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Council presses state lawmakers after local officials warn tax-exemption law lets some apartment owners avoid payments
Summary
Port Royal councilors described how property-tax exemptions filed by apartment owners can erode local financing and urged legislative fixes after companion bills moved in the Senate but stalled in the House. Councilors discussed requiring annual requalification and raised concerns about redacted proof documents at the Department of Revenue.
Port Royal councilors used their April 8 meeting to highlight recent filings for full property-tax exemption by converted apartment complexes and to urge state action to close what they described as a loophole that can undermine local financing.
Council discussion began after staff and council members reviewed companion bills (S125 and H4475) that staff said passed the Senate but "died in the water" on the House side. A council member warned that, as currently applied, exemptions could allow owners to claim a 100% exemption while tenants still pay hundreds of dollars in mandatory fees that raise effective rents. "On paper the rent looks nice, but then you have $400 a month in fees that you have no option of," the Chair said, pointing to examples submitted by residents.
Council members argued the state law lacks adequate checks and balances and could undermine tax increment financing (TIF) arrangements used to repay bonds for public infrastructure. One council member suggested an annual requalification requirement so property owners must verify compliance each year rather than be grandfathered indefinitely: "If we can't address the grandfathering issue, I think that in order to get the exemption, you should be required to apply every single year and prove that you qualify under the new law," the council member said.
Members also criticized the Department of Revenue for redacting proofing information that the town requested, which they said prevents local officials from verifying exemption claims. Councilors described reports from residents showing posted rents that were lower than tenants' actual payments after mandatory fees were added. A council member noted the owner's parent company is Sundance Bay, a private‑equity firm, and said the pattern appears to be a broader strategy rather than an isolated case.
Town staff said they have raised the issue with municipal associations and with Representative Kirschman, who indicated he would try to shepherd the matter legislatively. Staff urged residents and municipal leaders to contact state lawmakers while the session remains in progress; the Chair noted there are only 12 legislative days left in the short session.
Council did not take formal action beyond the briefing, but members asked to keep the issue on future agendas and to provide updates to the public about legislative progress.
