Senate advances change to low-income housing tax exemption, 44-0

The South Carolina Senate voted 44-0 on Feb. 26 to give S.125 a second reading, advancing a committee amendment that changes how local property tax exemptions apply to low-income housing projects.

The measure would maintain a 100% property tax exemption only when a nonprofit owns 50% or more of a housing property; ownership below that threshold would yield an exemption prorated to the nonprofit's share. The measure also requires Department of Revenue certification of unit-by-unit income eligibility and moves the bill's implementation date to 2026. Properties already in the process of seeking the exemption would remain on their current schedule until the next annual certification.

Senator from Lawrence, explaining the committee amendment on the Senate floor, said the change is intended to "maintain the incentivization of the provision of low income housing, but at the same time not have an increase in the proliferation of the creased exodus of these properties off of the tax rolls for local government." The senator described the proposal as replacing the current "all-or-nothing" exemption with a system that ties tax relief to the nonprofit's percent ownership.

Why it matters: The current law can remove the entire taxable value of certain properties from local tax rolls even when a nonprofit holds only a small ownership stake, a situation members said has reduced property tax bases in some municipalities. Supporters said the amendment aims to preserve incentives for building affordable units while reducing the number of properties fully removed from local tax rolls.

Key details and safeguards: - 100% exemption remains when nonprofit ownership is 50% or greater; lesser ownership yields a proportional exemption. - Properties already certified or in process will continue under current rules until the next annual recertification (certification date in October). - The Department of Revenue will administer front-end certification that documents unit incomes and ownership shares. - The committee amendment postponed the effective implementation from 2025 to 2026.

Senator Walker (Richland) pressed authors on whether the change would restore revenue to local governments; the sponsor replied that effects vary by jurisdiction but that the measure is intended to "stabilize and actually put properties back on the tax rolls." The sponsor said local governments and nonprofits had been part of the bill development.

The motion to give the bill a second reading required a roll call. The clerk read a roll showing 44 votes in favor and none opposed. By a vote of 44 to 0, S.125 was given a second reading.

The bill remains before the Senate; further amendments or final passage would occur on subsequent readings.