Wake County tax administrator warns affordable-housing exemption and brownfield rules have cost Raleigh millions

Wake County’s tax administrator told Raleigh City Council on March 17 that a trio of developments — unresolved appeals from the 2024 revaluation, a large spike in brownfield exclusions and rapid growth in multifamily affordable‑housing tax exemptions tied to nonprofit/for‑profit ownership structures — have reduced the city’s FY26 tax base and could shave millions from the FY27 forecast.

“On the residential side and on the commercial side we’ve lost value,” Marcus Kinrade, Wake County’s tax administrator, said in a detailed presentation to council and staff. He said the county’s work found roughly $2.2 billion in apartment value had been exempted countywide in 2025 and that the city’s share of that loss is significant. He told the council that, as of the briefing, the city had seen about $672 million in apartment value removed from the tax rolls and that exemptions newly in the pipeline could reduce city tax receipts by roughly $2.95 million for FY27 under current rates.

Kinrade outlined three drivers of the shortfall. First, a high volume of property tax appeals filed after the 2024 revaluation remains unresolved at the state property tax commission; the county still had hundreds of PTC appeals open and noted that closed appeals routinely produce significant refunds and reduce the taxable base for multiple years. Second, brownfield exclusions — a state statutory exclusion that can sharply reduce taxable value in the first year after a contaminated site is redeveloped — produced an unusually large swing in assessed value in 2025, costing the city an estimated $1.8 million in city taxes tied to $514 million in excluded value.

Third — and the item that drew the strongest reaction from councilors — Kinrade described a recent legal and market development that has allowed some multifamily owners to obtain large property‑tax exemptions by structuring ownership so that a nonprofit partner holds a small equitable interest. Kinrade pointed to the Blue Ridge Housing court decision and subsequent practice as the legal basis and said the strategy has been more widely used since 2024. He said many of the resulting exemptions are limited to 80% of area median income rents and that the recorded restrictive covenants allowing the exemption can be dissolvable, leaving limited long‑term affordability protections.

“Seventy percent, 80% AMI is not deep affordability in Wake County,” Kinrade said. “What we are seeing is owners using that structure to capture tax savings without commensurate long‑term affordability protections. That has created a rapid and large fiscal exposure.”

City finance staff and councilors discussed options: reallocating general‑fund resources, raising rates, or pursuing state legislative fixes. Council members and staff stressed the political and timing constraints at the General Assembly but urged rapid coordination with county and state partners. Several councilors pressed for closing the statutory loophole and for remedies that avoid shifting disproportionate burdens to long‑term homeowners and seniors.

Councilors also asked about interim budget steps. City staff said follow‑up briefings are scheduled and that the manager’s office will return budget options in April and May. The council and staff emphasized that any state legislative fix would require action at the General Assembly and that the timeline to secure corrections before FY27 remains uncertain.

The presentation underscored how assessment appeals, redevelopment exclusions and tax‑exemption structures interact with local budgeting: a single appeal or exemption can produce refunds for prior fiscal years and reduce the future tax base, creating both cash‑flow and structural pressures for city services.

What happens next: staff and county officials said they are participating with House and Senate committees studying property tax reform and will press for statutory changes to limit unintended exemptions while preserving bona fide affordable‑housing projects that provide durable affordability protections. The council scheduled additional budget work sessions before its May proposed budget.

Sources: Wake County tax administrator Marcus Kinrade and City of Raleigh finance staff’s presentation to council on March 17, 2026.