Part of a series on right-sizing capital

Jill Castilla had just driven under the giant railroad trestle on Broadway Extension outside Oklahoma City when Jonathan Dodson reached her on Bluetooth.

“I have a deal,” he started. The young developer had previous successes in the city, Castilla knew, including a rehab of an old theater. She listened as he described the benefits of his latest project: A former service station would be occupied by a health clinic, which would in turn spur retail development in a second building. A fitness center. A restaurant. Then he uttered the words that had sunk his pitch with 25 other banks.

“It’s on the East Side.”

When Dodson called Castilla, the East Side of Oklahoma City hadn’t seen a private real estate development in 35 years. The retail consisted of scattered pawnshops, a KFC, and a CVS; a locally owned radio station is the only bright spot. There were no sidewalks and few bus routes. Elderly people traversed a busy highway in motorized wheelchairs to get to the grocery store.

The East Side of Oklahoma is a mostly black, mostly poor neighborhood that is also home to the state capitol and a large medical complex. Those are like castles in a sea of poverty complicated by hard-edged race relations. When Dodson, who is white, called Castilla, he was one in a long line of developers who had tried and failed to make something happen for the residents of East Side. Lenders were wary, red-lining was a real, and the community, burned after all those years, was hostile.

With the help of Castilla and an East Side community leader, Sandino Thompson, Dodson’s project, East Point, ended up being different. The innovative process and capital structure is now drawing local and national attention.

“We desperately need more investment and entrepreneurship along northeast 23rd Street,” said Oklahoma City Mayor David Holt by email. “I think this will be a catalyst,” he added. “I think [Jonathan Dodson’s] extremely inclusive and empathetic approach in a historically African American district is innovative,” he said. “Some of it is the way he listens.”  

When it comes to economic development in areas that have long been starved of investment, there are typically two key issues: One is that trust has broken down. The other is a lack of investible opportunities. The small businesses that could, together, create enough jobs to make a difference are too small individually to receive investment, and often aren’t ready for it, anyway.

Most approaches to reviving areas like OKC’s East Side are policy based. But it’s worth noting that Opportunity Zones, the pre-eminent current policy to steer investment to areas that need it, was no help at all on the East Side. The funds that have been raised to take advantage of the tax incentives typically look for much bigger deals, and individual investors who are motivated by tax incentives often look for the least risky situations. The breadth of Opportunity Zones means there are much less marginal districts, even in OKC, that still qualify — in fact, one of Dodson’s other projects in a gentrified district, is also in an Opportunity Zone.

On OKC’s East Side, the key ingredients turned out to be, first, passion, and second, relationships between people who had power and resources of the traditional kind, and people who had social capital.

A Friendship at the Heart of the Deal

To understand how the East Point project happened is to look at why three key players were open to working across boundaries: Dodson, Castilla and Thompson.

A stylish, talkative black man, Thompson left OKC after college to work for a construction company in the Southeastern US. “After a project that included rebuilding over 600 units of housing and seeing a devastated community come back to life I started to think about how the communities I grew up in in Oklahoma City could be a part of the ‘renaissance,’” he said via email.

He returned to OKC in 2010, and he and Dodson eventually met through city organizations.

They established a relationship. Slowly.

“One day, I’m going to like being your friend,” Thompson told Dodson at some point, probably, he said, after one of Dodson’s earnest and naïve (Dodson’s word) questions about racial dynamics.

Oklahoma has an inspiring and horrific race history. The black community had been particularly active in fighting Jim Crow laws in the early 1900s. In 1921, in Oklahoma City’s sister city, Tulsa, white rioters looted and burned an affluent black community, “the black Wall Street.” As many as 300 people were massacred.

The East Side had grown up in the 1940s and 50s as a red-lined black suburb of OKC. Poverty grew entrenched even as Deep Deuce, Ralph Ellison’s home and a center of black music and culture close to the city’s heart, slowly gentrified.

Thompson encouraged Dodson to consider developing in East Point. He knew there would be obstacles, but he was willing to put his reputation on the line to work with Dodson.

That, as far as Dodson was concerned, was powerful. After years of failed ventures, East Side neighbors were downright hostile to outsiders. “If developers show up in all their whiteness, there would be riots,” said Erica Emery, one of two sisters from the East Side whose real estate firm, Monarch Property Group, is active in the city.

“Once or twice a month, I get a call from a someone working on a project. They want a black face involved,” said Monique Short, Emery’s sister.

Thompson knew collaborating with an outside developer carried risk. If the project failed, or worse, extracted wealth from the community, he’d be considered a turncoat.

In Dodson, however, Thompson found a person with a heart for the work.

The son of parents who worked in evangelical nonprofits, Dodson started his career as a banker. But two events changed his life’s path, forcing him to consider what happened to people without the same power and privilege he had because he was a white man.

One day, he heard his boss at the bank tell an assistant: “If you don’t have sex with me, you’ll lose your job.” Dodson reported the executive, who was given a year off with pay. The female underling was given two months to find a new job.

Dodson resigned. As his family’s financial situation slowly deteriorated, he found unexpected generosity in a developer friend, David Wanzer. “On my 35th birthday, he handed me a contract and said, ‘Why don’t we tackle [this project] together?’” With Ben Sellers, the trio scored some successes in the urban core.

The Effectiveness of Right-Sizing Capital

In 2017, armed with what he thought was decent knowledge about how to get a deal done, Dodson visited the East Side with Thompson. They located a two-piece property with potential, a shopping center and a former service station.

They needed to lease to area tenants to win local support for the project, but they didn’t want those tenants to be gentrified out if the project succeeded. They came up with a lease structure they thought might work: In exchange for signing 10-year leases at $16.50 – $18.50 triple net, tenants earn equity in the property. When one wants to cash out (after 10 years), the property will be re-appraised, and money will be borrowed to issue a payout.

That structure is essentially right-sizing capital: If Dodson could find an investor or lender to put money into building, they’d also be supporting the growth and long-term health of local businesses.

Dodson obtained the city’s commitment for $2.6 million in economic-development financing on the $9 million project and found an anchor tenant, Centennial Health, to open an outpatient clinic in Phase One.

With that solid capital structure in place, Dodson started approaching lenders in 2017-2018. “We had done 15 deals as a development company. We had an anchor tenant,” Dodson said. “I thought this would be an easy project.”

He thought wrong. Even though the city had agreed to fund $1.2 million in incentives on Phase One, which was a $4.3 million project, and although an equity partner and community supporter put in an additional $600,000 for both phases, the rejections started piling up.

A couple banks said, “We don’t lend money over there,” meaning the East Side, even though red-lining is illegal.

Others said they couldn’t find comparable sales necessary to appraise the property, or suggested that Dodson needed another guarantor. So he lined up a commitment from a wealthy friend. “He had more single malt Scotch than debt on the loan,” Dodson said.

The banks still said no.

An Unlikely Ally Emerges

As the months rolled by, Centennial tried to pull out, and one of Dodson’s other projects ran into trouble. “Out of a 10, I was a 10,” in terms of his level of fear, he recalled. Then, Dodson remembered Castilla, who runs a bank unlikely to lend in the urban core.

The Citizens Bank of Edmond is small (with $300 million in assets) and it’s in a suburb. When Castilla joined it seven years ago after leaving the Oklahoma City Federal Reserve, it was the worst-performing bank in the state.

She took a creative approach to solving the problem: In hundreds of phone calls, she asked local customers to move their high-paying CDs out of the bank. Slowly, the bank’s ratios righted themselves. “When we were in trouble, when our backs were against the wall, people came to us and said, ‘What can we do to help?’” Castilla recounted.

Under her leadership, the community saved the bank, whose largest shareholder is its employees. “There’s a special place in my heart for communities that are pulling themselves up,” Castilla said.

Dodson’s Plea

On the phone that day in her car, she listened to Dodson. “We’ll find a way to get to yes,” she said. After she thought it over, she asked Dodson to get Steve Mason, a local entrepreneur who had sold an engineering firm and is active in development projects, to sign on as an additional guarantor on the bank’s debt.

“I have faith in our underwriting,” she said. “I knew it was a good deal.”

About a month later, the bank approved a market-rate loan for $2.6 million.

Nothing has been easy since. Tenants have signed letters of intent and backed out. “We had it leased three times over,” Dodson said. The project is generating enough cash to cover the debt service, but it won’t be cash flow positive until more of it is leased.

But, today, the first tenants at the EastPoint project have moved in. The health clinic is open for business. A restaurant called Family Affair will be reopening soon. Local rapper Jabee, is opening another restaurant. And Kindred, a bar in which Thompson has an interest, is opening.

There’s also an optometrist, a nonprofit – Oklahomans for Criminal Justice Reform – and an art gallery launching soon. Thompson plans a co-working space for people in the creative economy. And there’s a fitness center, the first tenant up and running in Phase Two.

Emery, of the Monarch Property Group, said she drove by not long ago and said to herself: “There are black people working out at the gym. I’m like, ‘Look at y’all.’”

Emmanuel Sosanya opened Intentional Fitness in October. A former Orangetheory coach and a fitness instructor who traveled to people’s homes, he’d always thought of opening his own brick-and-mortar studio. “I was determined to take the quality of an Orangetheory, but where it was really needed,” he said.

Memberships are $69 a month. The studio has 120, with a goal of 400. It’s not breaking even yet but Sosanya, whose wife is a Realtor, is in it for the long haul. So is Dodson, who says that he’ll consider EastPoint a success when the first tenants receive substantial checks for their equity.

This story and others on New Builders Dispatch are made possible by a sponsorship from the Ewing Marion Kauffman Foundation. The Ewing Marion Kauffman Foundation is a private, nonpartisan foundation that provides access to opportunities that help people achieve financial stability, upward mobility, and economic prosperity – regardless of race, gender, or geography. The Kansas City, Mo.-based foundation uses its grantmaking, research, programs, and initiatives to support the start and growth of new businesses, a more prepared workforce, and stronger communities. For more information, visit and connect with and

A business journalist for 20 years, am the founder of Times of Entrepreneurship and the co-author of The New Builders.