J.Matthews_January 31, 2020 – Authority of Pat Harrison Waterway District to enter into an agreement

[LOGO] Lynn Fitch ATTORNEY GENERAL OPINIONS DIVISION January 31, 2020 Jolly W. Matthews, Esq. Attorney, Pat Harrison Waterway District 910 South 34th Street Hattiesburg, Mississippi 39402 Re: Authority of Pat Harrison Waterway District to enter into an agreement Dear Mr. Matthews: Attorney General Lynn Fitch has received your opinion request and has assigned it to me for research and reply. ### Background Your request is a follow-up to a previous request by which you asked whether the Pat Harrison Waterway District ("the District) possessed the authority to execute a Consent, Non-Disturbance, Attornment and Subordination Agreement in connection with the lease of Little Black Creek Water Park ("the Park"), by which the lender to the proposed lessees thereunder would acquire a security interest in and to the leasehold and premises. By an opinion to you dated November 1, 2019, this office stated: While the District possesses broad authority to contract, it may not enter into this contract which purports to grant the lender a security interest, not just in the lease, but in the state owned property that is the subject of the lease. See MS AG Op., Cartier (November 8, 1989)(Lender can only foreclose on and receive title to the leasehold interest of the borrower and in no event can acquire fee simple title to property owned by the State). The proposed agreement clearly states that the lender. . . will hold from time to time a . . . security interest on the Premises and the Lease securing the loan . . . 550 HIGH STREET • SUITE 1200 • JACKSON, MISSISSIPPI 39201 POST OFFICE BOX 220 • JACKSON, MISSISSIPPI 39205-0220 TELEPHONE (601) 359-3680 Jolly W. Matthews, Esq. January 31, 2020 Page 2 ## Issue Presented Your current request, dated January 8, 2020, inquires as follows: The Lessee, Little Black Creek Campground and Park, LLC, has now requested that the Citizens Bank be allowed to take the lease, only, as collateral for a loan. Does the Pat Harrison Waterway District (PHWD) have authority to do such a loan? ## Response The District may enter into an agreement which grants lessee's lender a security interest in the leasehold interest but not in the state-owned premises itself. ## Applicable Law and Discussion The District is given broad authority under its enabling statutes to accomplish its statutory purposes and projects. Section 51-15-119(m) of the Mississippi Code Annotated grants the District the authority "[to] make contracts and to execute instruments necessary or convenient to the exercise of the powers, rights, privileges and functions conferred upon it by this article." Section 51-15-119(p) confers to the District the power "[to] do all other acts or things necessary, requisite, or convenient to the exercising of the powers, rights, privileges or functions conferred upon it by this article or any other law." This office is aware of no authority which would prohibit the District from entering into an agreement granting lessee's lender a security interest in the leasehold interest. Of course, should the deed of trust be foreclosed upon, the lender would take the leasehold interest subject to all of the terms and conditions of the lease and subject to all of the terms and conditions imposed by law pursuant to Sections 51-15-1, et seq. See MS AG Op., Webb (September 13, 1996). As for the agreement itself, this office does not construe or interpret contractual provisions, and we do not opine on contractual obligations or rights. Whether the terms of the proposed agreement are acceptable to and in the best interests of the District is ultimately a determination for the District. 550 HIGH STREET • SUITE 1200 • JACKSON, MISSISSIPPI 39201 POST OFFICE BOX 220 • JACKSON, MISSISSIPPI 39205-0220 TELEPHONE (601) 359-3680 Jolly W. Matthews, Esq. January 31, 2020 Page 3 If we may be of further service, please let us know. Very truly yours, LYNN FITCH, ATTORNEY GENERAL By: Tommy D. Goodwin Tommy D. Goodwin Special Assistant Attorney General # OFFICIAL OPINION 550 HIGH STREET • SUITE 1200 • JACKSON, MISSISSIPPI 39201 POST OFFICE BOX 220 • JACKSON, MISSISSIPPI 39205-0220 TELEPHONE (601) 359-3680