Atif Z. Qadir 00:03
Welcome to American Building. I'm your host Atif Qadir. Join me as we explore the skylines and strip malls, the crosswalks and rail crossings, the balconies, the buildings and the boroughs shaping the next generation of real estate. Let's build common ground.
Atif Z. Qadir 00:26
Today's guest is Jonathan Dodson, Co-founder and CEO of Pivot Project. Jonathan started his career in residential and commercial mortgage lending before pivoting into development in 2014 pivot project is a full service development brokerage and property management firm based in Oklahoma City that specializes in historic buildings. Since 2015 the firm has delivered roughly 380,000 square feet across 15 projects, and that's about $100 million of value, and currently it has 10 projects in development. Today we'll discuss OK Market Hall, a mixed use redevelopment in downtown Oklahoma City, with residential retail, and wait for it, pickleball courts and a planned phase two hotel across the street. So thanks so thanks so much for being here with us, Jonathan.
Jonathan Dodson 01:23
No thanks for having me. It's good, good to actually be in zoom with you. I only get to see you like twice a year.
Atif Z. Qadir 01:30
As some of the listeners know, I have mentioned before, the small scale Developers Forum. So that's where Jonathan and I see each other. So for listeners that are developers or interested in government developers, check it out, small scale Developers Forum. Next one is in Fayetteville, Arkansas in October, and we'll include the link to the conference in the show notes. Jonathan, you spent about a decade in banking. Tell us what you did as a banker and what you learned from that experience.
Jonathan Dodson 01:59
Yeah, so my first year actually out of school, I worked for a mortgage brokerage company, but then went and did something else, and then went back to banking. And when I came back to banking, it was all on the commercial lending side, and I spent about 10 years there. And so what I found is I started in '06, and so you kind of had the, what you would call the mortgage crisis that happened all over the country, right? Oklahoma City wasn't hit as bad, but we were hit. And during that time, I'd gotten really involved with Urban Land Institute, and so as I was trying to, like, build my portfolio of customers, most of the customers I was getting were kind of urban infill customers. They were folks doing interesting projects in the urban core and across really the financing world. If you had a like a home builder out in the suburbs, they were your bread and butter for so long. Well, that collapsed. And so as I was '06, '07, '08, '09, I realized that my portfolio was actually in really good shape. It was just because I had focused on the urban core, and that was a little bit more resilient to what was happening in the suburbs. And so our bank actually didn't have great interest rates. And so what I would do is, if you were a developer, I would say, hey, I'll go raise equity for you. For free. You can't pay me, because that would be a conflict, but like, just bank with us and you'll pay a little bit more, but I'll take care of you. And so I ended up getting quite a few really cool customers that were gonna pay 100 basis points more to bank with us, but I was helping them on the equity side. And so for them, it was totally worth it to do that
Atif Z. Qadir 03:36
So fastly, you were essentially doing 90% of the developer's job, which is raising money and not even being a developer yet. So you were preparing yourself and getting there. But help me understand why were you were trying to find equity. It sounded like you really cared about these projects.
Jonathan Dodson 03:56
There's several people who have talked about the built environment, but in some ways, our cities are the built liturgy for how we experience each other. And so when you're in the urban core and you start to see how that engage interact, and you engage and interact with other people, it becomes like, I want other people to experience this, and I want more of this, right? And so Oklahoma is a little bit unique. And I don't know if you know the story of Oklahoma, but we were basically founded overnight. We had the land run right so someone shot a gun, and so we have this very kind of wild west feel to how we did it. And really, we had a great urban core up until about the 60s. And this is more than you asked for, but I find it interesting. Famous architect and has done great work in other parts of the world, but his thesis was essentially, Oklahoma City has no geographic boundaries to prevent growth. He said, We really need to try to compete with the suburbs. So that theory was, let's just tear down all the buildings. So we blew up about 200 buildings. They the idea. Idea was to build a super mall and really say, like, hey, suburbs, we can compete with you. Well, we had oil embargo. We had all this stuff in the 70s that happened. We have a downtown that's completely dead, and we lost a good portion of the really historic buildings that we had. And so as I was lending money and getting to see people bring buildings back to life. It felt really important, especially given the history that we have in our city.
Atif Z. Qadir 05:26
Okay, so it seems like that Oklahoma City is a city that people should know about with tons of history, and the downtown is a really special place that has had a lot of kind of painful processes that have gone through, but still, the bones are really amazing there. So what prompted you to leave banking and then start working on deals directly?
Jonathan Dodson 05:50
Yeah, so I was at a community bank for that had been around for about 100 years, and I made the jump to be my forever bank. And I thought, you know, I'd like to do development, but this is a good job, and I'll be able to lend more money to customers that I've wanted to lend to then. And this is really before, kind of the ME TOO movement, but we it was a really toxic work environment. And so one day, my boss walked into my assistant and said, If you want to keep your job, you got to have sex with me. Get it on the calendar. And I was sitting in room adjacent hearing that. And so really, over the course of the next two or three weeks, her and I tried to unpack what to do. He was a pretty influential lender in the city, and was about to be head of the Oklahoma Bankers Association. And so for her, there was quite a bit of and rightly so concern about what could he do to her career, and for me, it was really a moment of kind of jumping off. And so when, when I told I reported him up, and when they didn't fire him, and they gave my assistant, like it was like four weeks to find a new job. That was kind of enough for me to say, All right, so I, so I put my two week notice in and quit, and I became a developer or entrepreneur by force, not by I didn't have the guts to do it.
Atif Z. Qadir 07:11
I really applaud you, because it's in times of turmoil where you see somebody's true character come out. And I would imagine that there were many things that you were weighing besides adherence to your morals in terms of your own obligations to your family and to your own career, desires for your own career. So that means a lot, and I'm really glad that you shared that, and I hope that inspires other people to not to take bullshit lightly. So that's great,
Jonathan Dodson 07:41
yeah, and I just also create a little clarity too. Is in some ways, I feel weird always telling that story, because it's not, it is part of my story, but really it's her story. I was a bystander in that, and so I She's like, going on. She's doing she's a commercial lender, she's doing awesome work in the city, but being a bystander to her story, impacted my story, and so glad that she has taken off and found success. And obviously it's weird to think about. That's what led me into development. So it's kind of crazy
Atif Z. Qadir 08:10
cool. So let's talk about development then. So walk us through the first years so we know how you made that transition. But what were those hardest early lessons that you learned once you put out the sign pivot projects ready to go, let's see it.
Jonathan Dodson 08:27
So I sold my car and started bicycling around the city, and I did the math, and I realized if I officed at a coffee shop, it was cheaper than rent, that I could get somewhere else, and I could meet all these people that I had never met. And so if you look at banking in general, is fairly it's mostly, most of my customers were white men, and I am a white man. And so there's I am what I am. But I started going to this coffee shop, and all of a sudden I started getting an experience culture that I had never seen before. So when you're talking about the metoo movement, or you're talking about any of the race kind of BLM things that were happening, or Ferguson, or you think about LGBTQ rights. I was at the one coffee shop where everyone was kind of congregating to be passionate about what mattered, right? And so I went from driving a really nice car, and all of a sudden being in this place where I felt like my heart got bigger. And so, you know, I'll say, like, the problem with white culture in general is it's anemic, but it doesn't know it.
Jonathan Dodson 09:32
And so when it to be around people who are different than us, it actually is not a bad thing. It's a really good thing, because it allows us to actually see the world more fully, which, I think I had a scope that all of a sudden you put a pair of sunglasses on your Oh, this is what a really wonderful world looks like. And so as I was officing out of this coffee shop, and I had people like they would bring my checks by, and they would just leave with the barista, and the barista would hand it to me. I mean, it was a great. Set up, I started again, raising equity for people and placing debt. And it was during that time that two of the original co founders, along with Mia pivot, he got the tower Theater, which is an old mixed use building. It was a music venue, and then, sorry, movie theater. And then he got it under contract. And so he asked me and my other buddy, Ben, to go co develop it and do it equally. And so I didn't even know that there were development fees. I had no idea how you think you know stuff and you don't, right. And so I was like, all I've got is a bicycle and four kids.
Atif Z. Qadir 10:36
So were your kids your collateral for your first PG?
Jonathan Dodson 10:41
They should have been but yeah, so we walked in with no money, and what we realized was that the greater the complexity in a project, the more value there is to create and so on that deal. I mean, this is when interest rates were low, but we had friends and family equity, we had historic tax credits. We sold the federal and the state, we had mezz debt we were paying 16% on and so we overnight, I was still officing out of elemental coffee. And one of the guys was like, I think I can operate it. And so we formed a music operating company. Overnight. None of us knew anything about the music operation business. It was 1000 cap venue, and we had to basically borrow about $800,000 in 30 to 45 days to not blow the lease or our debt with the bank. And so it's where it's a funny story. We're I'm told I should go meet with this lender, and he owns the bank, and so we go and meet with them, and he's like, let's go. Let's go to happy hours, two o'clock in the afternoon, which is usually a earlier happy hour for me. And so he calls me the next day right before I show up. And he's like, I need to, like, are you playing ping pong? You know how to play ping pong? I'm like, Yeah, but not good. He's like, Well, find the best ping pong player, you know? And so I'm like, Okay, this is getting weird. But I mean, we're desperate, right? If we don't do this, we lose our loan, we lose they say everything falls apart before we even get started.
Jonathan Dodson 12:08
And so I call one of my buddies who he has played so much ping pong at the time, he had tennis elbow from playing so much ping pong, and so I called him dude, like, well, you are player. And he's like, I got you. I will not let you down. I'm your man. So we hang up couple hours like we're getting ready to go. I'm headed to go to this building. And he calls me, and he's like, Hey, dude, I got another meeting today, so I sent one of my other friends like to play on my behalf. I've never met this guy before, and so he's like, just he's good, he'll be fine for you. Don't worry about it. So I meet this guy in the parking lot. He's like, so what are we playing for? And I'm like, I don't know. I don't know what's going on. So we ride up the elevator, and the toilet flush, and the door opens, and this guy walks out in gym shorts, and the guy that I'm with goes, oh shit. And I didn't know this, but the two of them knew each other, and they were in ping pong. They, like, competed in ping pong tournaments against each other, and so they see each other, and they're like, what is happening?
Jonathan Dodson 13:07
So what gets laid on the table is this guy's like, All right, I'll give you $350,000 which is what we need to finish out. This the rigging for the music venue. He's gonna give you 350 and I'll give you this interest rate if you win the ping pong game, if you lose, I'm only gonna give you 300,000 and it's gonna be at a more expensive rate. And so, like, we're like, I mean, I mean, I would have been like, hey, this feels highly not right, right. You're savage. So me and my two buddies, like all guaranteed that we just sit down and I'm just sweating. I mean, it is like, and it goes, get like, game five, match set seven times over, and we lose. And so the difference, for me the difference between 300 and 350,000 at that point. 50,000 at that point is like, it's, it'd be like, if you said, pull a million dollars out of your pocket or or not, right? I'm like, I don't have $50,000 so to me, it's like, it's over. And so the loan officer is like, well, we'll do this. We'll let you play one more time. I'll give you your 350 but you're gonna pay 200 basis points more if you win. And so again, we're like, we got nothing right, no one else is gonna give us the money. And so our guy smokes him, I mean, smokes him in straight sets, come to find out, he had never lost to him until that one match that they had. And that loan officer who owned the bank is now no longer owner of the bank, and is in a little bit of trouble, because I think he was doing more of those kind of things. But we got the loan, and so we borrowed, and have since paid off that debt, and we sold the music operating company. We still own the real estate.
Atif Z. Qadir 14:54
So what I find so interesting is, as you took us through this rabbit hole of history of Oklahoma, and termed it very correctly, so the wild wild west. I wonder if things actually have or have not changed since then.
Jonathan Dodson 15:14
What I would say is that he is no longer owner of the bank. So things have changed enough, at least that like he I think there were probably some red flags, but when sometimes you're desperate, finding a ping pong ball game that will get you that extra $50,000 was worth it.
Atif Z. Qadir 15:32
I think that when there is a Robert Moses style book about Jonathan Dodson, the story is definitely going to be included in that one. And as a motivation to listen to this whole episode, I know there are going to be more stories like this one, great. I love it. Welcome to Oklahoma. We talked about your early inspiration. We know about your the moral backbone, the spine that you have you also have a really good backhand, or you have somebody that, you know, something that has a really good backhand. But how does all this come together into the the mission of your company, of Pivot Project?
Jonathan Dodson 16:07
Excellent. And that is where I want to make the pivot to talking about OK Market Hall. Is that the official name for the project,
Jonathan Dodson 16:07
Yeah, so really, we kind of have, I would say, we have one continuous mission. But our values and our purpose have evolved over time. And so when we did the Tower towers on old route 66 and it was a pretty tight there was some developers who had a lot of courage and did some stuff, but Tower was kind of like this. It's got an iconic neon sign, and it was just drug the whole area down. And so when we were able to redevelop that and really turn it into something, you started to see how the community engaged in that space. And we had people who had gone to movies in the 30s, and they they were like when they were a baby. We really started looking at some of these old assets, and some of it was by default, right? We still didn't have any money, but we figured that one out. So we really went on a little run where we basically focused on historic rehab projects that were complicated that we could repurpose and bring value into the community. So we had a guy in Boulder who is at Avery Brewing Company. And it was like, dude, come back. We'll let you have ownership in the real estate be the flagship brewery in Oklahoma, Oklahoma City. And he did that right. And so we were, we were trying to pair people with buildings. We really did that all the way up until about Covid time, and we felt like it was meaningful. And they were mostly local tenants, and they were making a difference.
Jonathan Dodson 16:39
It's Medley Market. Is gonna be the name of it, medley market. Okay, yeah, so I'll quickly digress. We can get to medley market, but we in 2020, we basically when the rest of the world shut down, we kind of had a Who are we as a company? And so if there's developers listening, typically, your dev fees are anywhere between, for us, at least on these $20 million projects, are four to 6% and so if you're doing a $10 million project and you get a 6% fee, you can do the math right, $600,000 and so our burn rate, though, at that time, in terms of our lease, not even paying partners, but leasing space and some upfront costs and staff, we were burning about 50k a month. And so what was happening is these projects take three years, really, a year of planning, Inception, a year of construction, and then a year to stabilization. So three years and you only have essentially, what like 12 months of salary. So you start trying to stack complicated projects, and that doesn't work very well.
Atif Z. Qadir 18:44
So because you only have four, four kids to use as your backup for your personal guarantee, what four projects you can use?
Jonathan Dodson 18:50
Then, you know, like before the time. And so I said we, we either needed to kill pivot or we needed to rethink pivot. And one of my partners is a super entrepreneurial guy. He's fascinating he was. And so he's like, I kind of want to go back to my roots. So he left. And then my other business partner, he had some family stuff going on, and really trying to take care of his aging parents. And so he said, I probably got a year in me, and then I need to kind of reset and go take care of some stuff. And he's like, but I'll support you as you do that. And so that allowed me to bring Candice, who had really been in the company since inception, make her my partner. And we said, Okay, we're really gonna focus. And you know, New York City, this may buy you a lot, but for us, it was 20 to $50 million was kind of our price. What we needed enough dev fees to go hire people that we thought really could help us and bring a level of expertise we didn't have, and so we closed on Medley Market about, let's see, six or seven months ago. And so it was an old furniture building before that. It was a, I think it was a car shop, and they had parts and stuff that they kept there. And so we're converting it to 24 multi family units and then a market hall. Itself, and then we'll have structured parking with climate controlled pickleball on the rooftop. So that's a it's been a fun project to take down, and it's really required our whole team to engage in that.
Atif Z. Qadir 20:11
How did you find the site and what was your evaluation process like?
Jonathan Dodson 20:15
Yeah, so we were hit up by a guy who had it under development, and he couldn't the numbers. He was just having a hard time making the numbers work. And some of his real issues were he was looking at some pre covid pricing for what he had done, and then covid happens, and you've got everything costs 40% more, so he's kind of stuck. So we said we would come in and help him. And unbeknownst to him, one of the partners in that project who was in charge of the money, had been severely mismanaging the money, and so we asked to audit their books before we jumped in, because we were basically going to recap all of this into a new project. And as we audit it, we found anywhere from a half million to a million dollars of somewhere between fraud and mismanagement from one of the investors. And so we bring the whole team together, including the guy who committed it, and we the fraud. And we're like, Okay, guys, we're just gonna be honest. And we had the investors, some of these people, like, had one of the investors had significantly sacrificed the help, right?
Jonathan Dodson 21:13
And so you bring all these people in a room, and you're like, This is what we found. And the guy who had done all of this, he didn't have any shame. He was like, So what are we gonna do now? Like, what's the plan? And I was one of those moments where I was so surreal to go, Oh, you don't have shame at all, right? Like, this is you don't even see this as a problem. So it became pretty contentious, obviously, after that. And really, the developer, who'd been working for four years on this deal. To his credit, he just said, I would rather the project go forward than be a part of it. And he knew that he was being connected to this guy who was created, who had committed all the fraud and all of that. And so he left the project. We kicked the other guys out of the project, we recapped it, and we really kind of re underwrote it. And you know how hard deals are right now, right? I mean, it is hard financially to make a deal work. And so really what we did was we have, it's another historic tax credit project. So we had about $4 million in equity. We sold the federal and the state credits. We have mezz debt. We have bridge debt. And so it's really those five forms of capital got us to the finish line closing.
Atif Z. Qadir 22:25
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Atif Z. Qadir 23:18
So you mentioned tax increment financing. Could you explain what that means for anyone that may not know?
Jonathan Dodson 23:30
Yeah. So I'll go through the three kind of forms that we use in general. One, the historic tax credits. Every state's different, but you usually get 20% of what they consider qualified funds for reimbursement, right? And so if outside of your purchase cost. So if you go through all these hoops and hard and soft costs and million dollars, you can get 2 million of state tax credits. In Oklahoma, you can also get 2 million of federal credits. And so eight tax credits, you would get 90 cents on the dollar. Ish and federal, you're gonna end up in the upper 70s to mid 70 cents on $1 that was one thing. I'm assuming they have this in other communities. And then the last one is PACE financing. C PACE financing. And so there that is very much a county by county deal across the country. And Oklahoma has pretty favorable C pace. Texas is not as favorable, and it was like in New York. That's the other kind of component to the capital stack,
Atif Z. Qadir 24:28
Sure. And just to add some color to what Jonathan just said, so CP stands for commercial property assessed clean energy, and the idea is that forms a part of the capital stack as long term, low interest financing with no upfront costs, and typically the repayment is on the bill, the utility bill, as opposed to part of a lien on the property. That is a little crash course in alternative financing and talk to me about besides the fraud. Was there any other messy history that you would like to share with our listeners about this property?
Jonathan Dodson 25:06
Well, yeah, there's a couple of things. One is one of the things that I think we did well on this, before I go into some of the funnier stuff, is, when you have a market all you really got 12 people who are working in close proximity to each other. And so, you know, cities that are larger really understand the difference between a food hall in a market, but really, for cities who don't know, don't have that differentiation market halls is where you're you're selling maybe a sandwich, but you're also making the bread, or there is a maker's component to it. And so us, it was trying to find, well, who are we going to find in Oklahoma City that not only are good makers and can make good food, and this isn't their first, but they could get along with each other, that of us going out and trying to do it ourselves, we actually brought in a food critic who has really good relationships to all the restaurants. And so we just said, Hey, we'll pay you a fee. Help us find out who should talk to. Kate Kaufman, it really was the genius behind Central Market. We hired her in and brought her in as well to help the combination of those two really elevated our knowledge base, because we just we'd never done a market hall before. So, yeah, you were asking about funny stuff. Well, so we've always developed on the edge. And so we've always our thesis is we chase asset appreciation and cash flow. So are we developing in a place that, in 10 years, is going to be worth more than it is today? And so usually that means we have to be on the bleeding edge of something, right? And so our we've had all sorts of things in our buildings over the years, but in the stoves building. We actually had, I mean, it was like an underground black market marijuana ring running of it, and so we kept,
Atif Z. Qadir 26:50
and I'm guessing that was before it was legal in Oklahoma, right?
Jonathan Dodson 26:53
Oh, it's still, like it was during. It is, like, it's crazy. I don't know why. I guess there is a black market out there. We have no idea. We don't know why we're doing that, and they may have been doing other things. We don't know. We kept bringing the police in to move them out, and they kept coming back in in real sport. I mean, we're talking it got so bad that the cops finally told us, and they had been working with us, but they said we we can't even send our dog in anymore because of how dangerous it's getting in there. We because the dogs will get high. I think there was, there was guns, there were Shanks, there were needles, oh, there's, Oh, you meant dangerous. Okay, yeah. So we're like, we're confused on what to do. We keep boarding it up. I mean, we're spending money every week, and we're trying to get closed and, you know, there's all these things happening. And so one day I get a call, and it's from, he's a well known property owner in the community, and He is hilarious. I mean, on his business card, it says his name, and then it says fancy cars, real estate, dancing women and manure and so, like, I don't even, oh, I don't know if that means he specializes in he's just like, you just so he I find out he needs to talk, and I don't know why, right?
Jonathan Dodson 28:06
And so I go up to his office, and he kind of tells me his whole story, which is fascinating. And then he's like, you know, we got a problem. He said, one of you people living in your building came over to my building last night, came to the top floor and turned the water on and plugged all of the the drains and flooded my office building. He's like, we, you know, we're gonna have to make this right. And I'm like, Dude, I one is, how do you know it was? I mean, I like, I'm not saying it's not, but, like, anything, I got a can. And I was like, okay, or that, and I was like, Oh, I don't have any money. And he's like, Well, we're going to need to pick up the security. And I said, we're trying like we're doing, like we're we can't. None of the women aren't even allowed to go to that building right now because how dangerous it is. And he says, Well, I'll take care of your security. And I'm like, I don't know if that's the best plan or not, you know. And he's like, no, no, no, no, you don't need to pay me. This is what I love to do. And so for free, over the course of a 60 day period before we closed on our loan and could start demo, this guy came in with his other guys, and they basically had, like, it was like, pepper spray, and they would just shoot it in the room and clear everybody out, and so all of the, like, everything went away. Now there was still graffiti. I mean, some of the graffiti is amazing. There's one that says, like, Hey Tony, give me $60 or my weed back, right? And there's obviously way more perfect stuff. But like, the level of time these guys spent in this building was amazing, but for 60 days, Chris kept our buildings completely empty of people, and so we are incredibly grateful for the free security service that he provided on that space, and we probably will need to name a drink or something after him when we open the bar up.
Atif Z. Qadir 30:02
This is amazing. And I've you can't make this stuff up. This is, this is just too good. That's the reality TV show. Okay? Developer, this is, this is totally and for people that are interested in learning more about food holes, I'm gonna include the links to two articles, one from Vogue, which highlights Denver Central, which is the project that that Jonathan mentioned as inspiration for Medley Hall, and then also an article from Newsweek earlier this year, which lays out some of the 10 Best Food halls. And when that article is republished in 2026 it's going to include Medley as well then.
Jonathan Dodson 30:43
So I hope so. I hope so. Yep,
Atif Z. Qadir 30:46
I feel like we might just like have to end the interview there, because I don't know how much better we're gonna get. So we talked about fraud, we talked about marijuana, pepper spray, the cops giving up ping pong games. So I want to find out about the team that brought this project together. So you mentioned Kate from the Denver City Market fame, but talk to me about the designers, the commercial partners, whoever else you think is critical in getting this off the ground.
Jonathan Dodson 31:15
Yeah. So I mean, I want to give, and this isn't any order of importance is just as my brain thinks of the people. To mention one with Matt Dean. Matt we met him through ULI. He's a he's branding and marketing, but he went and learned real estate before he got into branding. And so we this is the first project we've gotten to work with him on, and he's been amazing to work with. And we brought him in since the beginning. That was great Liv out of Denver, AHMM, and then we, oddly enough, have two general contractors on this so. And then we brought in in 22 or 2023 we brought in a lady who had had 15 years of experience in large scale construction. And really we brought her in to be an owners rep. She is really good at building things, and so she's doing the Cowan is doing multi family, and she is actually doing the market hall and the pickle ball. And so we're self performing that, which is really fun to watch her work with the team and do the thing there, and I think we'll probably continue to do more work over time with pivot construction. She's awesome. So that's really the team. And then you've got the development team, right, really running it, and so Candice. And then she's really took this from, okay, we've got all these problems. Can you fix it? And she's taken from that, really, to we're under construction. We're digging all the trenching right now. Framing is up for multifamily. So it's amazing how far this project has gotten, and this is such a difficult time to develop.
Atif Z. Qadir 32:51
Okay, so you talked about difficult time. So the most beautiful word in the English language, you know, is tariffs. So tell me about how that's impacting you, because everyone's writing the news, la, la, la, tires, construction costs. But actually what's happening? And then you're building a commercial development in the era of E commerce, experiential retail. Nobody wants to buy regular, big box stuff. I don't know all of that froth too. So how are you making this work?
Jonathan Dodson 33:24
I would say that it has taken a lot of work to figure out how to problem solve some of these increases, and some of them are just like windows or something where you're like, we got to have windows. And if it's historic tax credit project like this is you, you're really tied to a certain type of window that you're gonna have to use. The way that we have viewed it is, you really, as a developer, have levers you can pull right increase my rents, can I decrease my debt cost? Can I assume a little increased access booster? Yeah, exactly. Can I find other funds to help? And then, from the general contracting side, it's really, how do I create efficient and pricing and what things can be cut without damaging the integrity of the design, right, like what they are. So really, it's taken loose production side, being hyper aggressive, on figuring out what can we cut. And then it's taken campus, really, what things can we and we were originally going to keep the federal credits, and what realized was that we really need to sell. And, you know, I think the the positive spin on this is we underwrote this at 8% or eight and a quarter, and we're not at eight, right? But from a borrowing costs perspective, it's great. And so for there is a period of time where we'll might be able to actually capture hidden value and decreasing debt cost, which, for the first from 2014 on, it was you always gonna go up. You never thought that, oh, below three and a quarter, right? So this is an interesting time that, if a development makes sense now. So it will make sense in the future.
Atif Z. Qadir 35:02
Totally. This is where it's like, the all the all the lipstick on a pig stuff is cleared off the table, and it's the real stuff. Okay, so speaking of real stuff, okay, we're gonna put on our meta quest. Three headsets, co branded with American building. So Mark Zuckerberg, if you're listening, let's do a collab. There's so many cool projects we could do this with our listeners. Are going to put their their virtual, virtual headsets on, and imagine walking through your project as it's finished. So describe to folks, so they get a visual what they're going to see as they walk through the door.
Jonathan Dodson 35:36
Yeah. So hopefully you didn't drive there blind, because what you would have seen as you drove there would have been a historic automobile alley. And so it's all it stumps you into, like downtown Oklahoma City, and it's all these really well preserved brick buildings. And so we are just off of auto alley to the east, and we're right next to the railroad tracks. And so the railroad tracks go by us 20 times a day, and it's, it's basically a communal watering hole. But what we're really trying to do is elevate the food, the food offerings and the building. And so you'll have pizza, you'll have we've got a chef who's actually, he's, he is gonna open up a spot there. So we got pizza, coffee, tacos. We've got really a mix all these. We've got a baker all these different types of food. And then tucked adjacent to the building on land we don't own because the railroad owns it, we have a bar that, and the bar is probably eight feet wide, and so that will be a very special place to drink. There will be no noise transfer, and a portion of them will have huge decks that overlook downtown Oklahoma City. And then I would just say, you know, we've got our pickleball courts. I think the thing that we realized was important as you're thinking about the human experience when you go into a place. And so really, what Kate has helped us do is find a POS system that integrates all of the different market hall concepts and the pickleball so that you're not you're just tabbing out once, and it will, it will cut the checks as it needs to go. It will tip a 40. And so, you know, as a father of four, it's like when my wife and I will take them, it's super frustrating because you're just walking around and swiping right something like that integrated, I think will be really important for the way that people experience it.
Atif Z. Qadir 37:29
Amazing. So you are the type of developer that thinks about the details of how the spaces are being operated, as well as the large scale, which is really nice to hear. So a lot of what you talked about is hilarious, funny, amazing, and a lot of it came together, or all of it came together because of the people. You have a very distinctive approach to your team and how you set up ownership and compensation that really brings team members into development that is very different than my experience when I was at xtel development, and I know that the experience of many of my friends from undergrad and grad that worked in real estate, what their experience was, and that's what kind of pushed many of them to start their own businesses. So explain your model and how you allocate fees, share upside and reward great contributions like Kate we mentioned earlier.
Jonathan Dodson 38:26
Yeah, so Kate is one of the ones who taught me this. So we really she had agreed to a fee even prior to us coming on with the previous developer who had that building. And so one day, we were all together, and I just said, Kate, what's your retirement plan? And so she started talking about it, and I realized, like there was some depth there, but I didn't think she understood her full value. And so I said, Okay, I want you to get I said, Let's do a zoom call next week. And so we pulled up. We have a development spreadsheet that basically lists every stage in the development, and it assigns kind of a percentage of the development fee that you get for that work. And I said, Okay, let's just go through our development spreadsheet, and don't tell me how much we paid you, but let's just figure out what you would get if we would have done this before we signed a contract with you 12 months ago. So we go through it all, and then I'm like, okay, so she doesn't know what number I'm gonna give her. I'm like, what do we pay you for this? And she said she gave me a number, and I said, we should have paid you six times more than that, and that would have been a fair development fee that you would have gotten had you just known it. And so what she told me in that moment was she said, No, I've been doing this forever, but no one's actually shown me what my value is, and I think that's one of the things that you know. You and I have talked about this before, but I think a lot of us think if we just had more power, we could fix things. If I just have or then I can make things right. But what history has taught us is that people in power usually don't fix things right. They can try, but the more power you get, usually the more damage you can do.
Atif Z. Qadir 39:59
You begin to start interrupt, but you began the interview with the best example of that as someone that abuses their role to take advantage of somebody else.
Jonathan Dodson 40:08
Yeah, yeah. And so for me, it was like, actually, I think translation is the most important thing that we get to do for other people. And so I will give you an example of another way that someone has done that. For me, we were doing a project on the east side of Oklahoma City, which is Oklahoma City, which is historic African American, black side of the city, and one of my buddies calls me and he says, Hey, I need you to go meet me at this place. Doesn't give me any background, so I pull up and meet with him, and it's, it's right next to our site that we're getting ready to develop. And he said, I want you to meet this guy. And I'm like, What is this about? He's like, don't ask questions. Just come in and meet him. And so he opened this door, there's this guy. He's a barber. He's cutting the guy's hair. The dude is ripped, and he's probably six foot four, and he has one photo on his wall, and is a photo of JB, and there's two guys in there playing NBA, 2k and so you can tell there's an affection, just as friends, between this guy and JB, and they start talking. And so this guy just starts asking me questions, and I answer the questions as best as I can for 10 minutes. And finally he said, Okay, you're good. You guys, have a good day. And so we leave, and I'm like, JB, what just happened?
Jonathan Dodson 41:14
And he's like, Well, that guy, I needed him to, like, bless you. And I was like, but I like how he's like, Well, he's an OG. And I'm like, Okay, I know what OG stands for, but like, what does that technically mean? And then he's like, No, he's made and I'm like, Dude, you gotta help me. And he's like, What? He's untouchable on the east side. And what JB did was he risked his reputational capital to get me to meet with someone who could basically make sure that our building didn't get touched when we were developing it. And I never would have known one that that was a person to talk to. Two, I never would have had, like the gut or the wherewithal to know how to do that. And JB, like he interpreted right a moment in time for me that I couldn't have back. And so I think when we start looking at the best forms of where I think as humans, we do, well, it's when someone is either giving a bit of their world to us and interpreting and making sense, or we're getting to do that for somebody else. And so within the development process, there's all these games and all these things that we know, and it's kind of like we all secretly know them, but closing that off and saying, This is ours instead opening it up, I think it is actually a way better process.
Jonathan Dodson 42:25
And so, like, We're doing another project with Kate, and guess what we're using to figure out what her contract is going to be worth. It's the development especially, yeah, yeah, it's a spreadsheet, right? And like, she's gonna wait make, she's gonna make money on this project that she should have been making because of the value that she creates, and she would not have ever known that that was actually the financial value she creates had she not had something like that. So to me, that is like meaningful step one. We even think about what is our role as developers, and what are we trying to do? It's we're interpreting things, and we're allowing we're trying to build relationships so that people can interpret to us the things that really matter, and so that all takes some level intentionality of listening and also being brave enough to go for something amazing.
Atif Z. Qadir 43:11
And that's basically thinking of a development team as not something that you extract value from, or a zero and one zero sum game. It's actually human beings. I dig it. I think this is, this is a really nice, nice way of talking about your approach, your business, the way that you want to be thought of. So I think that brings us to the most important question, which is, Do you enjoy being a developer, and what is it that keeps you motivated to do all the crazy that you described and more tomorrow and the day after the day after?
Jonathan Dodson 43:53
Yeah. So I think one is, I love the people I get to work with. So the team that we have at Pivot is really impressive, and so many of them are way better at what they do than I could ever be. And I don't say that and like, it's false humility. It's actually true, and it's necessary a developer, by we talk about this all the time, a developer is really trying to ask the right questions to get the best out of other people. So I enjoy that I had never really led anything before. And so when my other two partners decided to step away and I CEO, part of it was me trying to learn the muscles in my brain and my heart that I had not learned before by leading a team. And so I'm in the process of that. And so there's some days where it's hard, there's other days where I feel like I'm making strides, and then I get to I get to cross paths with amazing people. So developers really just create covers to a book, but tenants are the storytellers, right of the city, and so the fact that I get to engage with storytellers on a daily basis and see what kind of stories they're telling makes me. Happy, and I guess, like that's the best just the combination of, I'm getting to work with people who are better than me at what they do. I'm getting to learn new things, and I'm getting to be around storytellers in this city, that's a pretty special place to be
Atif Z. Qadir 45:13
Amazing. So in order to fuel you to be able to do this amazing work, let's do the ask. So you're currently raising money for the development of a hotel across the street from the market hall. Is that correct?
Jonathan Dodson 45:28
That's correct. Yeah.
Atif Z. Qadir 45:28
And okay, tell us more.
Jonathan Dodson 45:30
Yeah. So it will be, we're in early design, but it looks like it'd be 44 keys, heavy, heavy component of food and beverage. Kate, who was Denver Central Market, were actually agreed to move. I've worked really hard at convincing people to move to Oklahoma City, but she's going to move to Oklahoma City, and she's actually going to help us operate it. She has about 30 years in hospitality experience. She'll actually be a part of that deal. And so we're gonna probably need to raise $6 million on that project, and we will do historic tax credits, and we will be bringing it out for fundraising in a formal way in January or February of 2026, so right around the corner.
Atif Z. Qadir 46:17
And if folks are interested, how do they reach out to you?
Jonathan Dodson 46:20
My email, which is or my phone, I'm happy to give you either if you
Atif Z. Qadir 46:25
want to, if you want to. I'm going to prank here I know,
Jonathan Dodson 46:29
like, here's No So Jonathan, jonathan@pivotproject.com is the easiest way. I'm also on LinkedIn. So you can send me a message on LinkedIn, and I will happily respond to that. So either one of those ways is great,
Atif Z. Qadir 46:44
great and American building listeners get a free night at the hotel. And the code that you're going to use is A, T, I F, R, U, L, E, S, and that's the code. Make sure you wrote that down for 2028 occupancy,
Jonathan Dodson 46:59
definitely, definitely, yes.
Atif Z. Qadir 47:03
So that brings us to a wrap. This is one of my most favorite interviews so far, John. So thank you so much for spending your time with us today.
Jonathan Dodson 47:13
Hey, thank you. You're awesome, and I'll see you hopefully in Arkansas.
Atif Z. Qadir 47:17
I'm Atif Qadir, and thanks for joining me on American Building. If you enjoyed this episode, be sure to subscribe on your favorite listing app and leave a rating and review. America's housing crisis is one of our greatest challenges. But what are the real solutions? Hear from the developers and other industry experts driving meaningful change. Get our exclusive guide housing in America, eight ways we can solve our way out of a crisis at Americanbuilding podcast.com.