Why It Matters
Two bills moving through the North Carolina House this week address separate but significant fiscal priorities: closing a property tax exemption that has drained local government revenue for years, and authorizing hundreds of millions of dollars in campus construction across the University of North Carolina system.
Closing the Affordable Housing Tax Loophole
The House voted unanimously Tuesday to advance House Bill 1042, titled “Affordable Housing Exemption Mods,” which targets a property tax exemption that for-profit organizations have increasingly used by partnering with nonprofits. Under the legislation, such arrangements would need to include government funding to ensure actual affordability in order to qualify for the exemption.
The bill’s origin traces to a 2013 North Carolina Court of Appeals ruling involving a low-income housing project in Mitchell County. In that case, a for-profit company that owned the property but ceded control to a nonprofit was found eligible for a property tax exemption — a precedent that opened the door to broader use of the benefit.
Rep. Erin Paré (R-Wake), the bill’s primary sponsor, said tax administrators across the state have observed a sharp rise in exemption applications over the past five years. “The trajectory forward is particularly problematic as applications rise and the foregone revenue burden gets passed on to other mostly residential taxpayers,” Paré said.
Fiscal analysts for the General Assembly estimate the change would restore $22 million in local government revenue in the first fiscal year, growing to $32.6 million annually by fiscal year 2030–31. A final House floor vote on the measure is scheduled for Wednesday. For related context on property tax policy in North Carolina, see how proposed revaluation freezes could affect some NC counties.
$636 Million for UNC System Campus Projects
The chamber also moved House Bill 1123 forward Tuesday with near-unanimous support, authorizing $636 million in construction and renovation projects at five UNC campuses. Only Rep. Pricey Harrison (D-Guilford) voted against the measure.
The funding would come from parking fees and housing revenue already collected by the university system — not from new legislative appropriations. The largest component involves NC State University, where new student housing and dining facilities accommodating 3,000 students would replace aging buildings.
Other projects include a new residence hall at UNC Chapel Hill, along with the demolition and replacement of two existing halls on that campus; a residence hall renovation at UNC Charlotte; and a new parking structure at UNC Wilmington.
The bill also adjusts the residency requirement for admission to the North Carolina School of Science and Mathematics to align with the state’s standard process for determining in-state tuition eligibility, and includes additional provisions related to tuition grants and capital improvement fund usage.
The bill now heads to the Senate for consideration. North Carolina lawmakers have also been active on broader tax policy questions this session — including proposed changes affecting data centers and consumer protections.
What’s Next
The property tax bill faces a final House vote Wednesday before it could advance to the Senate. The UNC construction package is already headed to that chamber for further action.