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COMMERCIAL FINANCE 701 — Doing business with the Government

Commercial Finance 701 is a continuing series on commercial loans written exclusively for the Mississippi Business Journal. This series is geared to lenders, developers, investors and transactional attorneys.




The Founding Fathers would be dumbfounded if they could see our gigantesque government structure. This behemoth annually spends in excess of $6 trillion protecting, regulating, arbitrating, purchasing, managing, lending, insuring, competing, and, more recently, joining public–private partnerships. One of every six full-time U.S. workers is a local, state or federal governmental employee.  Inevitably, doing business will involve contact with Uncle Sam, his nephews, and some distant cousins.


While working on commercial transactions, we have encountered the CFPB, DOI, EPA, FDIC, FNMA, FHLMC, HHS, HUD, IHL, IHS, IRS, JRA, MBCI, MBFC, MDA, MDAH, MDBCF, MDEQ, MDOR, MHC, MSAG, MDOT, MSBOC, MSDH, MSSOS, NIGC, NPS, OCC, SBA, USDA, and a smattering of zoning boards, city councils, boards of supervisors, chancery clerks, circuit clerks, tax assessors, tax collectors, county administrators, mayors, commissioners of districts and authorities, and even a few judges.

In lieu of a resigned “it is what it is” approach, there are affirmative steps a business can take to improve its position when dealing with the government.

Timing.  Build in extra time and then add more.  Time is not only money, it can be a deal killer.

City hall and the county courthouse may provide counter service five days a week, but most agencies are not nearly so accessible.  Responsiveness usually depends on the nature of the request.   Lien instruments filed with the county clerk are accepted any time during business hours and returned with filing information in a few days.  Similarly, formation and lien filings are accepted daily by the Secretary of State’s office and promptly posted online.  But many county and state boards must hold public meetings, and require an issue be timely submitted to be placed on the agenda.  Second, the matter has to be heard.  Third, a vote must be taken.  A matter may be delayed due to timing issues or heard and then “tabled” for consideration at a later meeting.  Even approved items are subject to challenge through processes such as a “bill of exceptions.”

You may face drop-dead dates for certain submissions, such as tax credit award applications or RFP responses.  Use the wrong form, submit the right form with the wrong office, fail to complete it properly, or miss a deadline and you may have missed your opportunity for consideration.

Agencies.  No two government entities are exactly alike. Governmental bodies are creatures of law run by humans saddled by officialdom and dated software.  Some county boards of supervisors are known for routinely denying resort status applications.   Some government boards have vacancies and difficulty garnering a quorum for the required public meeting.  Your loan or grant from an agency may be derived from a bond issue delayed by approvals, publication and chancery court validation.

Minutes.   Many government bodies “speak” only through their official minutes.  So, even if the Lafabusha County Board of Supervisors approved your request, you might be hard-pressed to convince the title insurance company to issue a title endorsement or the attorney to give the required legal opinion before the minutes are available.  And minutes of one meeting aren’t approved until the next meeting.  Even if you don’t need official minutes, there can be considerable lag time between approval by a governing body and execution of documents.

Experts.  There are only a few instances when a taxpayer is required to engage an expert to interact with a government entity.   But just because you don’t have to doesn’t mean you shouldn’t.  Businesses routinely seek professional assistance in filing tax returns and handling audits, so why not for other matters?  If you want to acquire a nursing home, put a curb cut near a highway intersection, contract with a Native American Indian tribe, or obtain permanent Fannie Mae loan financing, then novices would be well served to hire a pro.  And even if an expert isn’t necessary, the busy entrepreneur might find it economical to outsource that task.

Homework.   Assumptions can ruin a deal.  If a person is new to an area, homework is in order.  Read articles that discuss the particular government agency and program.  Talk to friends.  Read the online opinions of the Mississippi Attorney General, which regularly address the legal authority of an agency to do something.  Learn from others’ costly mistakes.

Fine Print.  Actually, it isn’t so much the size of the print but the words.  Government contracts are different.  You should expect to find limited remedies for breach, broad discretion by the government, and clauses that condition payment on legislative appropriation.  Many long-term contracts – including leases – are subject to annual appropriation of funds and can be cancelled any year without penalty.

Change.   Using a borrowed line, the satirist Mark Twain joked that “No man’s life, liberty or property are safe while the Legislature is in session.”  Change is the name of the game.  Programs are subject to sunset laws.  Budgets – such as the state historic tax credit – may be depleted.  Unexpected events shift a board’s balance of power.  Agencies’ executive officers come and go.  It would be prudent to not count your government chickens until they have hatched – and you have a signed document.


One of the authors was privileged to study Local Government Law under the preeminent Professor of Law Robert C. Khayat.  During that roundtable course, wannabee lawyers learned the perils and pitfalls of dealing with the government.  Chancellor Khayat’s book – The Education of a Lifetime (2015) – is an excellent read and provides some disconcerting insight into the workings of the government.

President Ronald Reagan and his witty staff writers had a lot to say about the government.  Picking one favorite quote was difficult, but we landed on this one:  “Nothing lasts longer than a temporary government program.”

» Ben Williams and Molly Jeffcoat Moody are attorneys in a commercial law practice at Watkins & Eager PLLC (watkinseager.com).  Ben and Molly are both recognized byChambers USA and Best Lawyers in America. Ben was selected as Best Lawyer’s 2016 Project Finance Lawyer of the Year in Jackson, Mississippi.


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