Warren County joins suit over housing taxes

Published 11:41 am Tuesday, April 19, 2011

Warren County agreed Monday to join a growing list of Mississippi localities planning a court challenge to state law governing how affordable housing units are taxed.

The Mississippi Association of Supervisors and the Mississippi Municipal League plan to sue the state Department of Revenue over the appraisal method prescribed for homes financed with tax credits geared to attract low- to moderate-income workers. Supervisors voted unanimously to become a party plaintiff in any court case against the agency, a move that follows similar resolutions passed earlier this month in Greenville, Greenwood and Brookhaven.

A law passed by the Legislature in 2005 allows developers of so-called “Section 42” property, named for the Internal Revenue Service code section on the subject, to be taxed based on the net income generated instead of the actual property value. Supporters of the pending suit have said tax revenue for such developments is lower compared to market rate rental property because tenants pay rent based on a sliding scale based on income and are ineligible if earnings exceed 60 percent of area median income.

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Separate developers plan to apply to the Mississippi Home Corporation this year to redevelop four sites in Vicksburg and Warren County using tax credits as a key piece of financing. Two, at the former Carr Central High School and the former Aeolian apartments, are slated to become senior-oriented apartment complexes if awarded any credits. A makeover of the abandoned Timber Creek complex on Blossom Lane and a townhouse community at Grove and Third North streets also are planned, depending on credits expected to be awarded by early September.

Supervisors kept debate on the issue to a bare minimum after MAS asked the county earlier this month to join a suit. Board President Richard George kept the item off last week’s meeting agenda, saying the topic should remain in the usual realm of “pending litigation.”

Monday’s vote came after a closed-session discussion by the board, which cited the pending litigation exception in the Mississippi Open Meetings law.

In 2006, Magnolia Commons filed a tax appeal suit against Warren County challenging its value for tax purposes. A settlement was reached between the two parties on the value, though written objections over tax liability were filed in 2008 and 2009 by owners of the complex off Grange Hall Road.