Opinion, we conclude that a lease with the Fayetteville CVB that would allow Epic to operate a for-profit business on county land would likely not satisfy the "public purpose" requirement in Section 7-1-3hh. Although the proposed agreement would require Epic to share an unspecified portion of revenues with the Fayetteville CVB, it appears that the majority of revenue would revert to Epic. In Coghill, the sale of a small percentage of parking spaces could be used to offset costs of the project's primary, public aim: building and operating a public parking structure. Here, the dominant purpose appears to be Epic's business interests, with only ancillary benefits flowing back to the public in the form of a partial revenue-sharing arrangement.

While economic factors "are not the sole criteria for determining whether commercial sale or leasing are necessary and ancillary to [a] public purpose," Coghill, 156 W. Va. at 884, 207 S.E.2d at 118, there appear to be no additional factors here that would shift the calculus. The relationship contemplated in the proposed lease would primarily benefit a private entity, Epic, which would gain access to and use of county-owned property that it would not be entitled to obtain from the Commission on its own. Unlike the scenario presented in Coghill, the construction of a public parking lot, there is no indication from the proposed agreement how the public would benefit from the operation of a private business on county land, the facility would presumably be available to the public, but patrons would be private business customers, not public guests. It also appears that the entire building (or at least the vast majority of it) will be used to operate the escape room facility, which is more than the limited number of parking spaces allocated for sale in Coghill, and more than the top floor of a three-story building that we concluded in the 2014 Opinion would violate the "public purpose" test.

Further, although Coghill and the 2014 Opinion involved situations where the city or county commission contracted directly with private entities, we conclude that the same result holds in the context of a sublease. To conclude otherwise, that is, to conclude that Section 7-1-3hh prohibits the Commission from leasing directly to a private entity for private purposes, but not indirectly where the Fayetteville CVB is essentially an intermediary between the Commission and Epic, would permit an end-run around the statute's text and purpose. Under the statute, the Commission can lease county property to a government entity only for a public purpose; if the entity sublets to a private business for private use, the primary lease would become invalid because it would no longer satisfy Section § 7-1-3hh's public purpose requirement. Such an arrangement would thwart the Legislature's purpose to ensure that public property is used for private gain only where that purpose is ancillary to a "primary and dominant" goal to benefit the public.

In short, the private benefits to a private business under the proposed plan would likely be "so overwhelming, compared with the public benefits," that the "primary and dominant purpose" of the proposal appears to be the conferral of private benefits. Coghill, 156 W. Va. at 884, 207 S.E.2d at 118. Absent legislative action, such as an amendment to allow county commissions to lease land to for-profit entities or to expand the scope of permitted "public purposes", the proposed plan would likely not withstand scrutiny under existing law.

Nevertheless, that is not to say that any proposed lease to the Fayetteville CVB would be impermissible under Section 7-3-1hh simply because the intended purpose requires involvement of a private company. For instance, the statute's "public purpose" requirement may well be satisfied if the Fayetteville CVB retained control of the premises and itself operated an escape room game facility for the public's benefit, perhaps paying Epic or another company as a contractor to manage day-to-day operations. Such an arrangement would more closely resemble the City of Charleston's decision to operate a public parking garage in Coghill, and any financial benefits to a private contractor would likely be considered "ancillary and incidental" to the primary, public purpose of that lease. 156 W. Va. at 884, 207 S.E. 2d at 118.

Sincerely,

Patrick Morrisey
Attorney General

Lindsay S. See
Solicitor General

Gordon L. Mowen, II
Assistant Attorney General