GULFPORT, MS (WLOX) - Harrison County supervisors approved a moratorium on Section 42 housing developments at Monday's meeting.
Those are the government subsidized projects created in the wake of Hurricane Katrina to meet the need for affordable housing. But some supervisors say the projects are having a "devastating" effect on the county's tax base.
Families that meet the income guidelines can rent a four bedroom home at Crown Road Estates for $699 a month. Local builders say "tax credit" projects like this one, are driving them out of business.
"When appraisals come in low, when you're building the lower income homes, the cheaper homes, and the tax credits and all this come into effect, it hurts when you go and try to build a home and you can't build a home. Your cost is higher than what it appraises for," said Clay Easterling, with the Home Builders Association.
"Section 42 is subsidized housing. So, the federal government is giving them a huge advantage over normal, local builders," said county building official Patrick Bonck.
Supervisor Marlin Ladner said the board may have been misled about the need for post-Katrina housing.
"Now, all of a sudden, we've got this glut. And I think it wouldn't be wise, it wouldn't be prudent for this board to approve any more of those things," he said.
One big concern of supervisors involves the fairness of taxes. Under the law, Section 42 developers can be assessed not on the actual value of the land, but rather on the rental income it generates.
"Other taxpayers are bearing the load because these projects are not paying their fair share of the taxes. And it impacts all these other citizens," said Board Attorney Tim Holleman.
Supervisor Connie Rockco proposed the moratorium and wants the Mississippi Home Corporation, which issues the tax credits, to hear the concerns.
"People keep telling them how devastating this is to communities and they keep giving tax credits. Maybe this will send a message to them as a united board," said Supervisor Rockco.
The vote for the moratorium was unanimous.
The Mississippi Association of Supervisors and Mississippi Municipal League both oppose the Section 42 housing tax breaks. Those groups are challenging the issue in court