Aeolian withdraws tax abatement request
Published 12:00 am Saturday, June 21, 2014
Property tax abatements approved in 2013 for the developers of the Aeolian and Village Oaks apartments have been rescinded at the developer’s request.
The Board of Mayor and Aldermen Friday voted 3-0 to rescind the tax breaks at the request of Houston, Texas-based Brownstone Development. According to a letter accompanying the request, Brownstone officials said they decided to be taxed using an income approach rather than receive a tax abatement.
Because they are geared to low- and moderate-income renters, both buildings are eligible as so-called “Section 42” properties, named for the Internal Revenue Service code section on the subject. The Mississippi Legislature in 2005 passed a law that allows such developments to be taxed on the net income generated instead of the actual property value, which generates far less tax revenue than market-rate units.
The board in May 2013 approved a tax abatement for the Village Oak Apartments, which are being built at the old Car Central High School site at 1805 Cherry St. The school building is being renovated for apartments as part of the plan. The tax break for the Aeolian properties at 1208 and 1300 Cherry was approved in December.
The Warren County Board of Supervisors in April denied Brownstone’s abatement requests for both projects because of their apparent Section 42 status. The supervisors are reviewing the county’s tax abatement policy and will hold a public meeting on the issue July 21.
Mayor George Flaggs Jr. mentioned the supervisors’ Brownstone decision and their tax abatement study during discussion Friday on Brownstone’s request.
“I want to make it emphatically clear to the public that I don’t think we should be in the business of rescinding tax abatements, because we believe it creates economic development,” he said. “Because of that, we’re going to go forward, I hope, because you’ve got to provide incentive for people to take risks in coming into your community. I want to make this clear, they (Brownstone) are requesting this. The city is in business to stay in business.”
North Ward Alderman Michael Mayfield said he had talked with several supervisors “and I think what they’re looking at is everything outside the historic district. I think they’re going to stay in line with us as far as the historic district.”
“I agree that we ought to make tax abatements,” South Ward Alderman Willis Thompson said. “We need to draw business to the city. We need to show that we’re business friendly. That this city is business-friendly.”