Repealing big tax breaks for housing up hill
Wednesday, January 15, 2014 12:00 AM
Support in Jackson to actually repeal a 2005 law granting huge tax breaks to developers of federally-subsidized housing like Wells Place in Philadelphia may be scant.
The Neshoba County Board of Supervisors joined the Mississippi Association of Supervisors and others in calling for the repeal again this session.
The exemption costs Neshoba County about $115,500 annually, Tax Assessor/Collector Mike Lewis estimated.
Without the exemption, Wells Place would be assessed at $6.7 million, resulting in about a $144,600 tax bill, Lewis said.
With the tax exemption, the assessed value of Wells Place is $1.3 million, which results a tax bill of only about $29,000.
The developments provide low- and moderate-income housing, but the developers end up paying little or no ad valorem taxes to the city, county or schools, supervisors said.
Wells Place is a development of Valley View Estates LLC who principle is John P. Chapman of Oxford.
Republican District 44 Rep. C. Scott Bounds of Philadelphia said Monday 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 he understood the supervisors' position.
"I am going to support it if we have an effort to repeal that decision. I am going to vote for it. It's come up the last few years and always died for whatever reason. It may gain traction this year."
Republican District 18 Sen. Giles Ward of Louisville said the 2005 law has been an issue for a number of years.
Ward said he was not sure what language would come out on it in the legislature.
He delayed further comment until he had a clearer understanding of the legislation.
Ward's predecessor in the Senate, Democrat Gloria Williamson of Philadelphia, voted for the 2005 law and later served as a lobbyist for Clarence Chapman, owner of Chartre Consulting Ltd in Oxford, in 2009 when a group was trying to get it repealed.
Chapman owns several Section 42 developments, Williamson said.
In 2006, Chapman gained approval for Valley View Estates LLC to construct Wells Place, a 63-single-family-rental project.
Williamson said supervisors supported the legislation in 2005.
She is still an avid supporter of the law, saying projects such as Wells Place in Philadelphia provide affordable housing for many working families.
"When I was a Senator, I visited a girl who lives there with her four children," Williamson said. "She and her husband were working. They truly couldn't afford another place with four kids. She was so proud of her home. There were tears in her eyes when she was telling her story. It was a warm, nice place to live."
People making less than $40,000 a year, such as firemen, policemen and teachers, couldn't afford houses such as those in Well Place on their salaries, Williamson said.
"It wonderful for older people and young people who can't afford anything better," she said.
"Here's the point to me. When they become the real homeowners after 15 years, they take up and pay the appropriate taxes just like you and me."
Williamson noted that there were several dilapidated rental properties in the city whose owners pay very little ad valorem taxes because of their low assessed values.
"There are slum lords all over the place," she said.
Based on the 2005 law, Valley View Estates LLC, currently pays $12,008 in county taxes, $4,084 in city taxes and $12,988 in city school taxes.
Prior to the 2005 law, the development would pay $59,713 in county taxes, $20,310 in city taxes and $64,588 in city school taxes.
The difference would be over $115,500 in tax monies, supervisors noted.
The law created by the legislature in 2005 carves out a special exception for these property owners which is "extremely unfair" to other taxpayers, supervisors said.
As a consequence, the tax breaks have caused an unfair and disproportionate shifting of tax burdens in counties and cities across the state to single family homeowners and less valuable multi-family housing properties, some of which are losing tenants to the federally subsidized properties and struggling to remain in business, the board said.
"Everybody should have to pay their part and their share and the law should be changed to require this," supervisors said in a prepared statement.
The board called on Neshoba County residents to contact their state legislators and ask them to change the law where Section 42 property owners have to pay taxes like other property owners here.
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.