Devon Zuegel

We think that if you're playing a long game and you really think that this is going to be a long-term value, it's worth not taking a loan. The downside of that is that when you do borrow and you leverage your returns and if things go well, you end up with higher returns because you need less equity to fund the project. So that's what you're trading off when you're deciding on equity versus debt.

We think that if you're playing a long game and you really think that this is going to be a long-term value, it's worth not taking a loan. The downside of that is that when you do borrow and you leverage your returns and if things go well, you end up with higher returns because you need less equity to fund the project. So that's what you're trading off when you're deciding on equity versus debt.

And so what we're doing is we're purchasing the land, all equity. Then the infrastructure stage, because it's one click farther, is a bit less risky. Have the land, you have the approvals, so you know what you're going to be allowed to build. There's still other risks in the future that... may affect the returns, like market demand. Did you actually do a good job of predicting what people want?

And so what we're doing is we're purchasing the land, all equity. Then the infrastructure stage, because it's one click farther, is a bit less risky. Have the land, you have the approvals, so you know what you're going to be allowed to build. There's still other risks in the future that... may affect the returns, like market demand. Did you actually do a good job of predicting what people want?

In our situation, the whole Esmeralda concept, it's got some examples of it working. Chautauqua works well, and there's other communities I've studied that I think are really good comparables. But at the end of the day, there is nothing quite like it in this part of California, and there's real risk that we're wrong.

In our situation, the whole Esmeralda concept, it's got some examples of it working. Chautauqua works well, and there's other communities I've studied that I think are really good comparables. But at the end of the day, there is nothing quite like it in this part of California, and there's real risk that we're wrong.

And so in that situation, it's one click farther in the it's maybe a slightly better idea to take debt than when you're doing it at the land stage. But there's still a lot of risk in that situation. We have not decided exactly how we're going to fund the infrastructure.

And so in that situation, it's one click farther in the it's maybe a slightly better idea to take debt than when you're doing it at the land stage. But there's still a lot of risk in that situation. We have not decided exactly how we're going to fund the infrastructure.

We're in talks right now, actually, with several investors who are interested in doing a full equity deal, both for the land purchase and for infrastructure build out. And that's really exciting to us because We wouldn't be as dependent on interest rate fluctuations, but it could go either way. And I think that there's arguments on both sides.

We're in talks right now, actually, with several investors who are interested in doing a full equity deal, both for the land purchase and for infrastructure build out. And that's really exciting to us because We wouldn't be as dependent on interest rate fluctuations, but it could go either way. And I think that there's arguments on both sides.

Then getting to the vertical and housing, which is more related to the mortgages that we were talking about. I think that mortgages make buying a home a lot more affordable for people. And there's a lot of good reasons to use mortgages. And my view is that there's other ways that we could de-risk the project to make it attractive to lenders. There's a few specific choices that we've made.

Then getting to the vertical and housing, which is more related to the mortgages that we were talking about. I think that mortgages make buying a home a lot more affordable for people. And there's a lot of good reasons to use mortgages. And my view is that there's other ways that we could de-risk the project to make it attractive to lenders. There's a few specific choices that we've made.

For example, many of the homes in the community will be fee simple lots. So basically people will just own their lots outright, which makes the ownership model a lot simpler and more straightforward. other things that are very tactical, but important where we plan to have zero lot line homes instead of townhomes, which have a shared wall.

For example, many of the homes in the community will be fee simple lots. So basically people will just own their lots outright, which makes the ownership model a lot simpler and more straightforward. other things that are very tactical, but important where we plan to have zero lot line homes instead of townhomes, which have a shared wall.

And from the outside, they both look like townhomes, but in the zero lot line model, you don't share a wall with your neighbor. And so again, the ownership is a lot simpler. And so there's a lot of tactical decisions like that, that we can make that I think that allow it to fit cleanly into a mortgage lender's box. while still actually being quite innovative and interesting.

And from the outside, they both look like townhomes, but in the zero lot line model, you don't share a wall with your neighbor. And so again, the ownership is a lot simpler. And so there's a lot of tactical decisions like that, that we can make that I think that allow it to fit cleanly into a mortgage lender's box. while still actually being quite innovative and interesting.

To do innovative stuff, especially at the urban planning stage, that is the place where you really don't want to take on the debt. But I think as you go through and you get closer to finished product that you can sell to people, it makes less of a difference and you get more of a benefit.

To do innovative stuff, especially at the urban planning stage, that is the place where you really don't want to take on the debt. But I think as you go through and you get closer to finished product that you can sell to people, it makes less of a difference and you get more of a benefit.

Property tax. Different cities and states have different property tax levels. People who own a home or a building will pay something on the order of 1% a year on the value of their home back to the state. Property taxes are very unpopular. Taxes in general are pretty unpopular. And so in California in particular, there's this rule on the books called Proposition 13, which was passed in the 1970s.

Property tax. Different cities and states have different property tax levels. People who own a home or a building will pay something on the order of 1% a year on the value of their home back to the state. Property taxes are very unpopular. Taxes in general are pretty unpopular. And so in California in particular, there's this rule on the books called Proposition 13, which was passed in the 1970s.