County leaders say Section 42 tax revenue is a significant issue

BILOXI, MS (WLOX) - Harrison County has joined a court battle challenging the amount of taxes paid by developers of subsidized housing.

The county is asking the state supreme court for a re-hearing in a case that could have a major impact on local tax revenue.

County leaders and others contend that the developers of Section 42 housing projects are not paying their fair share of taxes.

They say, consequently, the tax burden is being shifted to other home and business owners.

Developers of Section 42 housing received federal subsidies to build their rental homes and apartments.

But many local government leaders say those developers are paying little or no local taxes, since the federal tax credits that helped pay for the projects are not figured into the taxable value of the properties.

"After Hurricane Katrina, there was a large number of income tax credits assigned to Harrison County. So, we have an extremely large number of them compared to other counties in the state," said Harrison County board of supervisors attorney, Tim Holleman.

At issue is a loss of local tax revenue. In Harrison County, it amounts to more than a million dollars a year.

"It's a serious problem for the county because we have to provide the services to the people in those apartment complexes, yet we can't get any taxes to help pay it. So, what that means is you and I pay it," said Holleman.

"This amount of money that they're asking for leaves them literally paying no taxes and putting a tremendous burden on local county services and city services and school services," said county supervisor, Connie Rockco.

She says the impact reaches beyond government services.

"There's also contractors within our community that have gone out of business because they can't compete with the government dollar and the government program."

If local governments don't get a favorable ruling from the courts, they'll have to look for a remedy in the legislature.

But they'll have to do a little better lobbying. A bill addressing this issue passed the house last year, but never made it out of committee in the senate.

"I don't expect it to be settled anytime soon. I would hope the court would grant re-hearing, the supreme court. And I would hope the legislature would address it as a serious problem," said attorney Holleman.

A court case which began in Humphries County is the focus of this court challenge.

The initial ruling from the state supreme court went against the local governments. Harrison County and 19 other municipalities and school boards have filed "friend of the court" briefs, seeking a re-hearing of the issue.

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