Multi-talented SEC Attorney/Developer/Historic Renovator Urges Get to Know Tax Code

One of the things that I've been really interested in is, and I would advise any passive investor or sponsor operators, get to know the tax code.

Real estate is such an amazing asset to invest in because there's so many benefits, whether it's historic tax credits, opportunity zones, new market tax credits.

You may get some sort of tax liability relief or incentives from the state, the federal, and even the local municipal level.

Um, so definitely something anytime you're looking at a project and reviewing a project is take a look at all of those opportunities that you can bring to the table.

You just said one that I was going to try to make sure we covered, and that's the local, because, yeah, that can be something everybody or a lot of people miss.

We passed the Live Local Act here a few years ago, and supposedly it's being modeled across the country and other places.

Have you heard of the Florida's Live Local Act?

I'm not familiar with that.

What we're working on here is what's called tax increment financing.

And so basically you take a project that is not producing tax revenue and you enter into a tax and cost sharing arrangement with the local districts.

And so as you create value, whether it's through sales tax or property tax improvements or whatever else, you can get the municipality and some of the special taxing districts to pledge the increment that they don't get now anyway, but what they may get once you actually develop the project.

And so we're in negotiations right now for pledge of sales tax and some property tax increment to help reimburse the developer.

In this case, me for infrastructure projects that will build out the community.

So they're pledging their additional credits to you because you're adding value to the area.

In short, like a CRA, an old CRA idea, right?

Yeah.

So in our example, we've got 15 commercial parcels that once built out will generate a lot of sales tax for the city, the county, the fire district, the education district.

But it's net new revenue.

It's revenue that doesn't exist.

And so what we're asking them for in exchange for this new revenue that we're going to create for them is to pledge some of that revenue back to help us offset the cost of infrastructure.

And then once the infrastructure is built out, it's usually over a 20 to 25 year period.

Their payback to us goes away and they incur that remaining revenue in perpetuity.

So it's a way to build infrastructure without imposing tax on the current residents where we operate.

You know, they're very tax averse.

And so we had to get creative with a way to help us as a developer build out the project.