Panel advances S 125 to adjust property-tax exemption for nonprofit low-income housing

The Senate Finance Committee reported favorably on S 125, a bill aimed at recalibrating the property-tax exemption for nonprofit low-income housing.

Senator Verdon, subcommittee chair, told members the bill seeks to restore a "sweet spot" that better incentivizes development of affordable housing without removing excessive parcels from local tax rolls. Under current practice, the transcript shows nonprofits may claim a 100% exemption regardless of the size of their ownership stake; S 125 would tie the percentage exemption to the nonprofit's percentage ownership or investment and require an annual report to the Department of Revenue.

Subcommittee members discussed that more than 2,000 properties in the state have claimed the exemption and expressed concern that the current 100% exemption can reduce the local tax base. The bill, as discussed, would grant a 100% exemption only when ownership or occupancy thresholds are met (the transcript referred to thresholds but did not print final percentage values); lower ownership percentages would receive a commensurate exemption.

The subcommittee adopted an amendment to delay implementation from tax years after 2025 to 2026, based on testimony from housing authorities that projects in the pipeline needed certainty. The committee moved the favorable report, as amended, and the motion carried unanimously.

The transcript records no final floor amendment text or the exact formula for the graduated exemption; committee members said staff would provide the precise thresholds. The subcommittee also discussed but did not adopt other suggested adjustments tied to median income calculations.

The committee recommended the bill as amended (implementation delayed one year) and moved it forward for further consideration.