Senate Bill 2978

AN ACT TO AMEND SECTION 37-7-485, MISSISSIPPI CODE OF 1972, TO AUTHORIZE LOCAL SCHOOL BOARDS TO CONTRACT WITH OTHER ENTITIES FOR THE DEVELOPMENT, DESIGN, CONSTRUCTION, FINANCING, OWNERSHIP AND OPERATION OF SURPLUS SCHOOL PROPERTY PURSUANT TO THE PROVISIONS OF THE SCHOOL PROPERTY DEVELOPMENT ACT; TO AUTHORIZE SCHOOL BOARDS TO ISSUE NOTES AND OTHER WRITTEN OBLIGATIONS TO FINANCE SUCH ACTIVITIES; TO AUTHORIZE SCHOOL BOARDS TO PLEDGE TAXES COLLECTED UPON SUCH LAND AS SECURITY FOR SUCH NOTES; TO REQUIRE ANY TRANSACTIONS INVOLVING SIXTEENTH SECTION LAND TO CONFORM TO SECTION 29-3-1 ET SEQ., MISSISSIPPI CODE OF 1972, TO REMOVE THE REPEALER FOR THE SCHOOL PROPERTY DEVELOPMENT ACT; AND FOR RELATED PURPOSES.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:

SECTION 1. Section 37-7-485, Mississippi Code of 1972, is amended as follows:

37-7-485. (1) This section shall be referred to as the "School Property Development Act of 2005." It is the intent of the Legislature that this section shall provide school boards with an alternative optional method of disposal of surplus school property that may generate greater returns to the district than a public disposal sale, or to promote or stimulate economic development within the school district or to promote, stabilize or enhance property and tax values within the school district.

(2) The school board of any school district shall be authorized and empowered, in its discretion, to sell, convey or exchange a partial interest, undivided interest or any other interest in real property (other than sixteenth section public school trust land), in whole or in part, for a nonoperational interest in any proposed development of the property, including ownership of shares of a domestic corporation or a membership interest in a limited liability company or a limited partnership interest, any of which is organized for the operation of any project, development or activity that, in the discretion of the school board, will have the potential for fostering economic development activities, increasing property values, increasing student development or enhancing public safety. The school board may contract with any other governmental entity, university or community college, corporation, person or other legal entity for the development, design, construction, financing, ownership or operation of any project, development or activity and may issue notes, leases, bonds or other written obligations to finance such activities. The school board may pledge any revenues or taxes it is to receive from such sale, conveyance or exchange, including any shares of a corporation or membership interest in a limited liability company or limited partnership interest under this subsection or under Sections 37-7-471 through 37-7-483, to secure the repayment of any notes, leases (excluding leases of sixteenth section public school trust land), bonds or other written obligations of the district issued under any provision of state law. Any such pledge of revenues or other monies shall be valid and binding from the date the pledge is made; such revenues or other monies so pledged and thereafter received by the school district shall immediately be subject to the lien of such pledge without any physical delivery thereof or further act, and the lien of any such pledge shall be valid and binding as against all parties having claims of any kind in tort, contract or otherwise against the school district irrespective of whether such parties have notice thereof. Neither the resolutions, contracts or any other instrument by which a pledge is created need be recorded. Any debt secured in whole or in part by a pledge of such revenues or other monies shall not be subject to or included in any debt limitation imposed on the issuance of such debt. This subsection (2) shall not be construed to apply to sixteenth section public school trust land.

(3) The school board shall use sound business practices when executing exchanges as provided in this section. The school board may utilize the services of the Mississippi Development Authority, the local planning and development district or the Board of Trustees of State Institutions of Higher Learning when executing exchanges as provided in this section. The local school board shall require, in any project exceeding Two Hundred Thousand Dollars ($200,000.00) that the party with whom the school board is contracting shall provide the following information, at a minimum:

(a) A two-year business plan (which shall include pro forma balance sheets, income statements and monthly cash flow statements);

(b) Financial statements and tax returns for the three (3) years immediately prior to the date the contract is formed;

(d) Data supporting the expertise of the entity's principals;

(e) A cost benefit analysis of the project performed by the Mississippi Development Authority, a state institution of higher learning or other entity selected by the local school board; and

(f) Any other information required by the local school board.

This subsection (3) shall not be construed to apply to sixteenth section public school trust land.

(4) The local school board shall make public record any final and signed contract created under this section.

(5) No person involved in any economic development project entered into by a school board under the provisions of this section shall be related by consanguinity or affinity within the third degree to any member of the school board or the superintendent or any assistant superintendent of the school district, nor shall any such person have an interest in any business or have an economic relationship with any member of the school board or the superintendent or any assistant superintendent of the school district.

(6) No person, or any agent, subsidiary or parent corporation or firm owned in whole or in part by the person shall be eligible to bid or otherwise participate in the construction, contracting, or subcontracting on any project or part thereof for which the person has been hired to perform construction program management services. Any contract for public construction that violates this provision shall be void and against the public policy of the state. For purposes of this subsection, the term "construction program management services" means a set of management and technical services rendered by a person or firm to a public sector building owner during the predesign, design, construction, or post-construction phases of new construction, demolition, alteration, repair, or renovation projects. These services include any one or more of the following: project planning, budgeting, scheduling, coordination, design management, construction administration, or facility occupancy actions, but shall not include any component of the actual construction work. The term does not include the services performed by the general contractor who is engaged to perform the construction work, or services customarily performed by licensed architects or registered engineers.

(7) This section shall be supplemental and additional to any powers conferred by other laws on school districts. However, this act shall not grant any authority to a school board to issue debt in any amount that is not otherwise expressly provided for by law, and shall not grant any authority to impose, levy or collect any tax that is not otherwise expressly provided for by law.

(8) If a school board exercises its option to enter into a development agreement or other contract under this act or to transfer any property or interest therein to a third party for purposes of future development, the following conditions shall apply:

(a) The board shall have the express authority to retain a deed of trust or such other security interest in the property in an amount equal at least to the value of the property at the time of such transfer, less any consideration paid by the developer or other parties;

(b) The liability of the school board and the school district under any such development agreement shall be limited to the value of any retained property interest in the development agreement or the property that is the subject of the development agreement. Neither the school board nor the district shall be liable to any party nor shall it indemnify or hold harmless any party for any liabilities, obligations, losses, damages, penalties, settlements, claims, actions, suits, proceedings or judgments of any kind and nature, costs, expenses, or attorney's fees incurred by such party or parties for any act or action arising out of, or in connection with any development agreement entered into by the school board, other than the value of the retained ownership interest in the property that was conveyed under such development agreement.

(9) Before entering into any transaction as provided in this section, the school board members shall certify that they are in compliance with Section 25-4-25 regarding filings of statements of economic interest with the Mississippi Ethics Commission and that they will receive no direct or indirect pecuniary benefit as a result of the transaction or be in violation of the provisions of Section 25-4-105 regarding the improper use of official position.

(10) [Deleted]

SECTION 2. This act shall take effect and be in force from and after July 1, 2006.