Port Royal cites law after $1.3M tax revenue loss

April 11, 2026

Summary

Port Royal officials said a state tax exemption for a 400-unit apartment complex erased about $1.3 million in expected local revenue.

Why this matters

The loss affected Port Royal’s budget for core services and reduced funding tied to local schools. The case could also shape whether state lawmakers revisit how tax exemptions for affordable housing are applied.

Port Royal officials said a South Carolina property tax exemption for the Preserve at Port Royal, a 400-unit apartment complex, is expected to eliminate about $1.3 million in local tax revenue this year.

Town Manager Van Willis said the town learned of the change through social media, then later confirmed it while reviewing lower-than-expected revenue. The issue was discussed publicly at a Town Council workshop on April 1, 2026.

The Preserve paid more than $1.34 million in property taxes last year, according to the town. Willis said it is expected to pay no property taxes this year. He said the roughly $6,000 listed on the bill reflects stormwater fees.

According to Willis, the exemption came through a section of state law that allows companies to set aside part of their corporate structure for low- to moderate-income housing. In the Preserve’s case, he said, that portion is 0.1%.

“They have set aside 0.1% of their ownership structure, which has now enabled them to exempt $1.345 million in property taxes,” Willis said.

The property is owned by Sundance Bay, a Utah-based private equity firm with about $4 billion in assets, according to town officials. The complex sold for $92 million.

Willis said the loss amounts to about $349,000 for Port Royal, or roughly 6% of its $11 million budget. More than $700,000 for the Beaufort County School District is also affected.

The exemption was finalized in May 2025, Willis said, after Beaufort County had supplied figures Port Royal used to build its budget. The town adopted that budget in June 2025 expecting the revenue to remain in place.

Emails between the county’s chief financial officer and auditor show the exemption appeared on a list from the South Carolina Department of Revenue on May 30, 2025, during local budget planning. Willis said the town did not receive direct notice.

Town officials also questioned whether the property meets affordable housing requirements. Willis said a firefighter earning about $48,000 was quoted about $1,450 for a one-bedroom apartment and was told no affordable units were available.

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