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A tiny Mississippi congregation is fighting a city's attempt to ban churches from the town square, a move that the pastor said is aimed at preventing the church from taking up valuable space for shops and other businesses.

The 5th U.S. Circuit Court of Appeals heard arguments in the case Wednesday. The dispute involves a Holly Springs, Miss., ordinance banning churches from the town square. Town officials want to make the square a business district. The case stems from a lawsuit filed by the church in January. A federal judge ruled in favor of the town in January, and the church is appealing.

Telsa DeBerry, the 44-year-old pastor of Opulent Life Church, accused town officials of relegating churches to the "third-rung" parts of town to make sure tax-exempt churches don't take up valuable space in the desirable town square.

"When the almighty dollar prevails, evil is part of that," he said Thursday. "They're looking at their tax base. A church doesn't bring in taxes."

The Opulent Life Church is a small Southern Baptist congregation of about 18. Its members want to expand by leasing a building on the town square and turn it into a church fit for a congregation of more than 100 people.

But the request was opposed in September 2011 by several town officials — including the pastor's uncle, Mayor Andre DeBerry.

Since then, the Opulent Life Church has gained some heavy-weight supporters: the Liberty Institute, a Texas-based legal group that fights on behalf of churches, and the U.S. Department of Justice. The Justice Department filed a brief arguing that churches in Holly Springs are discriminated against because they are treated differently from other institutions, such as museums, post offices and social clubs.

Initially, the church aimed to strike down a zoning ordinance that spelled out special steps churches must take before they can open their doors. One requirement made churches get the approval of 60 percent of nearby property owners and the mayor before being able to open their doors. Other nonprofits and businesses do not have to take those extra steps.

The church alleged the ordinance violated the First Amendment and the Religious Land Use and Institutionalized Persons Act, a law passed in 2000 designed to force towns to treat churches the same as other businesses and nonprofits under zoning laws.

However, town lawyer J. Kizer Jones told the appellate court Wednesday that the town's board of aldermen passed a new zoning ordinance on Tuesday forbidding churches on the main town square altogether. He conceded to the judges that the previous ordinance was unconstitutional but said the new ordinance was not.

He said the town was trying to "develop retail and foot traffic, commercial business" on the square. He said the town also was concerned with traffic congestion should the Opulent Life Church grow to become a large congregation. He argued that a church's rights are not being violated because it can operate elsewhere in town, just not on the town square.

Reached by telephone Thursday after the hearing, Jones said Holly Springs has a cross-section of faiths and houses of worship, including a Muslim mosque. But he added that a town should have the power to decide how it wants to develop.

"Churches are like regulating any other activity," he said.

However, it's unfair that the town would allow museums, art galleries and libraries while excluding churches, said Hiram Sasser, the Liberty Institute's litigation director.

"It's surprising to see a city so hostile to seeing a church on the town square," he said. "You think of the town square as the apex of constitutionally protected activity; and for a church to be excluded simply because it's a church is mind-boggling."