House Bill 278

AN ACT TO AMEND SECTION 29-3-63, MISSISSIPPI CODE OF 1972, TO PROVIDE THAT IF A BOARD OF EDUCATION LEASES OR EXTENDS A LEASE ON SIXTEENTH SECTION LAND THAT IS CLASSIFIED AS INDUSTRIAL, COMMERCIAL OR RECREATIONAL WITH THE GOVERNING AUTHORITIES OF ANY MUNICIPALITY OR COUNTY, THEN THE BOARD MAY LEASE OR EXTEND THE LEASE FOR LESS THAN THE MINIMUM ACCEPTABLE PERCENTAGE, WHICH IS FIVE PERCENT OF THE CURRENT MARKET VALUE, AS LONG AS THE LEASE OF THE LAND IS UTILIZED BY THE GOVERNING AUTHORITIES FOR A PUBLIC PURPOSE; 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) Except as otherwise provided under paragraph (b) of this subsection, 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, fair market rental will apply to those lands as determined by appraisal, comparative analysis or comparison with the private sector.

(b) If the board of education leases or extends a lease on land classified as industrial, commercial or recreational with the governing authorities of any municipality or the board of supervisors of any county, then the board may lease or extend a lease for such land at an annual rental rate that is less than five percent (5%) of the current market value, exclusive of buildings or improvements not owned by the school district, as long as the municipality or county utilizes the land for a public purpose.

(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. This act shall take effect and be in force from and after July 1, 2020.