Effort to repeal subsidized federal housing fails in state Legislature
Wednesday, February 19, 2014 12:00 AM
A legislative effort, endorsed by the Board of Aldermen and the Board of Supervisors, to repeal a 2005 law which allows Section 42 developers such as Valley View Estates LLC to avoid paying a large portion of local ad valorem taxes has died in committee.
None of the various Section 42-Housing bills introduced were taken up in committee for consideration.
The 2005 law allows Valley View Estates LLC, which developed the Wells Place subdivision in Philadelphia to pay considerably less ad valorem tax to the city, county and city schools.
The federally subsidized development provides low and moderate income housing.
Mayor James A. Young said Tuesday he was disappointed that the effort died in committee but said he remained optimistic that it would be brought up again next year for consideration.
"I think it is a proven fact that it hurts the cities and the counties," Young said. " Basically, you are giving a sizable amount of discounts but the people who live there are still paying. They haven't gotten a discount on their mortgages. Who benefits other than the private developer? It hurts our city in a sense that we are missing the much needed revenue to help fund the city."
Young expects a group of legislators to continue to push to have the 2005 law repealed.
"I don't think it is going to go away. I think those wise legislators will bring it up again for consideration. We may lose this year but I don't think the cities and counties will stop pushing them to bring it up again."
City and county leaders here joined the Mississippi Association of Supervisors, the Mississippi Tax Assessor-Collection Association and the Mississippi Municipal League in calling on local legislators to vote to repeal the law, which gives the owners of these types of multi-million dollar developments another large tax benefit resulting in their paying little or no ad valorem taxes to the city, county or schools.
Republican District 44 Rep. C. Scott Bounds of Philadelphia said earlier that he would support legislation to repeal the law should it come up for a vote.
Bounds voted for the legislation in 2005.
"At the time, these counties and cities were pushing for this to grant them that exemption," Bounds said. "They said it would spur development and everything else. Then, they turned around and it's been a push for the last few years to take away that exemption because it is a drastic reduction off the tax rolls and the citizens are having to pick that up."
Bounds said the issue had come before the legislature the last few years and always died for whatever reason.
Prior to the 2005 law, the Wells Place subdivision would have had an assessed value $6,770,230. At that value, the Valley View Estates would pay $59,713 in county taxes, $20,310 in city taxes and $64,588 in city school taxes.
However, based on the 2005 law, the Wells Place subdivision has a much lower assessed value of $1,361,490. Valley View Estates LLC currently pays $12,008 in county taxes, $4,084 in city taxes and $12,988 in city school taxes.
The difference would be over $115,500 in tax monies to the city, county and city schools.
In 2006, John P. Chapman of Oxford, the principle of Valley View Estates LLC, gained approval to construct Wells Place, a 63-single-family-rental project.
The Board of Aldermen voted in February 2006 to allow the $4 million housing development in the area of Blount Street and Valley View Drive at the request of Clarence Chapman.
He told the board that the development would be financed by investors through the Mississippi Home Corporation.
In March 2006, the board rescinded that order in response to a standing-room-only crowd who presented the board with a petition containing the names of 219 residents who were against the project.
Afterwards, developers notified city officials of their intent to file a lawsuit against the city and the Board of Aldermen, individually, noting they had purchased land and incurred significant expenses for engineering, site work and other items related to the proposed subdivision.
In May 2006, the Board of Aldermen reversed their decision and allowed the development to move forward, citing a threat of a $3 million lawsuit that would have been costly to taxpayers and difficult to win, they said.