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Clock Ticking for SC Multifamily Owners as Tax Abatement Moratorium Nears

By: Jonathan Kessler

Over the past several weeks, many of our multifamily owners and investors across South Carolina have reached out asking about the proposed changes to the state’s affordable housing tax abatement program under Section 12-37-220. Given the amount of attention this issue is receiving- from municipalities, school districts, housing advocates, and owners alike- I wanted to provide a brief market update on what we are seeing in real time.


Recent legislation passed by the South Carolina General Assembly would place a moratorium on new applications under the current structure beginning after June 30, pending the Governor’s signature. As most owners are aware by now, the debate accelerated following several high-profile cases involving nonprofit-affiliated ownership structures tied to affordable and workforce housing communities.

Regardless of where stakeholders fall on the issue politically, the practical reality is that many owners are now evaluating whether their properties may qualify under the current framework before the June deadline.

Over the last few days, I personally reached out to several Greenville-based nonprofit housing organizations to better understand how groups active in the affordable housing space are interpreting the legislation and advising owners.

 
According to Anthony Thompson of SAHA:

“The moratorium on South Carolina’s affordable housing tax abatement program, if signed by the Governor, is a real concern for tenants. These abatements allow housing providers to reinvest in their properties and keep rents stable for lower-income families — without them, those savings don’t just disappear, they get passed on to residents. Any owner with a property that qualifies under §12-37-220 needs to have their application submitted before June 30. At SAHA, we’re helping owners move quickly so that the families depending on affordable housing don’t bear the cost of missing this deadline.”

 
I also spoke with Mark Elliott of SC Opportunity Fund, who noted:

“The end of June is now a significant milestone for South Carolina affordable housing projects following passage of the moratorium legislation. We expect many applicants to accelerate submissions in order to preserve access to the current program structure that has supported workforce and affordable housing across the state.


We have ramped up staffing and resources to ensure anyone who wants to get an abatement before the deadline can do so.”

 
From a brokerage and investment perspective, we expect this issue to remain highly active throughout the summer. Owners, buyers, lenders, and municipalities are all trying to assess how these potential changes could impact valuations, operating expenses, future underwriting, and transaction activity across the state.


As always, this is not legal or tax advice, and owners should consult directly with qualified legal and accounting professionals regarding eligibility and compliance requirements. However, given the significance of the proposed changes, we felt it was important to keep our clients informed as this develops.

Our team at Aline Capital will continue monitoring the legislation and speaking with market participants across South Carolina as additional guidance becomes available.