House Bill 164

AN ACT TO TRANSFER THE DUTY TO ASSIST THE MISSISSIPPI DEPARTMENT OF CORRECTIONS IN THE MANAGEMENT OF PRISON LANDS LEASED FOR AGRICULTURAL PURPOSES FROM THE DEPARTMENT OF FINANCE AND ADMINISTRATION TO THE SECRETARY OF STATE; TO REQUIRE THE DEPARTMENT OF CORRECTIONS TO MAKE AN ANNUAL REPORT TO THE LEGISLATURE AND FILE A COPY OF THAT REPORT WITH THE SECRETARY OF STATE; TO PRESCRIBE THE PROVISIONS FOR DETERMINING THE VALIDITY OF AGRICULTURAL LEASES OF PRISON LANDS; TO AUTHORIZE THE LEASEHOLDER TO MAINTAIN INSURANCE ON HIS INTERESTS IN THE LEASED LANDS AND ANY IMPROVEMENTS LOCATED THEREON AT HIS OWN EXPENSE; TO PRESCRIBE THE PROCEDURES TO BE USED FOR LEASING AND RE-LEASING PRISON LANDS THROUGH THE COMPETITIVE BID PROCESS; TO RESERVE TO THE STATE TITLE TO ALL TIMBER, MINERALS, OILS AND GAS ON PRISON LANDS LEASED FOR AGRICULTURAL PURPOSES; TO AUTHORIZE THE OCCASIONAL SALE OF TIMBER ON PRISON LANDS BY THE DEPARTMENT OF CORRECTIONS; TO PRESCRIBE THE PROCESS TO BE FOLLOWED BY A LEASEHOLDER TO HAVE THE LEASE CONFIRMED OR QUIETED IN CHANCERY COURT; TO REQUIRE THE COURT TO ISSUE A DECREE OF CONFIRMATION OF THE LEASE UNDER CERTAIN CONDITIONS; TO AUTHORIZE THE COURT TO DETERMINE THE LEGAL STATUS OF A LEASE AND PROVIDE FOR THE PROPER EQUITABLE RELIEF FOR SATISFACTION OF ALL LIENS AND RENTS ACCRUED FROM THE PRISON LANDS SUBJECT TO THE ILLEGAL LEASE; TO AMEND SECTION 47-5-64, MISSISSIPPI CODE OF 1972, IN CONFORMITY WITH THE PROVISIONS OF THIS ACT; TO AMEND SECTION 47-5-66, MISSISSIPPI CODE OF 1972, IN CONFORMITY WITH THE PROVISIONS OF THIS ACT AND TO DELETE THE REPEALER ON THIS SECTION OF LAW; TO BRING FORWARD SECTION 47-5-357, MISSISSIPPI CODE OF 1972, WHICH REQUIRES THE DEPARTMENT OF FINANCE AND ADMINISTRATION AND THE DEPARTMENT OF CORRECTIONS TO ESTABLISH A PURCHASING POLICY THAT EXEMPTS CERTAIN ITEMS FROM BID REQUIREMENTS, FOR PURPOSES OF POSSIBLE AMENDMENTS; AND FOR RELATED PURPOSES.

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

SECTION 1. The Secretary of State shall assist the Mississippi Department of Corrections in establishing and maintaining prison lands leased for agricultural purposes for use as prison agricultural enterprises at the state's correctional facilities.

SECTION 2. The Mississippi Department of Corrections, in consultation with the Office of Secretary of State, shall make a report to the Legislature every year setting forth a statement of all the prison lands leased for agricultural purposes during that year. The department shall file a copy of the report with the Secretary of State.

SECTION 3. Lease of prison lands for agricultural purposes, including renewal, replacement or extension of a lease granted, executed and recorded in substantial conformity with the applicable provisions of this act, must be deemed to be prima facie valid, and defects in ministerial or procedural acts alone may not affect the validity of the lease as far as a bona fide purchaser or encumbrancer for value of the lease is concerned. Purchaser or encumbrancer may rely upon the validity of a lease insofar as the interest of the state or any political subdivision of the state, the public or any state correctional facility is concerned.

Nothing in this section may prohibit a party from challenging the validity of a lease on the grounds of inadequacy of consideration given for the prison lands involved in the lease.

SECTION 4. Leaseholder may keep, at his own expense, his interest in the buildings and other improvements on the leased premises insured against loss or damage by fire and windstorm.

SECTION 5. (1) Prison lands may be leased for agricultural purposes for use as prison agricultural enterprises, as provided under Sections 47-5-351 through 47-5-357, for a term not exceeding five (5) years. All leases of prison lands must be for a term to expire on December 31. Except in those cases when the holder of an existing agricultural lease on prison lands elects to re-lease the land, as authorized under this subsection, the Secretary of State shall lease the prison lands at public contract after the Department of Corrections has advertised the lands for rent in a newspaper published in the county in which the prison lands are situated or, if no newspaper is published in that county, then in a newspaper having a general circulation in the county, for two (2) successive weeks, the first being at least ten (10) days before the public contract. The lease form and the terms so prescribed must be on file and available for inspection in the Office of the Commissioner of Corrections and the Secretary of State from and after the public notice by advertisement and until finally accepted by the Secretary of State. However, before the expiration of an existing agricultural lease of prison lands, the Secretary of State, in his discretion, may authorize the holder of the existing lease to re-lease the land, on no more than one (1) occasion, for a term not to exceed five (5) years and for a rental amount that is no less than one hundred twenty percent (120%) of the total rental value of the existing lease. If the holder of the existing lease elects not to re-lease the land, the department shall publish an advertisement of agricultural land for rent, which publication may not be more than four (4) months before the expiration of the term of an existing lease of the land. An election by the holder of the existing lease not to re-lease the land does not preclude his participation in the bidding process established under this section. The Secretary of State, acting on behalf of the department, shall enter into a new agricultural lease on prison lands before the expiration of an existing lease on the same land, and the new lease shall take effect on the day immediately following the day on which the existing lease expires. The Secretary of State may require bidders to furnish bond or submit evidence of financial ability.

Bids received by the Secretary of State in response to the advertisement must be opened at a special meeting of the Secretary of State. The Secretary of State, at his option, may reject all bids or accept the highest and best bid received in response to the advertisement or alternatively, may hold an auction among those who submitted bids in response to the advertisement. If the Secretary of State elects to hold an auction, no bidder may be granted any preference. The opening bid at the auction must be the highest bid received in response to the advertisement.

(2) (a) If the Secretary of State receives an acceptable bid in response to the advertisement and elects not to hold an auction among those submitting bids, then the holder of the existing lease may submit a second bid in an amount not less than one hundred five percent (105%) of the highest acceptable bid received if the holder of the existing lease: (i) submitted a bid in response to the advertisement; and (ii) constructed or made improvements on the leasehold premises after receiving approval of the Secretary of State during the term of the existing lease. For purposes of this subsection, the term "improvements" does not include any work or items that are done customarily on an annual basis in the preparing, planting, growing, cultivating or harvesting of crops or other farm products.

(b) If the holder of the existing lease elects to submit a second bid, the Secretary of State shall hold an auction among those who submitted bids in response to the advertisement. The opening bid at the auction must be the second bid of the holder of the existing lease. However, no leaseholder may submit a second bid if: (i) any rent, taxes or other payment required under his lease are past due; or (ii) he is otherwise in default of any term or provision of the lease and such default has not been corrected or cured to the satisfaction of the Secretary of State after more than thirty (30) days' notice to the leaseholder of the default.

(c) If an auction is held, the auction may be conducted at a special meeting of the Secretary of State at which bids are opened or at a later special meeting called by the Secretary of State for the purpose of holding an auction. The Secretary of State shall announce the time and place of the auction at the meeting at which bids are opened, and no further notice of the auction is required.

(d) If no bid acceptable to the Secretary of State is received after the advertisement or at auction, the Secretary of State may lease, within ninety (90) days, the lands by private contract for an amount greater than the highest bid previously rejected in order to acquire a fair rental value for the lands. If no bids are received in response to the advertisement, the Secretary of State may negotiate a private contract for a fair rental value. The term of the contract must expire on December 31 of the same calendar year in which the contract is made. The Secretary of State may take the notes for the rent and attend to their collection. The Secretary of State has the right and remedies for the security and collection of those rents given by law to the director of prison agricultural enterprises.

(e) If an existing lease is terminated before the expiration of the term originally set in that lease, upon finding that immediate action is necessary to prevent damage or loss to growing crops or to prevent loss of opportunity to lease the land for the current growing season, the Secretary of State may negotiate a private contract for a fair rental value. The term of the lease must expire on December 31 of the same calendar year in which the contract is made.

(3) Any holder of an agricultural lease on prison lands which was granted before July 1, 2012, and which has an expiration date on or after April 1 but before December 31 during the final year of the lease term may extend the term of the lease to December 31 next following the expiration date originally provided for in the lease. If the lease is extended, the rent for the period from the original expiration date in the lease to December 31 next following the original expiration date must be one hundred five percent (105%) of the annual rent provided in the existing lease prorated over the period of the lease extension. At the expiration of the extended lease term or at the expiration of the original lease term if the lease holder does not extend the lease, the land must be offered for lease as provided in subsection (1) of this section.

SECTION 6. In all agricultural leases of prison lands made by the Secretary of State, whether those leases are original leases or extensions of existing leases, title to all timber, minerals, oil and gas on the prison lands must be reserved, together with the right of ingress and egress to remove same, whether such provisions are included in the terms of the lease or not. The Department of Corrections, from time to time, may sell all merchantable timber on those prison lands in the manner provided by law.

SECTION 7. Any person holding or claiming any prison lands under an agricultural lease or extension of an existing lease made by the Secretary of State or by his authority or direction may proceed by bill in chancery court to have the lease or extension of the lease confirmed and quieted. The complainant shall set forth in his bill his claim for title under the lease or extension of the lease which he asks to have confirmed, the date of the lease or extension, to whom made, the consideration, and the amount paid and to be paid, if any. The director of prison agricultural enterprises must be made a party defendant, and process must be served on him as in other cases in chancery. The suit must be brought in the county in which the prison lands being leased, or some part of the leased lands, is located and must be proceeded with as in other cases in chancery, except that the bill may not be taken as confessed. The court shall hear and consider evidence from outside sources, in addition to the records of the Secretary of State, as to whether the lease or extension of the lease sought to be confirmed was made legally and whether the complainant is entitled to relief. If it is proven clearly that the requirements of law regulating the leases or extensions of leases were complied with, the proper relief must be granted even though the records contain no such affirmative showing. The party claiming title under the lease or extension of the lease is entitled to the benefits of this section whether the suit is filed by him or by the Secretary of State, as required by this act.

Sections 8 and 9 of this act fully apply under this section.

SECTION 8. If the court determines that the complainant is entitled to relief, then the court shall decree a confirmation of the lease under which the complainant claims and fix the date of its commencement and termination. The decree must vest in the complainant a good and perfect title to the term of the lease for the time fixed in the decree. Nothing in this or the preceding sections may be construed as releasing any person from the payment in full of any balance that may be due on any lease under which he may claim or hold any or all prison lands leased for agricultural purposes, but he must either pay or tender in court any balance that may be due before the relief prayed for may be granted.

SECTION 9. If the court finds that the lease under which the complainant holds or claims title was made illegally and is void, then the court may proceed to have an account stated of the amount of money, principal and interest which has been paid in consideration for the lease by the complainant and those under whom he may claim, and an account of the rents, issues and profits arising from the land, less the cost of any necessary, permanent, valuable and not ornamental improvements made upon the land. The court may decree any excess of money paid and interest and cost of improvements over the rent, issues and profits to the complainant. The decree must be a lien upon the rents, issues and profits accrued or to accrue from the particular prison lands involved in the suit until the lien is paid fully and satisfied. Upon the rendition of the decree, the Commissioner of Corrections shall issue a warrant for the amount decreed to be paid to the complainant against the funds of the prison lands, and the amount due must be paid out of the first available money to the credit of those funds. Any excess in the amount of the rents, issues and profits, after deducting the cost of improvements and amount paid by complainant, must be decreed against him, together with a writ of possession in favor of the defendant. All court costs in suits brought must be paid by the party or parties seeking relief in the suit.

SECTION 10. Sections 1 through 9 of this act shall be codified in Chapter 5, Title 47, Mississippi Code of 1972.

SECTION 11. Section 47-5-64, Mississippi Code of 1972, is amended as follows:

47-5-64. The commissioner is directed to determine the number of acres and location of land under its jurisdiction which are needed for security purposes and for Prison Agricultural Enterprises. The commissioner shall designate and reserve such additional land for agricultural enterprise projects of the department, as he deems necessary. On or before July 1 of each year, the commissioner shall recommend to the Secretary of State the specific department lands to be leased to private entities * * *. The Secretary of State shall have the authority to lease for agricultural purposes that Penitentiary land so recommended in the same manner and for the same term as provided in Section 5 of this act.

SECTION 12. Section 47-5-66, Mississippi Code of 1972, is amended as follows:

47-5-66. (1) It is the duty of the Secretary of State to lease lands in the same form and manner prescribed in Section 5 of this act. Advertisement for bids must be run in newspapers of general circulation published in Jackson, Mississippi; Memphis, Tennessee; and the county in which the land is located in the manner prescribed in Section 5 of this act. In addition, the Secretary of State may accept, and the lease may provide for, assignments of federal, state or other agricultural support payments, growing crops or the proceeds from the sale thereof, promissory notes, or any other good and valuable consideration offered by any lessee to meet the rent requirements of the lease. * * *

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(2) There is created a special fund to be designated as the "Prison Agricultural Enterprises Fund." Any monies in hand or due from the leasing of Penitentiary lands and the sales of timber as provided in Section 47-5-56 and earmarked for the Prison Industries Fund shall be deposited to the special fund for prison agricultural enterprises. All monies in each fiscal year derived from the leasing of the Penitentiary lands and the sales of timber as provided in Section 47-5-56 shall be deposited into the special fund for the purpose of conducting, operating and managing the prison agricultural enterprises of the department. All profits derived from the prison agricultural enterprises shall be deposited into the Prison Agricultural Enterprises Fund. All profits derived from prison industries shall be placed in a special fund in the State Treasury to be known as the "Prison Industries Fund," to be appropriated each year by the Legislature to the nonprofit corporation, which is required to be organized under the provisions of Section 47-5-535, for the purpose of operating and managing the prison industries. The state shall have the rights and remedies for the security and collection of the rents given by law to landlords. Lands leased for agricultural purposes under Section 47-5-64 shall be taxed in the same manner as fee lands are assessed. Any funds obtained by the corporation as a result of sale of goods and services manufactured and provided by it shall be accounted for separate and apart from any funds received by the corporation through appropriation from the State Legislature. All nonappropriated funds generated by the corporation shall not be subject to appropriation by the State Legislature.

(3) Any land leased, as provided in this section, shall not be leased for an amount less than would be received if the land were to be leased under any federal loan program. * * *

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SECTION 13. Section 47-5-357, Mississippi Code of 1972, is brought forward as follows:

47-5-357. (1) Due to the unique and time sensitive requirements of growing and harvesting products produced by the prison agricultural enterprises, the Department of Finance and Administration and the department shall establish a prudent purchasing policy which may exempt from bid requirements those commodities, items or services which are needed for the efficient and effective management of the prison agricultural enterprises.

(2) The Department of Finance and Administration shall, by order entered on its minutes, list those commodities, items and services exempted from bid requirements as provided in Section 31-7-12, Mississippi Code of 1972.

SECTION 14. This act shall take effect and be in force from and after July 1, 2012.