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Attorney General Marty Jackley

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OFFICIAL OPINION NO. 72-44, Municipalities-Nonprofit corporations. Municipality cannot donate real estate to a nonprofit corporation for the purpose of promoting economic development of such city.

STATE OF SOUTH DAKOTA
OFFICE OF
THE ATTORNEY GENERAL

August 25, 1972

Michael S. Oberlitner
Assistant Director
S. D. Industrial Development Expansion Agency
Pierre, South Dakota 57501

OFFICIAL OPINION NO. 72-44

Municipalities-Nonprofit corporations. Municipality cannot donate real estate to a nonprofit corporation for the purpose of promoting economic development of such city.

Dear Mr. Oberlitner:

You have requested my official opinion in answer to this question:

Can a South Dakota municipality give land to a non-profit corporation for the purpose of promoting economic develpment for the city?

It is my opinion your question must: be answered, NO.

At the outset, may I advise that if the real property in question came in the form of a gift to the city subject to certain conditions attached thereto by the grantor, under the rule of law as propounded in Patrick v. Blake, 70 S.D. 494, 19 N.W. 2d 220, such alienation of title, in contravention to the terms of the gift, would be illegal.

Insofar as ordinary property acquired by a municipality, the general rule is that, except in certain special circumstances, such as a transfer of property to independent school districts, the donation of land for a county courthouse, or to the Federal Government for federal buildings, see (SDCL 9-27-29 through 9-27-33), a municipal corporation can lawfully dispose of its real estate only by sale. This is provided in SDCL 9-27-4 through 9-27-7 and 9-27-17 through 9-27-28.

While the statutes denominated SDCL 9-54 authorize the municipality to acquire property and thereafter enter into lease-purchase agreements for the purpose of economic development, a careful reading of these statutes does not authorize an outright gift of municipal real estate for development by third persons.

The statutes of South Dakota do not authorize such a gift under the circumstances you have outlined. It is familiar law in South Dakota that no municipal corporation has any inherent powers, so it is unable to act in contravention of the law.

Respectfully submitted,

Gordon Mydland
Attorney General