Firms Leverage Federal Tax Incentives to Stimulate Communities

SACRAMENTO—RevOZ Capital, a private equity investment firm specializing in Opportunity Zones, has formed a joint venture with Argosy Real Estate Partners to acquire an approximately 127,000-square-foot office building in downtown. The property at 660 J St. was acquired from SG Downtown LLC, an affiliate of the Sacramento Kings ownership group.

Construction is scheduled to finish by late 2021. The redevelopment reflects the continued emergence of the Downtown Commons (DoCo) district and is the latest in a series of investments by RevOZ in historically undercapitalized communities.

The four-story building will undergo significant rehabilitation, re-imagined as a mix of office and retail space, and complement the recently completed DoCo sports and entertainment district. DoCo includes the Golden 1 Center, home of the Sacramento Kings, as well as the Sawyer Hotel.

The property sits within a designated Opportunity Zone, selected in 2018 by then-governor Jerry Brown and the state to incentivize greater private investment and community benefit in specific census tracts.  Opportunity Zones are a bipartisan initiative established in 2017 by the federal government to stimulate sustained private investment in low-income urban, suburban and rural communities across the country. There are more than 8,700 Opportunity Zones nationally, 879 in California and 43 in Sacramento County, including nearly all of a downtown Sacramento area beset by decades-long poverty rates in excess of 30 to 40%.

RevOZ anticipates development and operations of the project will generate substantial new jobs and increased economic activity. As part of an emerging firm initiative focused on racial equity and social impact, RevOZ is also exploring new community partnerships.

“Once completed, 660 J will be home to hundreds of jobs. The economic impact will enhance the renaissance that downtown Sacramento has experienced in recent years, driven by the investments made into the DoCo district,” said Alex Bhathal, founder of RevOZ Capital.

The partnership has selected Cushman & Wakefield to market the property to tenants seeking an amenitized workplace at the epicenter of downtown Sacramento’s revitalization. With a renovation design planned by sustainable architecture firm LPA, the building will be LEED-certified with a minimized environmental footprint achieved through reduced energy consumption, water conservation and improved air quality.

Renovation plans include re-skinning the building’s exterior, recreating the building’s lobby, adding on-site amenities, creating new outdoor space, updating restrooms and modernizing building systems. The renovation incorporates several features as a response to the COVID-19 pandemic, including improved air circulation/filtration and enhanced touchless systems.

“The re-imagined building will attract corporate users, entrepreneurs and the like which are seeking a Bay Area atmosphere in Sacramento,” Ryan Parkin, managing partner of RevOZ, tells GlobeSt.com. “We think these will be COVID relocations, satellite offices or expansions.”

Despite the economic and public health headwinds presented by COVID-19, RevOZ has remained active in the Opportunity Zone marketplace. In recent months, the firm has also closed on Opportunity Zone projects in Indianapolis, Charleston, SC and Oregon, with several pipeline projects currently being evaluated. In addition, a May 2020 report released by the White House highlighted RevOZ’s investment in a children’s behavioral health facility in San Bernardino, CA as a national best practice.

“Opportunity Zones are more important than ever due to the economic and health issues the US has faced,” Bhathal tells GlobeSt.com. “While there has been a decrease in investing during COVID, the tax deadlines have been extended to the end of 2020 with the COVID relief package and this will result in an uptick in OZ investments.”