In this webinar, Erik Hayden shares several exciting updates on Opportunity Zone developments in San Jose.

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You can visit the Official OpportunityDb Partner Page for Urban Catalyst Fund II to:

• View beautiful high-resolution images.
• Learn key details about the fund and related projects.
• Request more information from the fund sponsor.

Webinar Highlights

• Overview of the tax incentives associated with Opportunity Zone developments.
• Economic factors driving jobs and population to San Jose.
• Overview of San Jose State’s importance to the local economy.
• Trends in the multifamily and office markets.
• Updates on development projects from Google and other tech giants in the Bay Area.
• Live Q&A with OZ Pitch Day attendees.

Featured On This Webinar

• Opportunity Zones in San Jose, California
• Most Expensive Cities in the U.S.

Industry Spotlight: Urban Catalyst

Urban Catalyst is a real estate equity fund focused on ground-up development projects in downtown San Jose. Urban Catalyst closed its successful Fund I in December 2020; that fund was a multi-asset real estate fund focused on ground-up developments consisting of office, mixed-use, student housing, senior housing and a hotel.

Learn More About Urban Catalyst

• Visit UrbanCatalyst.com
• See Fund II Projects
• Read about the Urban Catalyst team

Webinar Transcript

Jimmy: …Erik Hayden and Urban Catalyst, I believe, have been on every single one of my Oz Pitch Day events, and they’re the title partner this time around as well. So, Erik, as always, thank you, and thanks to Urban Catalyst for your support of OpportunityDb and OZ Pitch Day. How you doing this morning?

Erik: Doing great, Jimmy. And it’s always a pleasure to be here with you. We really like your presentation.

Jimmy: Awesome. Well, Erik, you’re our title partner for today’s event, as I mentioned. Erik, without further ado, why don’t you please dive in? Thank you.

Erik: All right. Thank you, Jimmy. So, our current offering here at Urban Catalyst is Urban Catalyst Opportunity Zone Fund II. This fund is structured a lot like a traditional real estate equity fund. We’re focused on doing ground-up real estate development in downtown San Jose, California. And of course, as an Opportunity Zone Fund, we’re able to give those tax benefits to our investors.

Just to kick us off, you know, Urban Catalyst, we’ve been featured pretty prominently in the news over the last few years. This is our second Opportunity Zone Fund in downtown San Jose. So, really, we’ve had a lot of newspaper articles written about us, really just a lot of positive buzz about what we’re doing here in downtown San Jose. Probably most important of those, we were named by “Forbes” magazine as one of the top 20 Opportunity Zone Funds in the country. So, nothing like getting a little, you know, national validation from “Forbes” that we’re doing things the right way.

A little bit about the program, and I’m sure everybody understands the basics of the program, but it never hurts to go over it just a little bit. In order to get the tax benefits associated with Opportunity Zone Fund investment, investors have to invest capital gains. Here are the three most common ways that folks have capital gains events. And then of course, you have 180 days from the date you have that capital gains event to invest into a Qualified Opportunity Zone Fund. You know, we don’t want anyone to miss out on the timeline, so we make sure that folks are aware of it.

There are two major tax benefits associated with the program. The first is, investors are able to defer paying capital gains taxes until they pay their taxes in 2027. So, that means your initial capital gains event, you don’t have to pay taxes this year, and you don’t have to pay them until 2027. Second benefit is really the major benefit, right, and that is, there are no taxes after…no taxes on profits after an investor’s funds really have been in our fund for over 10 years. So, investors invest, 10 years later, we plan on selling all of the assets in this fund, really just liquidating the fund, and that’s when we plan on returning the majority of the profits to our investors. And again, those profits are tax-free from a federal capital gains perspective.

So, two great benefits, and one other thing to mention on this slide is there is some pending legislation in both the House and the Senate about Opportunity Zone Funds, would extend everyone from 2027 to 2029. So, wouldn’t have to pay capital gains tax on that initial capital gains event until 2029. But, you know, we don’t like to speculate on when that legislation may pass, but we did want to make folks aware of it. There could be some good news out there on that horizon.

Just taking a step back here, the Opportunity Zones throughout the Bay Area, you can see them in green. For this fund, obviously we’re focused, as I mentioned, on San Jose, and even more specifically downtown San Jose. You can see four Opportunity Zones cover almost all of downtown.

You know, here at Urban Catalyst, we’ve been developers, doing business in and around the Bay Area of Silicon Valley, downtown San Jose, for many years. And really, downtown San Jose has everything that we wanna see whenever we do development anywhere. The first thing we wanna see is we wanna make sure that there’s demand for all the different types of projects that we’re building. That demand here is really generated by the Silicon Valley job engine. We also wanna make sure that transit and physical infrastructure are already in place. You know, downtown San Jose is really the only true urban environment in Silicon Valley. We have great things like the Diridon train station, one of the largest train stations in the United States. It is the largest train station on the West Coast. Has a variety of mass transit options that connect to it, including Caltrain, which gets you, you know, up to San Francisco in about an hour, and BART, which is the largest mass transportation system here in the Bay Area. BART is now fully funded to connect through downtown San Jose into Diridon station. It’s, like, taken them, you know, 65 years from BART’s inception to connect to San Jose, but we’re happy that it’s on its way. San Jose State University, with, you know, over 36,000 students, is the second-largest university in the Bay Area, behind Cal Berkeley, and it’s right in the heart of downtown.

And then the last thing that we wanna see is we wanna make sure that the local government really wants to see development happen. You know, most Bay Area cities are pretty anti-development. It’s kind of a sad story, right? Especially with the housing crisis that we have in California, but here in downtown San Jose, it’s kind of the opposite. This is where they wanna see high-density development. This is where they wanna, you know, make things happen, next to all that transit and physical infrastructure that’s in place. This is a picture of my partner, my partner Josh and I, with Matt Mahan. He’s the mayor of San Jose. Really, a lot of the policies he’s put into place have streamlined the pre-construction process, just making it so much easier for developers like us to do business. So we’re very happy to be doing business in downtown San Jose.

Just to give everyone an idea of, you know, what is happening here in downtown San Jose, I like to show this before and after slide. So, here’s the current skyline in San Jose. If all of the projects that are currently in the planning process are built out, say over the next 10 years or so, downtown San Jose should almost triple in size. So, quite a bit of development plan for downtown. You can see Urban Catalyst projects, both our Fund I and Fund II projects there, in red.

To continue talking about the local market here in downtown San Jose, wanted to show you this two-dimensional map. This black line, this represents the Opportunity Zone. Our headquarters is right here, and I like to point that out because, you know, we’re located right in the heart of the zone. We’re within walking distance of all of our projects, so we’re very familiar with, you know, really what is happening in downtown. We’re also right next door to Adobe’s world headquarters. Adobe has been building their fourth tower right here for the last three years. They just completed it at the end of last year, and they moved 3000 employees in in January. It really is a beautiful building. It’s been fun to watch it, you know, start from nothing and then suddenly it’s one of the largest high-rises in downtown. We’re also right next door to Zoom, and kind of a funny story. You know, we share a parking garage with Zoom, and now Zoom is back in the office, and all of my employees are complaining there’s nowhere to park. We always kind of thought if anyone was gonna work from home forever, it would definitely be Zoom, but Zoom is now back in the office.

Here’s San Jose State University. This red dashed line, this is where that new BART line is running, underneath Santa Clara Street, with the station here in downtown, and then connecting into Diridon station, that big train station. Kind of the, call it the biggest story here in downtown San Jose over the last few years has been Google’s massive acquisitions. And I’ll give everyone a little bit of a recap of what they’ve been up to. But as you can see, they’ve acquired quite a bit of property, over 80 acres of property. They spent about a half a billion dollars acquiring property. They had their plans approved a couple years ago. And those plans show them building around 7 million square feet of office and 6000 residential units. At build-out, this will be Google’s largest campus on Earth. This is their third major campus in Silicon Valley. Google says this is a 10-plus year build-out. It’ll be a $19 billion build-out, and they’re estimating it’ll bring an additional 40,000 people to downtown San Jose every day. Google started construction on this project last December, on their first phase.

So, that’s what Google’s been up to. But, of course, Google’s not the only thing that’s been going on. Other developers have really flooded into downtown San Jose over the last few years. You know, they saw the opportunity that downtown San Jose really has presented. And so, we see, you know, examples like Boston Properties, you know, big, publicly-traded REIT, has come in in a big way. Westbank, who’s an international development group out of Toronto. Hines, the largest development company in the country, is in downtown, right here. And then Jay Paul, who’s a regional developer but just finished building, you know, 26 buildings in the city of Sunnyvale, has come into downtown in a big way as well.

Here’s some of the projects those folks are building, just to kind of show some of the, you know, excitement happening in downtown San Jose. Here’s Adobe’s new tower. It really, as I mentioned, is a good-looking project. Miro Towers just finished. This is two apartment buildings, right next door to each other, a total of 630 units. That’s a real success story in downtown. It’s leasing up at the highest rents in the city, at around 35 units a month. They’re about 85% occupied right now. And the reason why that one’s really important is because here in Fund II, we have two apartment projects right across the street from there. So, it’s always nice to have your best comparable right next door. Other great ones, you know, Platform 16, Boston Properties, is under construction on…this project was recently completed. So, yeah, a lot of excitement happening in downtown.

And here at Urban Catalyst, you know, we saw this wave of development coming, and our whole plan was to, you know, really get in on the ground floor and acquire properties before they were scooped up by all the other developers and big tech companies, and that’s exactly what we did with the acquisition of our Fund I and Fund II projects. You can see Fund I projects here in blue, Fund II projects in Orange. So, there are four projects in Fund II. We have these two projects right here, which are apartment projects. Again, that’s right next door to that Miro Towers, which is located right here. This is also right next to City Hall, and it’s right on Santa Clara Street. You know, Santa Clara Street, kind of the main drag of the central business district. And, of course, where BART is going to be running. You can see that new BART station is gonna be right next door to us, really making this project the epitome of transit-oriented development. Then, you know, as we cross over the 87 Freeway, where Google is, we call this Downtown West. We have two projects in Downtown West, right here. This is a hotel project. This is a senior living facility. I’m really familiar with doing development on this street over here in Downtown West, because I’ve built around 800 apartment units on this street. So, yeah, a lot of success building in Downtown West. We did continue that here in this fund.

Here’s what our four projects look like. So, as I mentioned, we have a hotel project, senior living facility, apartment project. This is an office, and I’m gonna kind of spoil it. We’re changing this office to multifamily here very shortly. We’re about to resubmit applications to the city, as office really has taken a pretty significant downturn over the last year to year and a half, and we no longer wanna have exposure to office in this fund. I’m gonna go through each of these projects individually, and talk about them in a little bit more detail.

First project, the Keystone Hotel. We really like this project. It’s a Marriott TownePlace Suites. That’s an extended stay business hotel. Marriott’s been wanting to put this extended stay product into the downtown area for almost a decade. We partnered with Marriott in 2019 to create this project. They chose us because we had one of the best projects, and of course we’re one of the, you know, reputable developers here in downtown San Jose. This project’s 176 keys. You know, our average guest stays for 15 nights. Every room has its own kitchen. You know, hotels took a pretty significant hit during COVID. They bounced back pretty quickly, and business hotels have now gotten back to, really, pre-COVID levels. They’ve struggled a little bit in the last couple of months, but this project isn’t anticipated to be complete until next year. But, the good news for this project is we did start construction on it this year. We ripped down all the buildings on the site, and now we’re doing vertical construction. In this presentation, I have to update this slide every month, because another floor seems to go up, it’s going so fast. With this building, it’s an eight-story building. It’s three floors of concrete at the base, with five floors, the wood frame construction on top. It’s a very common construction type here in California, since 2017, when they change the building code. It’s really how you maximize density within the building envelope of an eight-story building. Right now, we’re working on the fifth floor of wood framing.

Right across the street from that, also, again in Downtown West, right next to that Google massive campus, is Gifford Place. Gifford Place, this is our senior living facility. It’s 169 units of assisted living and memory care. Also, very similar to the hotel project, they haven’t built any product like this in downtown San Jose in over 40 years. So it’s a lot of demand for this type of project. And then, San Jose and the San Jose metro area, you know, on any given year, we’re rated the number one market in America for senior living, and that’s really for two major reasons. The first is we have income levels in the San Jose metro area, and really, the Silicon Valley area, we have income levels where folks can afford to put their parents and grandparents into facilities like this. The second is we do have an aging population. A lot of people call it the gray wave. It is good for us to get out ahead of that with creating new supply, as one of the biggest problems throughout Silicon Valley is our inability to build new ground-up development projects because of government restrictions, and, really, constraints, the constraints of mountains and water surrounding all of our metropolitan areas. We can’t build outward.

So, again, really like this project. This project is shovel-ready. So, all of our projects, we own all of the land. We have all of the approvals to build all of these buildings. This project’s a little bit more advanced, as it’s ready to start construction. We don’t anticipate starting construction on this project until the end of next year, mainly due to financing markets not giving us favorable terms. We do expect that to change over the next 12 months or so, and this is just a really great project waiting to start. We did break ground on this project and knocked down all the buildings last year. We’re currently using the land as construction staging for our hotel project across the street.

All right. Back to the downtown core. Our two projects here, Icon and Echo. This is Echo. So Echo’s right here. This is a 388-unit apartment project. Remember that Miro Towers I was talking about? That’s right here. So, this project, Echo, you know, we’re really big fans of this project especially. I mean, multifamily has been kind of a no-brainer here in Silicon Valley for, you know, 20 years. And that’s because we have, as I mentioned, a pretty significant housing crisis in California. It’s even more exacerbated here in Silicon Valley, because, well, we’ve created six jobs for every housing unit for over 30 years straight. And that has driven our pricing to some of the highest in the world. The single-family home price here in San Jose hit a new record last year, clocking in at $1.7 million for the average home. That makes us the most expensive big city to live in in America, and the fourth-most expensive city to live in in the entire world. Our apartment rents are the third-most expensive in the country, behind San Francisco and New York.

So, you kind of get a feeling of just how dire it is that all these tech folks have somewhere to live. So, creating housing’s a good solution for that. You know, when we have this lack of supply, and just so much demand, we get things like the highest occupancy rates in the country. From May to May of last year, we had the highest rental growth of anywhere else in the country, and a lot of third parties are suggesting that apartment rents are going to continue to increase here in Silicon Valley over the next 5 and 10 years, really at a faster pace than almost anywhere else in the country. Not a surprise to us here as we’ve seen this happen, you know, for over a decade, but we do like to see a lot of folks saying things like that.

Finally, our final project, Icon. So, Icon is an office building, fully approved, 500,000 square feet. Just a beautiful building. It’s just a shame that the office market has just completely collapsed. We have seen, of course, return to office really not come off here in the Bay Area in a big way. So we don’t have a lot of tenants. There is no financing. So, for our fund investors, we did decide that it would be better returns to convert this project to multifamily. So, we are changing this to a two-tower, 650-unit multifamily apartment building. So, we’ll have just over 1000 units on this block. It’s a perfect place, as I mentioned, to build multifamily. Lots of demand for multifamily, lots of finance with multifamily, so multifamily is our switch. It’ll take us about a year to go back through the planning process to get our approvals. Usually not much of a big deal here in downtown San Jose. We’ve already had a lot of conversations with the city about this change. We’re gonna formally make this announcement in about a week and a half.

So, those are our four projects. You know, wanna talk a little bit about Urban Catalyst and who we are. You know, I mentioned we’ve done lots of development. So, I’m the founder and CEO of Urban Catalyst. Done several billion dollars’ worth of projects throughout my, you know, 20-plus year career. In General, I build institutional and quality scale projects, and that really means I build big, income-producing buildings, with a typical exit strategy of selling to a publicly-traded REIT or a large institutional investment group. We have five partners here at Urban Catalyst. We also have around 40 people that work at Urban Catalyst now. My two development partners are Josh and Paul. I’ve known these guys for, you know, 15-plus years. Josh, he’s our chief operating officer. He has significant development experience all throughout the Bay Area, Silicon Valley. A lot of emphasis in San Jose. And he’s built a variety of different asset classes, kind of mirroring what we’re building here in Urban Catalyst Fund II.

Paul Ring, very similar. He has a lot of experience building multifamily and below-market-rate housing, almost 25 years of experience doing that, almost exclusively here in downtown San Jose. I, in the past, have worked, you know, prior to forming Urban Catalyst, I worked as a joint venture partner with both of them on several projects, so I already knew that they were two of the best developers in downtown, so when I formed Urban Catalyst, brought them on as my partners. So, yes, Josh, our chief operating officer. Paul is our executive vice president of development and construction. Paul manages our 18-person team of development and construction professionals that build all of our buildings. We actually just had our development retreat last night, and yesterday, and it’s always good to check in annually and set our goals for the next year.

We got Morgan Mackles. Morgan is a really close friend of mine. I’ve known him for over 25 years. He and I went to high school together. We…well, he was a groomsman at my wedding. Morgan runs investor relations for us, and what he does is he does our fundraising. He’s the reason we’ve been so successful in our fundraising for the variety of funds that we have here in the Urban Catalyst platform. You know, overall, we have over 800 investors. We’ve raised over $350 million. So, we’ve been doing pretty well in the fundraising category for our projects here in San Jose. And then, finally, Sean Raft, who’s our chief administrative officer and general counsel. You know, Sean, of course, he’s an attorney. Manages all of our legal teams. He also manages our fund administrators, all of the administration that’s associated with, you know, running our funds, all of our compliance with the Opportunity Zone rules and regulations, with the SEC, and Sean, easy way to say, he really dots the i’s and crosses the t’s here at Urban Catalyst.

So, these are the five partners. You know, combined, here in Silicon Valley, we’ve done over $5 billion worth of ground-up development projects, and you can see the heavy concentration of projects in downtown San Jose. Been doing this a long time around here. We’ve been very successful at it, and plan to continue that success here at Urban Catalyst.

All right. Now for the fun part. This is our project timeline. Every Opportunity Zone Fund is a little bit different. So, we do want to go through this with everyone, to kind of let you know how we plan to roll out this fund. It’s a $200 million fundraise. We’ve been fundraising for almost three years now. We’re at about $140 million. We do plan on extending our fundraise for 12 months, and making that fundraise close at the end of 2024. So, if you do plan on having capital gains events next year, be sure to look us up. Also, just, you know, we flag 2027. That’s the year everybody has to pay taxes on that additional capital gains then. Of course, I mentioned we’re hoping that pushes out to 2029. That’d be great. Here in 2034, what looks like we pushed to 2035, that’s when we plan on selling our properties. That gives that 10 years to tax-free profits. So, 10 years, kind of a long time to wait to see returns. We do plan on starting making returns sooner than that with refinance events. These refinance events, pretty typical for ground-up development. As, you know, we build these buildings, we use construction loans. When we lease them up and stabilize them, after they’re built, you know, we go out and we get permanent financing, to take out those construction loans. And typically, the permanent financing is a larger amount. We take that permanent financing, we pay off the construction loan. Then, excess refinance proceeds, we can use those to make distributions to our investors. Those distributions are tax-free because they’re distribution of debt, kind of like a home equity line of credit.

We’re planning on having our first refinance event in 2026. That’s when our hotel project will be complete and stabilized and refinanced. Other projects will push out, probably out through 2030, 2031, as we stagger the starts to some of those multifamilies in phases, and have those refinance events. We’ll also plan on distributing cash flow to our investors. This is cash flow from our stabilized assets. You know, we’ll have net operating income coming off these assets. We’ll pay our debt service. And then after that, we’ll have excess cash flow. As that cash flow builds up, we do plan on making distributions to our investors. Now, one of the interesting things about this is, and this program in general, is for funds like us, that are structured as an LLC, of course, we give our investors K-1s every year, we plan on passing through a pretty significant amount of passive loss. A lot of our passive losses, that investors will see on their K-1s, come from the depreciation of our stabilized assets. That depreciation, you know, it’s something that everybody that owns property typically takes on their tax returns. Same for us, only we pass it through to our investors as passive losses on their K-1.

Now, why that’s nice is because this cash flow is passive income, we’re passing through passive losses, in some cases, the passive losses will be able to offset this cash flow, making this cash flow tax-free. We plan on having more passive losses than cash flow throughout the duration of the fund, which is really nice. Then, here at the end, you know, when we sell the properties, one of the unique benefits for the Opportunity Zone program is, you know, typically, when you sell a real estate asset, you have to pay back all that depreciation you’ve taken. You know, you sold it for more than you bought it for, and the government says, “Wait a minute. You can’t just keep all that depreciation. You need to pay that back. Your property didn’t go down in value.” So, that’s called depreciation recapture, and everybody…well, no one’s really a fan of depreciation recapture. Nice part about Opportunity Zone Funds, there is no depreciation recapture. So, we’re gonna pass you through as much passive loss from depreciation as humanly possible. And then, at the end, when we sell those assets, you get to keep all of those passive losses. And of course, when we sell the properties, that’s when we get the tax-free profits because of the Opportunity Zone program. So, kind of a recap is, tax-free refinance events, possibility of tax-free cash flow, and then tax-free profits after 10 years, when we sell the asset. So, overall, it’s a pretty good program from a tax perspective, that the government has structured for us to operate with.

Finally, the last thing I wanna talk about is our bonus units program. This has been a really popular program here at Urban Catalyst throughout a variety of funds, that we have bonus units in most of our funds. And the way that this works is, you know, if you invest into Urban Catalyst, what you’re doing is you’re buying our units. You’re then paid out based upon the number of units that you own. So, we give bonus units in three different ways. We’ll start at the time incentive credit. This is really to reward investors for earlier investment. We’re here in November, 0.25% bonus units. You see it goes down in December. That means that if you bought $100 worth of our units this month, you get $100.25 worth of our units. It is more than likely, if we extend the fundraise for an additional year, we’re gonna add 2.75% bonus units to everyone’s bonus units. So, we’ll have this scheduled for next year, and the investors that invest in November, for example, would then get around 3% bonus units. That hasn’t been fully announced yet, but it will be here in the next week or so, so stay tuned.

Multiple ventures program, this is for investors who are previous investors with us in our other funds. They get 4.5% bonus units when they invest in Urban Catalyst. And finally, our volume incentive program. This is to reward investors for more investment. Our minimum investment size, $250,000. Bonus units start at 1% at $300,000, and they go all the way up to 9% at $1.9 million. These three categories add together to get your total amount of bonus units.

Well, Jimmy, that’s the end of my presentation. Thought we could open it up. I saw we got some questions.

Jimmy: Yeah, we’ve got a ton of questions, and we’ve got time for a few of them. Erik, first question is, “I love the Urban Catalyst vision and project. Can you tell us more about how, if any, you have evolved the fund or projects since the new era of higher interest rates and less demand for office?” So, this question came in at the very start of your presentation, I think, Erik, so before you announced that you were converting that one building from office back into multifamily, but do you have anything else to add to that?

Erik: Yeah. A couple of things that we’ve done over the last couple of years. The first is, when we first launched Opportunity Zone Fund II, it was just Icon and Echo. At the beginning of 2023, we did add Keystone and Gifford. Those are projects that are currently in our Fund I, where Fund II will be coming in as the third-party equity provider for those projects. We did that because we wanted to get Fund II equity to work building projects as soon as possible, and we wanted to diversify out of office. At that time, we weren’t really at the position where we were ready to scrap the office altogether and go with multifamily. But I did mention during my presentation, we did that with that office project. We also, separate from our Opportunity Zone Fund, we have launched a new fund that is specifically for one of our Fund I projects, to provide that third-party equity, as third-party equity and debt has been very challenging for ground-up developers to get, of course, all over the country, really, since interest rates started rising in mid-2022.

Jimmy: Good. Let’s see. I don’t know if this question is for you specifically, Erik, or if you’d know the answer to it, but somebody anonymously asked, “Are there any differences in reporting docs for a typical 10-year private equity fund versus a 10-year OZ Fund?”

Erik: Well, OZ Funds have their own reporting requirements. In order to qualify as an Opportunity Zone Fund, you have to submit that, you know, working capital plan, and, you know, show that you’re qualifying as an Opportunity Zone Fund every six months. Other private equity funds don’t have to do that. The SEC filings are pretty similar to other private equity funds.

Jimmy: Bill asked this question about 20 minutes ago. I’m not quite sure who he’s referring to here, but he asked, “Aren’t they cutting back on some of their properties?” Maybe he’s referring to you, or Google? I’m not really sure there.

Erik: Yeah, he’s probably referring to Google. There was an article that came out about Google, I don’t know, maybe six months ago. What Google had done is they started construction on their first phase last year, and they had a scope of work of demolition and some historic remediation, you know, kind of getting their properties ready for development. And they finished that scope of work, and right when that happened, a bunch of national news articles came out and said, “Google Halts Construction”, which was really kind of the farthest thing from the truth. In reality, Google was successful in processing their project way faster than they thought they were going to be processing. We just talked with the head of development over at Google two weeks ago, because we get this question a lot. And he’s like, “Yeah, we thought this project was gonna take us, like, six years to get through the city, and then we were gonna get sued, and would have to fight those lawsuits, and instead, it just took us two years, and everything was approved, and we were just shocked.” He says, “So, we’re not halting. We’re actually just kind of trying to move forward while going a little faster than we thought we’d be going.” So, that’s really what’s going on with Google. They’re still fully committed to downtown San Jose. And as I mentioned, they keep saying, “Ten-plus years, $19 billion. You know, we’re working on it.”

Jimmy: Yep. Yeah, it’s gonna take a little while, but they’re working on it. Alan asks, “Parking for your properties?” What do you got parking-wise for your properties, Erik?

Erik: All four properties in Fund II have built-in parking into the buildings. And that is something that we like to do for all of our market-rate buildings, because people need a place to park.

Jimmy: Good. Diane has a couple of questions here. She seems to be concerned about some delays. She says, “With new development at ground-breaking stage and not yet built, where does completion come as compared to the three-year time limit for QOZ investment, especially considering changing one property from office to residential, and probable delay?” So, I think she’s speaking to some of the regulations around how quickly the QOF has to deploy capital into the properties. Maybe you can speak to that issue for a minute.

Erik: Sure. So, as far as all the rules and regulations of Opportunity Zones and how they’re structures, we meet all of those, and we are not up against any, like, three-year, you know, issues, because, really, we’ve deployed most of our funds already in order to acquire the land and process the project through entitlements. I think that answers the question, Jimmy. We do have some delays associated with starting our projects, mainly because of constraints in the financing markets since interest rates have gone up. COVID also really didn’t help us a whole lot. But, you know, our big value-add here at Urban Catalyst is when we build these buildings, it is a 10-year fund. We do have a long time to build them.

Jimmy: Very good. Well, Erik, with that, we’re at time for your main presentation here in the main session. So, Erik, with that, thank you to you, personally, and to Urban Catalyst for being our title partner on today’s event.