RE #179: John Blatchford - Owner of Kunst MF - Historic Real Estate Tax Credits 101
The Fort
Is There a Risk in Getting a Historic Building Registered?
An individual can nominate to register any building in the country, i think, 50 years older. The designation process is fair mile leg work on that, and i think it's like 80 % plus probability that you get the designation. But even in our historic districts, eh, no, demolitions happen. It goes in front of the board, there 's a case to be made. In ohio or ind cincinnati, that you have to prove, like, an economic hardship. And so you say, like, this building does not make financial sense. I cannot upkeep it, andso i can demolish it.
John Blatchford is the Owner of Kunst, a real estate developer in Cincinnati, Ohio that renovates historic buildings into city apartments by utilizing historic tax credits and Opportunity Zone investments. This episode is a deep dive into The Historic Real Estate Tax Credit, John breaks down the entire process from what buildings qualify, how to apply, the difference between the state and federal credits, how they use the credits, and much more. Enjoy!
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(02:09) - John’s Background and Career
(05:37) - What are you focused on at Kunst?
(06:38) - The Cincinatti Market
(08:40) - The Historic Tax Credit
(09:47) - How do LP’s benefit from this Tax Credit?
(11:35) - How do you use the credit?
(12:12) - How do you begin the process of getting the credit?
(13:56) - How often does the state approve these credit applications?
(14:17) - What work has been done before applying?
(15:39) - What are the things you did wrong on the first deal that are easy fixes on deal 14 and onward?
(16:49) - Do you have to own the property before submitting an application or can you be under contract?
(17:30) - Does anyone actually come to visit the property from SHIPO?
(18:07) - How much of the building needs to be ‘saved’ in order to qualify for the tax credit?
(19:38) - How vacant are these properties when you acquire them?
(20:39) - If a building is totally bombed out, do renovations have to match the aesthetics of the time or can it be built to look more modern?
(21:11) - Why do states and federal governments care so much about preserving the historical nature of these buildings?
(22:28) - Is there a point where the building is in such poor condition where you have to demo it?
(23:07) - Would a ground-up development require a historic-style building to go up?
(36:04) - Do you ever sell the credit in whole?
(37:12) - Is there an online marketplace where you can list these credits for sale?
(40:57) - Is there a place people can go to see all the federal tax credits that were awarded in a year to try and buy them?
(42:12) - Who are you usually selling your federal credits to?
(51:04) - How often do you see projects that are missing out on these tax credits?
(52:18) - What would it cost to hire a consultant to work on getting these credits?
(52:45) - How would you find a consultant?
(53:23) - Is there anything within landscaping that falls under the criteria?
(53:40) - How long does a typical renovation take you?
(58:30) - Do you have a lot of competition in your market?
(59:26) - Do you have the runway to do a lot of projects in your market?
(59:52) - Do you have a favorite historical building?
(1:00:26) - John’s Cincinnati Preservation Collective
(1:01:00) - Are there any political or governmental risks that keep you up right now?
(1:01:56) - How do you project job creation?
(1:02:37) - Who is usually the owner of the building before you enter the picture?
(1:03:41) - What do conversations with public owners look like?
(1:04:20) - Can you get the credit for ground-up dev?
(1:04:34) - Is there anything you’ve learned along the way when creating your budget?
(1:06:07) - Have you come across any treasures in these old buildings?
(1:07:49) - What are the biggest differences in how people used to build things back then?
(1:09:50) - What buildings can get these credits?
(1:11:21) - Is there a yearly influx of these buildings getting approved with the 50-year existence requirement?
(1:12:29) - Can you get a building out of a historic designation?
(1:13:02) - What’s your end goal?
(1:13:30) - Are there any resources that people can learn more about this industry?
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