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Wake County warns of $20 million tax revenue shortfall as exemptions surge
Summary
County tax officials told commissioners the FY26 property-tax base faces a roughly $1.5 billion real-property value shortfall—about $20 million in lost county revenue—driven largely by recent exemptions and exclusions tied to low-income housing and brownfield agreements.
Marcus Kenray, Wake County’s tax administrator, told the Board of Commissioners that the county is projecting about a $1.5 billion shortfall in the real-property tax base for fiscal 2026, which equates to roughly $20 million in lost county property-tax revenue.
Kenray said the shortfall stems mainly from a surge in exemption and exclusion applications. “For last year, exempt living units increased by about 4,500, and the exempt value increased by $1,200,000,000,” he said, and later called the trend “a substantial leak in your tax base.” Tax staff reported about $1.35 billion in value currently under review for exemption or exclusion in the coming budget year and noted brownfield exclusions contributed materially as well.
Nicole Kreiser of tax administration explained the mechanics behind brownfield exclusions and charitable-housing exemptions under state law and described how the county’s value calculations change when an active brownfield agreement is filed. She noted that, under the state brownfield rules, a property can be 90% excluded from assessment in the first year after completion, producing large year‑over‑year drops in taxable value for big projects.
Commissioners pressed staff on remedies and enforcement. Commissioner Jackson asked how the county verifies applicants’ claims; Kenray said staff will require application documentation, restrictive covenants and rent rolls and will develop an audit regime to spot-check tenant income against state records. He said the county can back-bill for up to five years if an exemption is found to be inappropriate.
Several members urged state action to close what staff described as a legal pathway—referred to in discussion as the “Blue Ridge housing” ownership structure—that can convert older, taxable apartment complexes into exempt properties by adding minimal nonprofit ownership. Kenray told the board the only reliable fix would be legislative change: “The only thing that can overturn it is new legislation, that closes this loophole,” he said.
What’s next: staff said they will continue triaging exempt applications, develop an audit plan and coordinate with housing and legislative partners. Commissioners were advised that the evolving exemptions materially affect the county’s FY27 revenue outlook and the county’s planning for referenda and budget priorities.
