After the June 2016 flood, can White Sulphur Springs give a piece of city-owned land to a regional economic development corporation, which will then pass it to a 501(c)(3) charity to build discounted homes for displaced residents?
Plain-English summary
In June 2016, devastating floods hit White Sulphur Springs and surrounding communities. Two months later, the city wanted to gift a piece of municipal land to the Greenbrier Valley Economic Development Corporation (GVEDC), a multi-county economic development authority covering Greenbrier, Monroe, and Pocahontas counties. GVEDC would then pass the land to a 501(c)(3) charity, which would build discount-rate homes for residents whose houses were destroyed in the floods. The county prosecutor asked the AG: is this two-step transfer legal?
The AG said yes.
Step one: city to GVEDC. W. Va. Code § 8-32-2 expressly authorizes a municipality to "transfer and convey to such area development corporation property of any kind heretofore acquired by such municipality . . . for or adaptable to use in industrial and economic development." GVEDC qualifies as an "area development corporation" because it was organized under W. Va. Code § 31-14-1 et seq.
Step two: GVEDC to charity. W. Va. Code § 31-14-5(d) gives area development corporations broad powers to "purchase, receive, hold, lease, or otherwise acquire and to sell, convey, transfer, lease, or otherwise dispose of real and personal property." § 31-14-5(e) confirms acquisition can be "by gift or purchase." Nothing limits GVEDC's authority to dispose of land it has received.
Does affordable flood-recovery housing count as "economic development"? "Economic development" is not defined in § 8-32-2, but the Legislature has used the term elsewhere. § 11-13A-20a(h)(3)(A) defines an "[e]conomic development project" as "a project in the state which is likely to encourage economic growth and development in the area in which the project is developed for commercial, industrial, community improvement or preservation or other proper purposes." That is a broad sweep. Compare § 31-14-2(3), which describes the purpose of development authorities as "promot[ing], develop[ing] and advanc[ing] the business prosperity and economic welfare of the State of West Virginia and its citizens" and "improv[ing] the living of the citizens of the state." Restoring housing for flood-displaced residents fits comfortably within that definition.
Caveats. The AG's analysis was facts-dependent. Different facts (a sweetheart deal, a self-dealing 501(c)(3), an ulterior commercial use) could trigger conflict-of-interest, governmental-transparency, or other federal, state, or local laws. The opinion is a green light for the basic structure described, not a generic blessing.
Currency note
This opinion was issued in 2016. 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.
The municipal property transfer and area development corporation statutes have been amended in subsequent legislative sessions. Anyone planning a similar disaster-recovery transfer today should pull current W. Va. Code §§ 8-32-2, 31-14-1 et seq., and the relevant chapter on county and municipal disaster-recovery authority.
Common questions
Q: Why involve an area development corporation as a middleman? Why not transfer directly to the charity?
A: § 8-32-2 authorizes municipal transfer to an area development corporation. There is no parallel statute authorizing a municipality to gift property directly to a 501(c)(3). The two-step structure uses the explicit statutory authority that already exists.
Q: What if there is no area development corporation in our area?
A: Counties can create county development authorities under W. Va. Code ch. 7, art. 12. Municipalities can also work with regional or multi-county development entities. The AG's analysis would extend to other authority structures with similar enabling statutes.
Q: Could the municipality have just sold the land cheaply to the charity?
A: That would raise different questions about municipal authority to convey property below market value. § 8-32-2's authorization is for transfer to a development corporation, with the development corporation then handling the eventual disposition. Direct sales to private charities at below-market rates would have to find their authority elsewhere.
Q: What does "for or adaptable to use in industrial and economic development" mean in practice?
A: The AG read it broadly. The land does not need to be currently used for development; it must be "adaptable" to such use. Vacant land, brownfield sites, and even improved property can qualify if the development corporation has a credible economic-development plan.
Q: Could conflict of interest derail the transfer?
A: Possibly. If a municipal official was on the GVEDC board or the charity's board, or stood to gain personally from the transfer, the West Virginia Ethics Commission would have jurisdiction over any complaint. The AG's footnote explicitly flags conflict-of-interest and governmental-transparency rules as potential issues "implicate[d]" by additional facts.
Q: What about transparency at each step?
A: Municipal property dispositions usually require open-meeting compliance, public notice in some cases, and resolutions of the city council. Area development corporations are public agencies subject to FOIA and ethics requirements. 501(c)(3) charities have their own state and federal disclosure requirements. Each step should be conducted on the record.
Background and statutory framework
Municipal authority to transfer to development corporations. W. Va. Code § 8-32-2: a municipality may "transfer and convey to such area development corporation property of any kind heretofore acquired by such municipality . . . for or adaptable to use in industrial and economic development."
Area development corporations. W. Va. Code § 31-14-1 et seq. § 31-14-2(3) declares the legislative purpose: "promote, develop and advance the business prosperity and economic welfare of the State of West Virginia and its citizens; . . . to stimulate and promote the expansion of all kinds of business and industrial activity which will tend to advance business and industrial development and maintain economic stability of the state[;] [to] provide maximum opportunities for employment[;] . . . and [to] improve the living of the citizens of the state." § 31-14-5(d) authorizes broad acquisition and disposition of real and personal property; § 31-14-5(e) confirms acquisition by gift or purchase.
County development authorities. W. Va. Code § 7-12-7(a)(3): "promoting, developing and advancing the business prosperity and economic welfare of the area embraced."
Cross-statute definition of economic development. W. Va. Code § 11-13A-20a(h)(3)(A): "[e]conomic development project" is "a project in the state which is likely to encourage economic growth and development in the area in which the project is developed for commercial, industrial, community improvement or preservation or other proper purposes."
Related-statute canon. Daniel v. Simms, 49 W. Va. 554 (1901) (importance of related statutory provisions to interpretation).
Comparator statute on residual powers. W. Va. Code § 31-15A-12 (water development authority has residual power "to do all things which are necessary to further the purposes and intent of this article", contrast: area development corporations do not have a similar residual clause, so their powers must be located in the enumerated list).
Citations
- W. Va. Code §§ 5-3-2; 8-32-2; 31-14-1 et seq.; 31-14-2(3); 31-14-5(d); 31-14-5(e); 11-13A-20a(h)(3)(A); 7-12-7(a)(3); 31-15A-12
- Daniel v. Simms, 49 W. Va. 554 (1901)
Source
- Landing page: https://ago.wv.gov/media/17926/download?inline
- Original PDF: https://ago.wv.gov/media/17926/download?inline
Original opinion text
State of West Virginia
Office of the Attorney General
Patrick Morrisey
Attorney General
(304) 558-2021
Fax (304) 558-0140
August 12, 2016
The Honorable Patrick I. Via
Prosecuting Attorney
Office of the Greenbrier County Prosecuting Attorney
200 North Court Street
Lewisburg, WV 24901
Dear Prosecutor Via:
You have asked for an Opinion of the Attorney General regarding the transfer of property from a municipality to an area economic development corporation and subsequently to a charitable 501(c)(3) organization. This Opinion is being issued pursuant to West Virginia 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 solely upon the factual assertions set forth in your correspondence with the Office of the Attorney General.
According to your letter, the Greenbrier Valley Economic Development Corporation ("GVEDC"), a multi-county economic development authority serving Greenbrier, Monroe, and Pocahontas counties, has been approached by the municipality of White Sulphur Springs to transfer land owned by the municipality to the GVEDC. You further state that subsequent to this gift transfer, the GVEDC will transfer the land to a charitable 501(c)(3) organization for the purpose of building homes, at a discounted rate, for residents of White Sulphur Springs who were displaced by the June 23, 2016, floods.
Your letter raises the following legal question:
May White Sulphur Springs transfer land owned by the municipality to an area economic development corporation, which in turn will transfer the property to a charitable 501(c)(3) corporation for the construction of housing for citizens who have been displaced by unprecedented flooding?
Under the facts you provided, we believe that nothing in the state code would prohibit either of these transfers. The law permits a municipality, such as White Sulphur Springs, to transfer property to an area development corporation for use in economic development. And as you explain the transfers, they appear to be intended for use in economic development.
First, under West Virginia Code § 8-32-2, a municipality is authorized to "transfer and convey to such area development corporation property of any kind heretofore acquired by such municipality . . . for or adaptable to use in industrial and economic development." The GVEDC is an area development corporation as contemplated by West Virginia Code § 8-32-2, having been organized pursuant to West Virginia Code § 31-14-1 et seq. In turn, as an area development corporation, the GVEDC is authorized to "purchase, receive, hold, lease, or otherwise acquire and to sell, convey, transfer, lease, or otherwise dispose of real and personal property." W. Va. Code § 31-14-5(d). The statute further provides that such acquisition of real property may be "by gift or purchase." W. Va. Code § 31-14-5(e). Accordingly, White Sulphur Springs is empowered to "transfer and convey" land owned by the municipality to the GVEDC so long as the land is "for or adaptable to use in . . . economic development." W. Va. Code § 8-32-2.
Second, though you have not provided specifics regarding the proposed project and the identity of all individuals or entities that may ultimately become involved, the proposal appears on its face to satisfy the "economic development" requirement. Economic development is not defined in West Virginia Code § 8-32-2. But based upon definitions and language found elsewhere in the code, it appears the Legislature intends the term to be given a broad definition. See Daniel v. Simms, 49 W. Va. 554, 39 S.E. 690, 695 (1901) (noting the importance of related statutory provision to the task of statutory interpretation). One such definition of economic development is found in West Virginia Code § 11-13A-20a(h)(3)(A), which provides that an "[e]conomic development project" is "a project in the state which is likely to foster economic growth and development in the area in which the project is developed for commercial, industrial, community improvement or preservation or other proper purposes." That definition is consistent with the stated purpose of development authorities and corporations like the GVEDC. Such entities are created to:
promote, develop and advance the business prosperity and economic welfare of the State of West Virginia and its citizens; . . . to stimulate and promote the expansion of all kinds of business and industrial activity which will tend to advance business and industrial development and maintain economic stability of the state[;] [to] provide maximum opportunities for employment[;] . . . and [to] improve the living of the citizens of the state.
W. Va. Code § 31-14-2(3); see also W. Va. Code § 7-12-7(a)(3) (noting the role of county development authorities in "promoting, developing and advancing the business prosperity and economic welfare of the area embraced").
The proposal appears to meet this understanding of "economic development." Given the utter devastation that has befallen wide parts of the State, including White Sulphur Springs, projects that will provide affordable housing to citizens of White Sulphur Springs will undoubtedly foster economic growth, maintain economic stability, and promote the economic welfare of the State and its citizens.
In sum, based upon the facts provided in your letter, we find no legal prohibition to the proposed transfers. We believe the contemplated construction of affordable housing for citizens displaced by the June 2016 floods constitutes "economic development" within the meaning of West Virginia Code § 8-32-2 and is consistent with the statutory purpose of the GVEDC. We stress, however, that this Opinion is based solely upon the facts as they have been presented. Any different and additional facts could implicate other federal, state, or local laws, including but not limited to those regarding conflict of interest prohibitions and governmental transparency.
Sincerely,
Patrick Morrisey
Attorney General
Elbert Lin
Solicitor General
Steven A. Travis
Assistant Attorney General