The Million-Dollar Industry Built Around NC’s Affordable Housing Tax Break

Last August, Wake County Tax Administrator Marcus Kinrade was working on annual property tax bills when he noticed something strange. In just one year, more than $770 million worth of property had become exempt from county taxes. In some cases, tax bills had dropped from hundreds of thousands of dollars to zero.

At first, Kinrade thought it was a mistake.

“I began digging through our database and applications to make sure we didn’t make some sort of significant error,” he told the INDY. 

But it quickly became apparent that a tax break historically used by nonprofit developers to build affordable housing was now being used by dozens of private developers across Wake County to reduce their tax bills.

A legal loophole established in 2013 by the N.C. Court of Appeals case In re Blue Ridge Housing of Bakersville LLC opened the door for developers to take advantage of the tax break. And a small industry of nonprofits, lawyers, and real estate brokers has formed to walk them through it. 

Under the current law, nearly all (up to 94%) of Wake County’s apartments, duplexes, condos, and other multifamily units could potentially qualify for the tax break as affordable housing, nonprofit Self-Help Credit Union told North Carolina legislators in January. Depending on the rents charged, property owners could use the tax break to significantly boost their profits.

“I can only describe that as a lightning bolt moment,” Kinrade said, referring to the Self-Help presentation. “My jaw dropped, and I realized the Blue Ridge case was now a full-blown loophole that was being completely exploited.”

A bill filed earlier this year in the North Carolina House would close the loophole by limiting eligibility to property that is either 100% owned and operated by an affordable housing nonprofit or supported with government funding (like Low-Income Housing Tax Credits, or LIHTCs). But it hasn’t advanced in more than two months. 

Some private developers argue that with the financial stresses facing them right now (insurance rate hikes, rising interest rates, increased operating costs), the Blue Ridge tax break is an invaluable tool for preserving affordable workforce housing. 

“By reducing operating costs, the exemption enables property owners to keep rents affordable while continuing to reinvest in their communities,” Graham Whitaker, government affairs director for the Triangle Apartment Association, wrote in a statement to the INDY. 

“Our goal is to strike the right balance by closing the loophole for bad actors while preserving the incentive for responsible housing providers who deliver long-term affordability.” 

But in the meantime local governments across the state, like Wake County, scrambled to adjust their budgets this year as they faced millions in lost property tax revenue. And they may face an even worse deficit next year.

Opening the Floodgates

The General Assembly created the affordable housing tax break in 1975 to give financial leniency to property “used for charitable purposes.” That includes “nonprofit organization[s] providing housing for individuals or families with low or moderate incomes,” the statute reads.

For years, the county used it to support affordable housing built by longtime nonprofit developers: projects that were typically 100% owned by nonprofits and used LIHTCs, making them subject to strict requirements on rent prices. 

The loophole was created when the N.C. Court of Appeals ruled that properties didn’t have to be wholly owned by a nonprofit to qualify. The property that was the subject of the case, an apartment complex in Mitchell County, was 99.9% owned by a for-profit partnership.

Since then, private developers have been able to get the tax break by meeting a few simple conditions outlined in the Blue Ridge case, including handing over at least 0.01% of their company to a registered nonprofit. 

The size of the tax break that properties receive depends on how much affordable housing they offer. An apartment complex in Northwest Raleigh, for example, Conclave Glenwood, only qualified for a 53% exemption. That’s presumably because only about half of the apartments there are considered affordable, while the rest are market rate. 

Before 2023, Kinrade saw only two or three applications per year for the tax break in Wake County. But in 2024, that number shot up to more than 20, and it has continued to rise. This year, the county received 170 applications. That’s a more than 500% increase in just two years. 

As long as properties meet all the criteria, North Carolina counties have no choice but to grant them a tax exemption. Since 2024, Wake County has denied only two applications out of hundreds, Kinrade said. The denials stemmed from applications dealing with vacant land allegedly for future affordable housing development, although the developers had no history of building affordable housing. 

The massive spike in property tax exemptions has left the county in an increasingly difficult financial position. Earlier this year, officials contended with the loss of millions in revenue and struggled to fund essential services like education and public safety. 

“It’s fairly egregious from my perspective. It’s just not right,” Kinrade said, adding that the loss of revenue increases the tax burden on Raleigh homeowners. “The people who live here and own residential property, they’re having to subsidize these for-profit investors who are taking advantage of this loophole.”

Affordable or Not?

To receive a tax exemption, property owners must offer rents that are affordable for people making at or below 80% of the area median income (AMI). But because Wake County is home to some of the highest earners in the state, property owners can charge rents that are out of reach for many residents and still qualify. 

According to numbers from the U.S. Department of Housing and Urban Development, a one-bedroom apartment in Raleigh could cost up to $1,900 per month — including rent and utilities—and still qualify for the tax break. For a two-bedroom, the costs could climb to $2,300 per month and still be considered affordable. Depending on where an apartment complex is located, those limits can fall hundreds of dollars above the average, market-rate cost of an apartment in Raleigh. 

Many of the one-bedroom apartments that received the tax break this year offer rents starting around $1,000 per month. But those numbers don’t take into account the cost of utilities or mandatory fees, which can push apartments into the realm of unaffordability for some residents.

People making less than $50,000 a year face the biggest affordable housing shortage by far, according to county data. In contrast, Wake County has a slight surplus of rental housing affordable for people making more than 80% AMI—around $74,000 per year for a single person.  

“If you’re earning $75,000, $100,000, $150,000, it’s scarce, but there are some units available within our community,” Morgan Mansa, director of Wake County’s Housing Affordability and Community Revitalization Department, told the INDY. 

“It doesn’t mean we stop building for those price points, because more than 60 people are moving to our community every day,” she continued. “But in full transparency, the saturation of need is on the lower end of the income band.”

Several of the nonprofits that benefit from the tax break state online that they are helping preserve valuable workforce housing, meaning those who earn more than 60% AMI—an income band, the nonprofits argue, that is less supported by government programs while also being priced out of the market. 

But unlike past projects supported by the tax break, there’s no requirement these properties remain affordable long-term. Rent price restrictions can be changed at any time, and apartments can return to market rate, but would no longer receive the tax break.

LIHTC projects like Milner Commons, on the other hand, are subject to complex federal requirements that ensure the housing built will be affordable for years to come. 

Milner Commons, an apartment complex for low-income seniors, was built in 2024 by DHIC (formerly the Downtown Housing Improvement Corporation), a longtime affordable housing nonprofit. Milner Commons was also eligible for Wake County’s property tax exemption, which “really makes the projects we’re developing financially feasible,” said Yolanda Winstead, president and CEO of DHIC.

With the help of tax breaks, Milner Commons apartment rents are as low as $500 per month to low-income seniors. The homes are guaranteed to be affordable to people making 30%-60% AMI, with rents dependent on income. 

Unlike Milner Commons, many of the properties that have received the tax break in the last two years are not touting affordability in their advertising. Words like “premier” and “boutique” pop up on many websites. Village at Broadstone Station, an apartment complex in Apex, advertises “luxury living,” complete with a “saltwater pool and cabanas, fully-equipped fitness center, [and] expansive dog park.” 

The entire property was exempt from county taxes starting in 2025, after it was sold in 2024 to a real estate investment group based in California. The owners avoided paying more than $300,000 in property taxes by keeping rents affordable to people making 80% AMI. As of July, available one-bedrooms started at around $1,300 per month, according to the website. 

Winstead is alarmed by the trend, she said, since private developers could pass those property tax savings along to investors, rather than using the money to cover operational costs and keep rents low. 

Behind the Curtain

While dozens of Wake County properties have received tax breaks in the last two years, a handful of law firms and nonprofits were involved in securing them, an INDY investigation found. 

“There is a whole niche industry that has been carved out relative to this [tax break] in the last three years,” said Kinrade. “We saw these out-of-state nonprofits and a few local law firms really increasing their efforts to make this part of their business model. They started actively advertising their services and promoting this.”

Often, developers or their nonprofit partners will hire lawyers to help them restructure the businesses and ensure the application’s approval. In some cases, nonprofits spent tens of thousands of dollars on legal services helping property owners secure the Blue Ridge tax break, according to IRS filings. 

In 2024, for example, the nonprofit Southeast Affordable Housing Administration (SAHA) paid $115,000 to Anthony Thompson for “legal counsel,” per IRS records. He is a former Nelson Mullins lawyer, a firm involved in many tax break applications, and current SAHA general counsel. 

Thompson did not respond to requests for an interview, but did share a written statement with the INDY.

“SAHA exists to protect affordability for the families already living in North Carolina’s older, naturally occurring affordable housing — the apartments that were never part of a federal program and can quietly lose that affordability one unit at a time,” he wrote in part. “The property tax exemption is the tool that makes that affordability possible.”

IRS records show that SAHA, founded in 2021, earned around $2 million in 2024 from its work partnering with properties to “implement tax abatements” across both North and South Carolina. The organization spent about $400,000 of that money on “tenant rent relief,” including services for tenants like case management and a credit-building program, as well as community activities like back-to-school drives.

In the same year, SAHA spent more than double that (around $900,000) on “consulting, legal & organizational, and marketing” support services from Affordable Upstate, a multifamily real estate investment firm based in South Carolina. The firm is helmed by Mario Brown, son of SAHA’s executive director, Dolores Brown.

Affordable Upstates owns and manages many of the properties that SAHA has helped qualify for the tax break, CEO Mario Brown told the INDY in a phone interview. The company works with SAHA to support tenants and provide rent payment programs and security deposit alternatives. Much of that work is enabled by the tax break, according to Thompson.

SAHA also pays the firm “to go out and originate partnerships with other [property] owners,” Brown said. In other words, to find property owners interested in partnering with SAHA to qualify for the tax break. Affordable Upstate educates property owners interested in affordable housing on how the incentive works and assists with compliance, according to Brown.

“The nonprofit itself doesn’t have the ability to go out and canvas the market,” Brown said. 

Several of the nonprofits helping properties qualify for tax breaks experience direct benefits of their own. The Foundation for Affordable Housing (FFAH), a registered nonprofit based in Oregon and incorporated in California, helped clients with property in Wake County qualify for $3 million in tax breaks this year, according to the INDY’s analysis—half of the property tax revenue Kinrade expects Wake County to lose in 2026. 

FFAH operated through one of its many subsidiaries, the Foundation for Affordable Housing V. It partnered with properties across North Carolina, including Village at Broadstone Station. While the majority of FFAH V’s revenue went back into the operation and maintenance of its properties, company officials also made a significant amount of money. 

In 2024, President and CEO Darrin Willard took home around $850,000 in compensation from “related organizations,” according to IRS filings. And in 2022, FFAH cofounder and former FFAH V President Deborrah Willard received a $2.5 million bonus on top of her $500,000 salary. 

Neither Darrin Willard nor Deborrah Willard could be reached for comment, despite multiple attempts by the INDY across several weeks.

Opportunity South Carolina (OSC), a registered nonprofit based in Greenville, is another major player helping North Carolina property owners qualify for tax exemptions, the INDY found. Founded by real estate investor Mark Elliott, OSC helped companies with Wake County property save some $1.1 million in taxes in 2025 and qualify for another $600,000 of property tax exemptions in 2026. Elliott did not respond to requests for an on-the-record interview. 

Industry regulation and oversight are limited given how quickly it’s grown. In one 2026 case, the INDY found that the same people who owned the properties receiving the tax break also created the nonprofit that allowed them to financially benefit from it.

The N.C. Affordable Community Housing Organization, which saved property owners some $50,000, was formed in December 2025, just two months before applications for the tax break were due to Wake County. 

National law firm Nelson Mullins (with offices across the Southeast) was responsible for about half of the applications Wake County received for the tax break in 2024, according to data Wake County provided to the INDY. Parker Poe, a well-known firm in Raleigh, submitted about 20% of applications that year. 

Those law firms continued to be heavily involved in 2025, with Nelson Mullins submitting around 60% of the applications and Parker Poe submitting around 26%. This year, more law firms joined in, including Spilman Thomas & Battle, bringing the total law firms involved to 13 (compared to only seven in 2024).

What’s the Outlook?

The private developers and nonprofits using the Blue Ridge tax break argue that it is an essential tool for preserving existing affordable housing. By saving on property tax, property owners could avoid passing on costs to renters, shutting down entirely, or selling to companies that will renovate and raise rents. 

“There’s no way to beat inflation,” Brown, of the SAHA-linked real estate investment firm Affordable Upstate, told the INDY. “Every cost incurred by the owner is passed to the resident via rent. So what SAHA really provides to us, and the rest of its partners, is a lifeline.”

But the question remains: Should the county and state offer such a strong financial incentive to private developers that, in many cases, provide little affordability?

Unlike the county’s longtime partners, some of the companies now taking advantage of this tax break are not aligned with the Wake County government’s affordability mission, said Mansa. And under the current law, they don’t have to ensure the housing is affordable long-term or meet certain accountability requirements. 

“We’re grateful that this is affordable today, but will it be affordable next year? Will it be affordable 10 years from now, 20, 30?” Mansa said. 

“If we are going to incentivize the private market, there need to be appropriate safeguards in place,” she added, “so that we can identify the private developers who are doing this in alignment with the mission of the county … versus the other ones who see this as ‘The market is softening, this is a really great way to make the numbers work for us.’”

As a private developer, Affordable Upstate is accountable to both its lenders and its equity investors, who expect a return on investment, Brown said. The tax break, in addition to enabling the firm to invest in the property and its tenants, also helps the company pay back its bank loans and pay investors, Brown added. Otherwise, the company could lose the property, or be subject to a lawsuit or lien from investors, he continued. 

State Rep. Erin Paré, who cosponsored the bill to close the Blue Ridge loophole, told The News & Observer in July that the policy change “didn’t make the cut” during negotiations around the state budget that was approved earlier in July. 

Advocacy from SAHA was one of the reasons the bill stalled, according to a statement posted on the nonprofit’s website in July by Lauren Deyo, SAHA’s deputy general counsel. The organization also hired a lobbyist following the introduction of the bill, according to the North Carolina General Assembly Lobbying Directory. 

“SAHA’s general counsel met directly with state senators and members of the Senate Finance Committee, arguing that a measure aimed at abuse should not sweep away compliant, mission-driven partnerships or force sound properties to requalify against a shifting standard,” Deyo wrote. 

Thompson, in the statement sent to INDY, wrote that SAHA “would welcome changes to the underlying statute,” such as more frequent compliance reporting or lower affordability requirements to qualify. 

Brown also said he is in favor of additional safeguards aimed at bad actors, saying that the rules as written, in both North and South Carolina, “leave a little too much room for interpretation.” 

In the meantime, Wake County is still struggling with the huge influx of applications and exemptions. Now that Paré’s bill is unlikely to come back under consideration before next year, Kinrade is concerned the county will be left in an impossible financial position. If applications for the exemption continue to increase, the county could be facing the loss of millions more in revenue next year.

Property owners only have to apply for the exemption once to continue receiving it year over year, according to Kinrade. And they are responsible for informing the county if a detail in their original application, like the number of affordable units, changes.

In the past, exempt properties were typically under additional oversight because they received federal government funding. Now, with the huge increase in exemptions, Kinrade is worried the county will have to start conducting audits every year. And at the moment, the department simply doesn’t have enough manpower to do that.

“We’re definitely not equipped for it. We’re not staffed for it, we don’t have a budget for it,” Kinrade said. “So we’re trying to determine, is there an opportunity for us to get more auditors or do we need to hire a company to help us? How often do we need to audit them? We’re starting from ground zero and trying to build it up.”

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