MS Counties Must Pay Back Tax Money to Developers

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Updated: 8/11/2014 6:57 pm
The Mississippi Supreme Court has upheld a decision which will likely mean millions in refunds and future tax loss for many counties throughout the state. Those refunds will likely fall on the shoulders of local residents.

Six million dollars, that's the amount of money Harrison County will have to pay back to Section 42 housing developers, many of whom are from outside the Coast, and were given large tax breaks to construct low-income housing post Katrina. Windy Swetman, Harrison County Supervisor for District 1, says, “We're looking at how we're going to be able to pay back those dollars, where those funds are going to come from, and what other legal avenues we have to explore at this time.”

On Thursday, the Mississippi Supreme Court upheld a tax break, mandating 13 counties, who state tax assessors say have over-collected taxes from these developers, must now issue refunds. Harrison, Hancock, and Jackson counties are included on this list. As it is, Section 42 developers only pay a third in taxes of what normal developers pay. Tim Holleman, Board Attorney, says, “When they don't pay their fair share of the taxes, then the burden of those taxes falls on the remaining homeowners in the county, or business owners, property owners.”

The $6 million payback will be split three ways between school, city, and county taxes, which could mean higher property taxes for homeowners. Board members tell News 25 the effects will be seen in a variety of areas throughout the State of Mississippi, with one of the biggest being the school systems. Connie Rocko, Harrison County Supervisor for District 5, says, “When you think about the school systems now, Harrison County schools especially, built two new schools especially to accommodate Section 42 housing projects.”

The school system will now have to pay about $2 million to these developers. Swetman closes, “This is a serious issue, but something that the board and the cities and the school boards are not taking lightly.”

For now, the gavel has come down and the counties must pay, meanwhile Harrison County Supervisors are exploring options before deciding on their next move. The Mississippi Association of Supervisors is advocating to revise the law so that federally subsidized housing developments are taxed at the same rate as all other commercial property, pointing out that a change in taxation on the properties would not increase the rent for the occupants.

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