MISSISSIPPI LEGISLATURE
2018 Regular Session
To: Education
By: Representative Tullos (By Request)
AN ACT TO AMEND SECTIONS 29-3-63 AND 29-3-65, MISSISSIPPI CODE OF 1972, TO LIMIT THE AMOUNT BY WHICH THE RENTAL COMPENSATION FROM SIXTEENTH SECTION LAND CLASSIFIED AS FARM-RESIDENTIAL MAY BE REVISED WHEN AN EXISTING LEASE IS EXTENDED, THE LAND IS RE-LEASED TO THE SAME LEASEHOLDER, OR A LEASE AGREEMENT CONTAINS A RENT ESCALATION CLAUSE; AND FOR RELATED PURPOSES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:
SECTION 1. Section 29-3-63, Mississippi Code of 1972, is amended as follows:
29-3-63. (1) The holder of a lease of sixteenth section or lieu land, at the expiration thereof, shall have a prior right, exclusive of all other persons, to re-lease or to extend an existing lease as may be agreed upon between the holder of the lease and board of education subject to the classification of said land. Provided, however, no holder of a lease of sixteenth section land classified as agricultural land shall have any priority rights in extending his lease contract, except as otherwise provided in Section 29-3-81. Provided, however, the compensation on an annual basis shall be the fair market rental of the land excluding buildings and improvements made on such land by the lessee, the title to which is not held in trust for the public schools, but in no event shall the compensation be less than the minimum amounts prescribed in subsection (2) of this section.
(2) (a) The board of education shall not lease or extend a lease on land classified as industrial or commercial at an annual rental less than five percent (5%) of the current market value, exclusive of buildings or improvements not owned by the school district. Such minimum acceptable percentage shall not apply to land classified as farm-residential, residential, recreational and other land; however, subject to the provisions of paragraph (b) of this subsection, fair market rental will apply to those lands, as determined by appraisal, comparative analysis or comparison with the private sector.
(b) Notwithstanding the fair market rental value or the fair market sale value of land classified as farm-residential, the rental compensation for a re-lease or extension of an existing lease of land classified as farm-residential may not exceed, under any circumstances, an amount that is greater than five percent (5%) more than the rental amount in effect before the re-lease or lease extension occurs.
(3) The prior right to re-lease or extend an existing oil, gas and mineral lease, or any part thereof, granted under this section shall be conditioned upon the existence of production of oil, gas or other minerals thereunder in paying quantities, or the existence of a well capable of such production, or the existence of drilling or reworking operations at the time of lease expiration. Provided, however, that said lease may, in the discretion of the board of education, be extended only as to the lands included in a unit or units as defined by the appropriate agency having jurisdiction over said unit or units. The replacement lease shall be upon such terms and conditions as may be agreed upon between the holder of the lease and the board of education, provided that the rental and royalty provisions shall not be less than the rental and royalty provisions as set out in the expired lease and the primary term shall not exceed the limitations in Section 29-3-99. Bonus payment for the replacement lease shall be consistent with the requirements set out in Section 29-3-65 with respect to oil, gas and mineral leases.
(4) Where used in this section and Section 29-3-65, the term "oil and gas lease" or "oil, gas and mineral lease" shall include all leases originally executed pursuant to Section 29-3-99.
(5) The right to re-lease an oil, gas and mineral lease provided in subsection (3) above extends to oil, gas and mineral leases which have already expired as of the effective date of this section, subject to an accounting for production from the date of lease expiration to the date of the replacement lease authorized herein.
SECTION 2. Section 29-3-65, Mississippi Code of 1972, is amended as follows:
29-3-65. One (1) year prior to the date, when any such lands, not subject to competitive bid procedures, shall become available for lease, the board of education shall appoint a competent appraiser to appraise the land and report to the board his recommendation for the fair market rental amount. The board shall then determine whether the same be a reasonable amount, and shall grant the lease pursuant to Section 29-3-63. Provided that in the event any such land becomes available for lease prior to July 1, 1979, an appraisal shall be required prior to the granting of said lease.
The board of education may use rent escalation clauses or other such devices to adjust rental amounts during the lease term. However, for a lease of farm-residential land which is executed after July 1, 2018, any rent escalation clause or other device to adjust the rental amount during the term of the lease may not authorize an adjustment that is greater than five percent (5%) more than the rental amount in effect before the adjustment occurs. Owners of leaseholds under a lease granted prior to July 1, 1978, which have improvements constructed thereon, shall not be charged for such improvements in successive lease periods unless the lease contract clearly specifies otherwise. The cost of the appraisal under this section shall be paid from any available sixteenth section school funds or other school funds of the district.
The appraisal pertaining to renewal oil, gas and mineral leases executed pursuant to Section 29-3-63 may be made either before or after the expiration of the original lease and shall appraise the fair market value for the bonus to be paid for a renewal lease containing the terms and conditions agreed upon by the holder of the lease and the board of education.
SECTION 3. This act shall take effect and be in force from and after July 1, 2018.