A growing number of apartment complex owners in Wake County and elsewhere in North Carolina are taking advantage of a state law that grants property tax exemptions to nonprofits that provide affordable housing to low-and moderate-income residents, Wake County officials say.
In a scheme that one longtime affordable-housing developer refers to as a “rent-a-nonprofit structure,” for-profit apartment complex owners can hand over fractions of ownership to nonprofits to qualify for generous tax exemptions. The move can result in significant reductions in property tax value for cities and counties, sometimes tens of millions of dollars.
“This is a huge leak in your tax base, and the City of Raleigh’s also,” Wake County Tax Administrator Marcus Kinrade told county commissioners during a recent meeting. “Most of these things are occurring in the city, so it’s affecting them even worse than it’s affecting the county.”
Lower tax values mean less revenue for counties to fund schools, libraries, public safety and health and human services, which can force local governments to reduce services or raise taxes…