A Texas multifamily developer has closed only the second project in state history to be financed entirely with 100% tax-exempt municipal bonds, demonstrating a rare approach that could shift how cities address the persistent workforce housing crisis. The $200 million workforce housing fund behind the deal is noteworthy, but it’s the financial structure of the Denton, Texas project—a 461-unit mixed-income community—that may prove most significant.
JPI, the Dallas-based developer, partnered with Berkadia to launch the workforce housing fund, targeting cities wrestling with population growth and soaring housing costs. The recently closed Denton project stands out for its unique model: the entire development is funded by fixed-rate, tax-exempt municipal bonds, with no upfront capital required from the city. Under the arrangement, the Denton Housing Authority becomes the owner of the asset, building long-term equity for the city while giving up potential developer profits.
“This structure is innovative in that it lets the city own the equity in a project without having to commit capital up front,” Mollie Fadule, Chief Financial and Investment Officer at JPI, told GlobeSt.com. “Typically, JPI owns the equity, but under these structures, the city benefits financially as the property grows in value over time. They’re able to hold, refinance, or reinvest that equity into other municipal priorities. It’s not your traditional affordable housing financing by any means.”
Half the units at the new Denton property are reserved for renters at restricted income levels: 5% at 50% of area median income (AMI), 10% at 60% AMI, and 35% at 80% AMI, with the remaining half available at market rates. Fadule described the community as one designed specifically for essential workers—teachers, nurses, and public employees—while maintaining a mix of affordability and quality amenities. She credited JPI’s in-house bond specialist, brought on five years ago, with helping devise a replicable model that uses municipal bond markets to address housing shortages.
For cities, the costs of capital through this structure are far lower than traditional private financing—and critically, the city “has no upfront cost to be able to own this project,” Fadule emphasized. “JPI develops and builds the project, and the city creates equity in the asset over time. The developer gives up the profit in the project, but the city is able to benefit as it appreciates.”
JPI says this approach also creates close alignment between public and private interests. “The city becomes the long-term owner, and as guarantor of the project, we shoulder the construction and performance risk,” Fadule said. “It’s not a structure we’ve seen other developers use. We expect to replicate it in other high-demand cities in Texas, as well as in North Carolina and Washington State.”
The broader $200 million workforce housing fund, underwritten by JPI and Pinnacle, targets four projects across Texas, California, and Washington. Sites include a 295-unit community in Oceanside, California, a 224-unit project in Redmond, Washington, and a 393-unit property in the Dallas suburb of McKinney—all selected for proximity to job centers and persistent demand for workforce housing.
With the cost of homeownership climbing out of reach for many middle-income households, JPI’s leaders see tax-exempt municipal bond financing as a tool for both boosting rental supply and delivering economic upside directly to municipalities. “It’s our goal to be building housing supply in every market we enter,” Fadule said. “More supply across the income spectrum benefits the cities, renters, and the country at large.”
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