This project is organized as a Utah Limited Liability Company reporting taxes on IRS Form 1065. Your membership interest in the LLC will be in proportion to the amount of capital contributed. Earnings, deductions, and credits will be reported to you annually on form K-1.
Your capital contribution is held in Escrow until the funding date of the project. From escrow, funds are applied for closing and for scheduled build out of the buildings identified in this project. Title Insurance will be purchased to protect against any prior liens or claims.
The minimum capital contribution is $50,000 USD. You must be a US resident or company registered to do business in the United States. Investments in Real Estate are suited only for investors with a 5 - 10 year time horizon. Utah taxpayers will derive more benefits from this fund than others.
There is a 5% acquisition fee at closing and property management fees once the property is completed, as stated in the operating agreement. There is a 1% annual administration fee for funds held in escrow and awaiting investment or scheduled build out.
This is a Manager Managed Limited Liability Company. The manager is Rae & Ray Enterprises, Inc. an experienced real estate and intellectual property management company business located in Brigham City since 2013. The manager will maintain an ownership interest in the project.
This is a long term Real Estate project suitable for high net worth individuals or other entities seeking tax incentives for a minimum of 5 years and a planned operating period of 10 years.
In addition to Capital Gains incentives this opportunity offers significant Historic Tax Credits and Enterprize Zone credits.
The Knudson Center complex is a mixed use commercial & residential real estate project located in the heart of Historic Downtown Brigham City. It consists of two buildings listed separately on the National Register of Historic Places. Upon completion the buildings will contain approximately 15,000 ft. sq. of retail/restaurant commercial space on the Main Street level and approximately 18,000 ft. sq. of residential space in the form of 8 - 10 upscale apartments on the upper floor. The project will be completed in two phases. The Union Block Building (57 S Main) first, followed by the Coronet or Knudson Brothers Building (63 S Main).
The time frame for construction will comply with the Historic Tax Credit program of 24 months, which is more restrictive than construction period for build out under the Opportunity Zone program of 31 months.
The success of this project will depend upon several factors including the housing market, the demand for commercial space, and the actions (or inaction) of Brigham City. You should seek competent legal, financial, and tax advice before considering this opportunity. The following tax benefits are enumerated for your consideration. Individual circumstances will determine your eligibility and the effectiveness of these tax incentives.
Federal Historic Tax Credits - 20%
The federal historic tax credit program provides a 20% credit for rehabilitation expenses associated with certain qualified properties listed on the National Register. It is a longstanding program preserved in the latest tax changes and provides a 20% dollar for dollar credit for expenses incurred over the cost of the project. The credit is taken over a 5 year forward looking time frame. Final approval of this credit is pending state Historic Preservation Office review and approval, then final approval by the National Parks Service (expected Q1-2019).
State of Utah Historic Tax Credits - 10%
Qualified in conjunction with the federal credits, a corresponding State of Utah credit of 20% is available for residential income producing property. Approximately 50% of this project qualifies under this program, so a 10% total credit is anticipated.
Utah Enterprise Zone Credit - 25%
Commercial real estate located in designated Enterprise Zones that has been vacant for at least two years and is rehabilitated and placed in service is eligible for a 25% tax credit (Utah taxpayers only).
Federal Opportunity Zone - Capital Gains Exclusion
The subject properties are located in a census tract that is a federally designated Opportunity Zone. Investment in these qualified properties allows individuals to reduce capital gains by up to 15% and avoid future capital gains earned on this project.
Note: These are complex tax matters. You may or may not be able to utilize these credits fully or in part. You should not participate in this project on the anticipated tax benefits alone. A Financial Proforma which excludes any tax implications is available upon request.