Taxpayers on hook for $1.2M Kohler settlement

By STAFF REPORTS,

Forrest County taxpayers will have to reimburse some $1.2 million in tax payments to Kohler Industries, a Wisconsin-based manufacturing company, in connection with a settlement agreement signed Tuesday morning by city and county officials.

The agreement was approved during special meetings of the Forrest County Board of Supervisors and the Hattiesburg City Council held immediately prior to a press conference in which Gov. Phil Bryant joined Kohler officials to announce a $20 million expansion of its Hattiesburg manufacturing facility. (For more on the announcement, click here: https://bit.ly/2HA3ffd)

The settlement is in connection to a dispute between Kohler and local city and county officials dating back nearly a decade about what was eligible for tax exemption as part of a 20-year deal used to lure the company to open a manufacturing facility in the Pine Belt in 1996.

After agreeing to the exemptions for tax years 1998 through 2009, the county and city denied Kohler’s application for exemption beginning with the 2010 tax year and have continued with that same policy ever since.

Disagreeing with the governmental interpretation of the agreement, attorneys for Kohler filed a lawsuit in 2014 alleging the city and county were not making good on their original agreement and asked for a full refund of tax monies paid during those same years.

In August, Special Circuit Judge Larry E. Roberts ruled in August in favor of Kohler and against Forrest County and the City of Hattiesburg ordering them to reimburse nearly $2 million in tax payments.

After Robert’s ruling, the Forrest County Board of Supervisors voted unanimously in executive session to allow Board Attorney David Miller to file an appeal to the ruling. The day after the board’s vote, Hattiesburg City Council members voted to do the same.

In a previous story, Board President David Hogan said the board was disappointed about Roberts ruling, which they consider a technical agreement regarding inventory tax.

“We hope to be able to get some clarity, but in the meantime we respectfully disagree with the ruling,” he said. “Board Attorney Miller, Tax Assessor Mary Ann Palmer and the board felt we were on the right side of this. We hope to be able to get this settled. We have the utmost confidence in Miller and Palmer.”

As recently as Friday, Miller told The Pine Belt NEWS the matter was still being appealed as the parties tried to agree on a settlement of some kind.

Under the terms of the agreement, both the county and city agreed to pay 75 percent of the trial court judgment over a 10-year period without interest.

“This amount is about $67,500 a year for the county,” said Board Attorney David Miller. “It’s a little different for the city.”

Because Forrest County schools benefit from the funds generated through these taxes and have received them, they’re not responsible for returning the money.

Despite the disagreement over the tax issue, Hogan said Kohler Industries had been a good partner to the county.

 “The board knows Kohler is a good business partner with regard to how we handle tax exemptions. We just need to get this inventory tax clarified so we’ll know how to handle in the future with other businesses.”

“We want people to know that Forrest County is business friendly and we want to sustain and expand job creation,” Hogan said. “We have extended other exemptions in their perrier and will continue to do so moving forward. Kohler is a good partner and we appreciate what they have done and will continue to do in the future.”