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H 3737

South Carolina Affordable Housing Tax-Exempt REIT Act

2025-2026 Regular Session Introduced by Wendell Jones

Creates a public-private SCAH-REIT to develop, rehabilitate, and preserve affordable housing for households at ≤60% AMI, with tax exemptions and 25-year property relief.

Referred to Committee on Ways and Means
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Bill Summary · H 3737

Summary — H 3737: South Carolina Affordable Housing Tax-Exempt REIT Act

Note: the provided source document includes unrelated language from a Massachusetts bill (MassDOT red lights). This summary focuses on the South Carolina “Affordable Housing Tax-Exempt REIT Act” text included in the file.

Purpose and intent

Establish a state-sponsored, tax-exempt Real Estate Investment Trust (SCAH-REIT) to mobilize private and public capital to develop, acquire, rehabilitate, and preserve affordable rental housing for households earning up to 60% of Area Median Income (AMI). The Act aims to increase affordable housing supply while leveraging market investment and reducing reliance on direct subsidies.

Key provisions

  • Creates the South Carolina Affordable Housing Real Estate Investment Trust (SCAH-REIT) as a public‑private vehicle (Title 31, Chapter 25).
  • Definitions: “Affordable housing” = units affordable to households at ≤60% of HUD‑determined AMI.
  • Governance: a board composed of 7 members:
    • 1 rep from SC State Housing Finance and Development Authority (SC Housing)
    • 1 private real estate representative
    • 1 banking/finance representative
    • 1 nonprofit housing representative
    • 2 governor appointees with affordable housing expertise
    • 1 representative from the State Fiscal Accountability Authority (SFAA)
  • Tax exemptions:
    • SCAH-REIT and its investors exempt from South Carolina corporate income tax on income derived from qualifying affordable housing projects.
    • Dividends to investors exempt from South Carolina individual income tax.
    • Property tax exemption for qualifying SCAH-REIT properties for up to 25 years.
  • Investment rules:
    • At least 70% of SCAH-REIT assets must be invested in projects meeting the 60% AMI standard.
    • Remaining assets may fund mixed-income or market-rate developments only if at least 20% of units in those projects are affordable.
    • Eligible uses include new construction, rehabilitation, and land acquisition for affordable housing.
  • Distribution requirement: SCAH-REIT must distribute at least 90% of annual net income as dividends to investors (consistent with typical REIT structures).
  • Oversight and reporting:
    • Annual report to the General Assembly (properties, units created/maintained, financial performance, dividends).
    • Annual audits by the State Fiscal Accountability Authority.
  • Funding and capitalization:
    • Initial state allocation: $50 million from the state housing trust fund.
    • Authorized to raise additional capital through sale of shares to private investors, corporations, and philanthropic entities.
  • Timeline and effective date:
    • Governor to appoint board members by January 1, 2026.
    • SC State Housing Finance and Development Authority to establish SCAH-REIT by July 1, 2026.
    • Act takes effect upon gubernatorial approval.
  • Severability clause: invalidation of any provision does not affect the remainder of the Act.

Who would be affected

  • Low- and moderate-income households (≤60% AMI) — increased supply of designated affordable units.
  • Private investors and financial institutions — new tax-preferred investment vehicle.
  • SC State Housing Finance & Development Authority and SFAA — governance/oversight responsibilities.
  • Local governments — potential reduction in property tax revenues for properties receiving the 25‑year exemption.
  • Developers, nonprofits, and housing advocates — new funding and partnership opportunities.

Potential impacts and considerations

  • Positive: Could leverage private capital to accelerate affordable housing development, increase inventory, and support rehabilitation projects.
  • Fiscal: State and local revenues may decline due to corporate, dividend, and property tax exemptions; net fiscal impact depends on project scale, economic activity, and long‑term property tax phase‑ins.
  • Program integrity: Reliance on board governance, reporting, and SFAA audits will be central to ensure compliance with affordability rules and limit leakage of tax benefits to non‑qualifying assets.
  • Market risks: Concentration of assets and the requirement to distribute 90% of net income may constrain long‑term reinvestment capacity.

Procedural status / notes

  • The bill text indicates filing around January 15, 2025, with board/deployment deadlines in 2026 and the Act effective upon the Governor’s approval.
  • Metadata provided with the submission contains inconsistent or unrelated entries (e.g., Massachusetts bill language, references to Transportation committee). Confirm current docket status with the South Carolina legislature for up‑to‑date procedural action and any amendments.

Compiled from official sources — confirm details with the bill’s official record.

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