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Garner staff urges legislative action to close 'rent-a-nonprofit' loophole; council to send agenda to delegation
Summary
Town staff recommended that Garner support closing a state 'rent-a-nonprofit' property-tax loophole and to add support for Senate Bill 587 to the town's legislative agenda ahead of the short session; the council agreed to place the agenda on the April 7 consent agenda for adoption.
Assistant Manager John Hodges and town lobbyist Sam Bridges briefed the council on proposed changes to Garner's 2026 legislative agenda and on a state-level property-tax exemption practice that staff say is reducing local tax revenue.
Hodges described edits to the town's draft priorities for the short legislative session and said staff would add a support statement for Senate Bill 587, which the town believes would address unintended consequences of state down-zoning limits. Hodges also said staff proposed requesting a charter amendment to increase the town manager's settlement authority and to oppose proposed constitutional amendments that would cap property-tax increases and limit local control.
Sam Bridges summarized what he described as a "rent-a-nonprofit" loophole in state law, saying that since 2023 a number of for-profit apartment owners have been transferring fractional ownership or control to nonprofits to qualify for property-tax exemptions. Bridges said exemptions for low and moderate income housing are projected to convert into a large reduction in taxable value countywide and cited an estimate that the exemptions translate into approximately $4 million in lost county revenue over a period discussed in his remarks.
"This law was adopted in 2010 to help increase the supply of low and moderate income housing...the loophole was created in 2013," Bridges said, and he urged the council to coordinate with the town's legislative delegation to press for fixes. Hodges said staff and the manager will continue outreach with the delegation and the League of Municipalities and asked council to place the revised agenda on the April 7 meeting so it can be delivered to legislators before the short session.
Councilmembers asked about strategy and timing to get a constitutional amendment on the November ballot; staff and Bridges said they expected a quick timeline and pledged continued outreach and information-sharing with the Garner delegation.
