The North Carolina House voted unanimously Tuesday to advance a bill that closes a property tax loophole for affordable housing that’s costing local governments tens of millions of dollars each year.
Closing the loophole would increase local governments’ revenue by $22 million next fiscal year and $32.6 million by fiscal year 2030-31, according to estimates by the General Assembly’s Fiscal Research Division.
House Bill 1042, “Affordable Housing Exemption Mods,” would make it more challenging for for-profit organizations to work with nonprofits to receive tax benefits. Such partnerships would need government funding to ensure affordability, NC Newsline previously reported.
Tax administrators in North Carolina have seen a dramatic increase in the use of existing low- and moderate-income tax breaks over the past five years, according to the bill’s primary sponsor, Rep. Erin Paré (R-Wake).
“The trajectory forward is particularly problematic as applications rise and the foregone revenue burden gets passed on to other mostly residential taxpayers,” Paré said.
The loophole comes from a 2013 case where the N.C. Court of Appeals ruled that Cane Creek Village, a low-income housing project in Mitchell County owned by a for-profit company but controlled by a nonprofit, was entitled to a property tax exemption under state law.
The House will take up a final vote on the bill on Wednesday.
New student housing, dining and parking approved
The chamber also voted near-unanimously on Tuesday to approve $636 million in construction across five campuses of the University of North Carolina system.
Under House Bill 1123, which received the support of every member except Rep. Pricey Harrison (D-Guildford), those projects will be funded through parking and housing funds collected by the university system rather than additional appropriations from the General Assembly.
The most ambitious project, taking place at N.C. State University, will see the construction of new student housing and dining facilities for 3,000 students, replacing older facilities.
Other projects in the bill are the construction of a new residence hall at UNC Chapel Hill and the demolition and replacement of Parker and Teague residence halls on campus; the renovation of a residence hall at UNC Charlotte; and the construction of a new parking deck at UNC Wilmington.
The bill also aligns the residency requirement for admission to the North Carolina School of Science and Mathematics with the state’s determination process for in-state tuition. And it includes a variety of other changes relating to tuition grants and the use of capital improvement funds.
That bill heads to the Senate for approval next.
Greg Childress contributed to this story.
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