Questions and Answers:

Describe the security and how residents gain access to the parking and their building?

Borden Lofts will be designed and built as a gated community. In order to gain access to the private areas each resident will have to pass through controlled access points. The majority of the Lofts in the Main buildings will be accessed by interior hallways. All outside doors will have controlled access. The parking areas will have an automatic gate opener. If you are a resident of Borden Lofts you will be able to gain access to the parking area with your secure card, close the automatic gate, gain access to your building and enter your Loft in complete safety.

How many bedrooms and bathrooms will I have?

Most Lofts will have two bedrooms, two full bathrooms, a laundry room, and a storage area. Larger units can have three bedrooms if the buyer desires.

Can I individualize my Loft?

Pre-construction buyers will design flexibility within their Loft. Bathroom and kitchen locations are not as easy to move but most other interior design changes can be made at little or no additional cost. For example, each buyer will be allowed to move or remove interior walls, enlarge or shrink closets, and add or delete entire rooms. Depending on the extent of design changes, some customization may result in additional architectural and construction expense. Items such as cabinets, counter tops, built in bookcases, tubs and showers, and appliances can be customized to each buyer.

How about custom cabinets and custom bathrooms? 

All cabinets will be custom made with European hinges and raised panel doors. Pre-construction buyers may, if they choose, individualize their cabinets. They may also add custom built in cabinets in the living area or bedrooms.

Our standard bathroom will have fiberglass tub showers; however Pre-construction buyers may upgrade their bathrooms to their custom specifications for additional costs which could include cast iron or Jacuzzi tubs with ceramic tile, cultured marble, granite, or natural marble trim.

The garages will only have around 20 inside spaces. Is this included in my price?

No, when developed, inside parking spaces will be leased to purchasers on a first come first serve basis. Inside spaces will be assigned and numbered and leased accordingly. Spaces will be leased separate and apart from the Loft ownership. Each parking space lessee will have a remote garage door or gate opener to gain access to the parking garage.

May I bring my dog and cat?

The original homeowners association Rules and Regulations will allow owners to have cats and dogs. Vaccination certifications, cleaning up after, barking, and leashing will be addressed in the Rules and will be subject to change by the Homeowners Association Board of Directors.

May I smoke in the building?

The Homeowners Association Rules and Regulations will deal with this. Smoking will not be allowed in the common areas but may be allowed in each unit.

How about noise between Lofts?

We will construct two complete wall systems between each Loft along with a one- inch airspace between the walls. This has been very successful in reducing noise in other historic projects. Depending on the floor coverings, you may hear muffled walking on units above, but we will minimize this with our design as much as possible. Upper floors may be required to have area rugs in traffic areas.


What will prevent the building from getting “run down” after a few years?

We have written strict homeowners documents that require the building to be maintained in top condition by your elected Homeowners Association.

Will these units be a good investment?

We are unable to predict how well the Borden Lofts will resell after the initial development. The closest similar project to Borden Lofts is the Renfro Mills Lofts in Mount Airy, NC. Renfro sold out pre-construction and resells are very strong. Below is an example (not the highest or the lowest) of one of the resells at Renfro Lofts.

Purchased 11-15-02 $151,000
Tax credit refunds from N.C. (43,200)
Net purchase price $107,800

Sold 10-12-06 $227,500

Again, we have no way of knowing how well the Borden Lofts will resell.

How does the tax credit work?

The Borden Mill building is listed as a certified property on the National Register of Historic Places. This designation makes the building eligible for historic preservation tax credits from the State of North Carolina and the National Park Service. A tax credit is not a deduction from income as is a charitable donation. A tax credit is a deduction, dollar for dollar, from income tax paid. For example, if your N.C. income tax bill is $6,000 in 2008 and you have a $5,000 historic preservation tax credit, you will pay only $1,000 in N.C. income tax.

Historic preservation tax credits were established by the National Park Service and the N.C. Historic Preservation Office to encourage the renovation of historic properties rather than their demolition. These credits are not a form of tax evasion or a tax scheme. They are simply incentives for historic preservation. We will provide you and your accountant with the necessary forms to claim the tax credits. You can learn more from the National Park Service Website http://www.nps.gov/history/hps/tps/tax/.

NON-INCOME PRODUCING

If you are buying a unit to live in yourself or as a rent-free residence for a family member or friend (i.e. non-income producing) you will use one of the following tax credits.

1. 30% N.C. historic preservation tax credit
o This credit is “tried and true”.
o No required holding period.

Or

2. 40% mill rehabilitation tax credit (recent law)
o Use this tax credit instead of the 30% tax credit above.
o The N.C. Department of Revenue is clarifying this new law.
o No required holding period.


INCOME PRODUCING TAX CREDITS

If you are buying the unit to rent to someone else, a family member or otherwise, (i.e. income producing) you will use one of the following tax credits.

1. 20% N.C. historic rehabilitation tax credit plus 20% Federal historic preservation credit. Total tax credit is 40%.
o Both of these credits are “tried and true”.
o Must keep the unit 5 years.

Or

2. 40% N.C. mill rehabilitation tax credit (recent law) plus 20% Federal historic preservation credit. Total tax credit is 60%.

o Use the N.C. 40% tax credit instead of the 20% N.C. credit above. The 20% Federal tax credit is unchanged.
o Must keep the unit 5 years.
o The Federal 20% tax credit is “tried and true”.
o The N. C. Department of Revenue is clarifying this new law.

These examples are explained another way below.

1. Non-income producing Lofts. (i.e. you pay for the unit yourself and live in the unit yourself). On day of closing you will receive with your deed a certification form called “PART C CERTIFICATION” from the State of North Carolina. It will certify the amount of tax credit you are due from the State. This tax credit will represent either 30% or 40% of the qualified rehabilitation expenses (QRE’s) to construct your Loft. QRE’s include most expenses inside the building such as flooring, heating systems, roof, custom cabinets, bathroom fixtures, painting, molding, and your share of the common area expenses. The total of these qualified expenses (QRE’s) will be added up and multiplied by 30% (or 40%). This number will be your tax credit amount. Expenses you incur such as outside landscaping, outside lighting, appliances, and window treatments are not eligible for tax credit and will not be included in the QRE total. We estimate that approximately 90-95% of your purchase price will be eligible for the 30% (or 40%) N.C. tax credit. For example, if your Loft price is $204,000 and your qualified expenses (QRE’s) total $195,000, you will receive between $58,500 and $78,000 in N.C. tax credits (30% (or 40%) X $195,000). The next $58,500 (or $78,000 if 40%) in N.C. income tax you pay will be refunded to you. You will take the N.C. tax credit over a 5-year period (or up to 10 years if needed). Keep in mind that this tax credit represents a dollar for dollar reduction in the cost of the Loft. The N.C. tax credit is non-transferable. This means that, even if you sell the Loft after the first year, you may continue taking the remainder of the tax credit in years 2, 3, 4, and 5, even though you no longer own the unit (note the exception above for the 40% mill rehabilitation tax credit). The buyer you sold the Loft to is not eligible for any of the N.C. tax credit. All the N.C. tax credit belongs only to you, the first buyer. Note that the Federal tax and state tax credits have special conditions that may limit the amount of tax credit taken each year. You should discuss this with your CPA. Keep in mind that this tax credit is a dollar for dollar reduction in the cost of the Loft.


Typical purchase of a non-income producing Loft

Purchase price (1,700 sq. ft) $ 204,000
Tax credit due buyer @40% $ 78,000
After tax purchase price $ 126,000
After tax price per square foot $ 74.11


2. Income-producing Lofts. (i.e. you purchase the unit and rent it to someone else). On day of closing you will receive with your deed, a certification form called “PART 3 FINAL CERTIFICATION” from the National Park Service. It will certify the amount of credit you are due from the I.R.S. and from N.C. This tax credit will represent either 40% or 60% of the qualified rehabilitation expenses (QRE’s) to construct your Loft. Qualified expenses will include most expenses inside the building, such as flooring, heating systems, roof, custom cabinets, bathroom fixtures, painting, molding, and your share of the common area expenses. The total of these qualified expenses (QRE’s) will be added up and multiplied by 30% (or 40%) for your N.C. tax credit and 20% for your federal tax credit. This combined number will be your total tax credit amount. Expenses you incur such as outside landscaping, outside lighting, and window treatments are not eligible for tax credit and will not be included in the QRE total. We estimate that approximately 90-95% of your purchase price will be eligible for the combined 40% (or 60%) tax credit. For example, if your Loft sells for $204,000 and your qualified expenses (QRE’s) total $195,000, you will receive between $58,500 and $78,000 in N.C. tax credits and $39,000 in Federal tax credits. The next $58,500 (or $78,000) in N.C. income tax paid by you will be refunded to you and the next $39,000 in Federal tax will be refunded to you. The N.C. tax credit must be taken over a 5-year period (or up to 10 years if needed). The federal tax credit can be taken all in one year (as fast as you can use it) and may be carried back one year and forward 20 years, until used. Note that the Federal tax and state tax credits have special conditions that may limit the amount of tax credit taken each year. You should discuss this with your CPA. Keep in mind that this tax credit is a dollar for dollar reduction in the cost of the Loft.

Typical purchase of an income producing Loft

Purchase price (1,700 sq. ft) $ 204,000
Tax credit due buyer @60% $ 117,000
After tax purchase price $ 87,000
After tax price per square foot $ 51.18

Below is a partial list of qualified and non-qualified expenses:

Expense Item: Qualified Rehabilitation Expense (QRE)

Outside decks and patios No
Appliances No
Custom counter tops (granite, etc.) Yes
Ceramic tile, linoleum Yes
Light Fixtures Yes
Security system Yes
Extra dead bolt locks Yes
Jacuzzi , custom tub Yes
Plumbing fixture upgrade Yes
Wallpaper Yes
Special moldings Yes
Built in shelving Yes
Mini blinds, curtains No
Cabinets (must be custom) Yes
Custom bookcases Yes
Painting special colors Yes
Heat pump upgrades Yes