Impact fees are unconstitutional and unenforceable in Ocean Springs, according to Judge Dale Harkey.
Judge Harkey handed down his decision Wednesday afternoon in favor of the Home Builders Association of Mississippi.
Local developers sued the city last year after the city assessed extra fees on residential and commercial builders to offset the cost of providing services to the growing area.
Developers believed the fees were unfair, but the city says that's the price of growth.
"This is not a victory for me or for the number of people listed here as plaintiffs, but for the citizens of Ocean Springs, who ultimately would have had to pay this $4,600 fee plus any builders markup when they bought a new home," said developer Randy Wrigley.
Randy Wrigley's "Waterford Village" development includes 100 lots.
Before Judge Harkey's ruling on Wednesday, Wrigley would have had the responsibility to see that $460,000 was paid to the city Ocean Springs, a fee he says is unfair and discriminatory.
"I thought it further eliminated the possibility of affordable housing in Ocean Springs and I think it's a victory for each and every citizen here," said Wrigley.
Ocean Springs mayor Seren Ainsworth disagrees.
He says the impact fees would help to pay for roads, water, and other services a growing community brings.
Ainsworth says the ruling is disappointing, but not discouraging.
"We knew going in that whoever side won this hearing that it would be appealed to the Mississippi State Supreme Court and that's where we'll meet next," said Ainsworth.
In the meantime, Ocean Springs leaders have 30 days to disclose exactly how much money has been collected.
They must also come up with a plan to make refunds to developers.
Wrigley says going back to the courts with this issue will be a waste of time and money.
"Five federal judges, the attorney general for the state of Mississippi and now a circuit court judge have all said they do not have the authority to do it. What they think they're going to accomplish by going to the next level is beyond me," said Wrigley.
Mayor Ainsworth could not give WLOX a definite number on how much the city will have to refund developers of the impact fees that have been collected.
Developer Randy Wrigley estimates between $400,00 and $500,000 are currently in the city's possession.