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Closing October 29, 2025 – CC October 21, 2025 – P&Z August 27, 2025 – P&Z June 25, 2025 – MOU May 20, 2025 – CC February 18, 2025

District: 3 | Southwest Denton

Closing 10/29/25

NRP’s 297-unit Roselawn Village deal closed on October 29, 2025. The transaction executes a 99-year ground lease partnership involving the Denton Housing Authority (DHA) and a private limited partnership. Truist Bank anchors the capital stack, providing a $67,175,000 construction note and acting as the fiscal agent for $49,000,000 in tax-exempt multifamily housing revenue notes issued by the Legacy Denton Public Facility Corporation. Rather than seeking a zoning change, the developer leveraged the City of Denton’s Affordability Incentive Program to secure density-boosting variances—specifically a 20% height increase and reduced parking ratios—in exchange for a 30-year set-aside of 20% of the units at deeply affordable levels. This deal layers municipal incentives with tax-exempt bond financing and private equity from Truist Community Capital, creating a complex but high-leverage capital structure that necessitates strict adherence to multiple overlapping regulatory agreements regarding tenant eligibility and income restrictions.

The financial architecture of Roselawn Village relies on a bifurcated loan structure and significant equity syndication managed by Truist Bank. While the initial May 2025 term sheet contemplated a construction facility of up to $75,960,000, the final closing documents executed in October 2025 reflect a tightened construction promissory note of $67,175,000. The project is further supported by $49,000,000 in tax-exempt Multifamily Housing Revenue Notes issued by the Legacy Denton Public Facility Corporation. The capital partner, Truist Community Capital, is providing tax credit equity pricing at $0.905 per credit dollar, aiming for a total equity contribution estimated at $32,225,086 based on the initial pro forma.

The Memorandum of Understanding (MOU) reveals aggressive fee-sharing and cash-flow participation for the Denton Housing Authority (Agency) in exchange for the tax exemption and land leverage.

The equity pay-in schedule is back-loaded to incentivize performance: only 15% of equity is funded at closing, with 20% at 50% completion, and a significant 29% held until stabilization and final closing. The Developer (NRP) provides robust guarantees, including a Net Worth covenant of $5MM and Liquidity covenant of $2MM.

The development delivers 297 units with a weighted average affordability of 60% AMI (Income Averaging), though the specific regulatory agreements impose different "floors" for compliance.

NRP’s deal must satisfy two distinct regulatory regimes. The City’s Incentive Agreement requires a 20% set-aside for 30 years, while the Bond Regulatory Agreement requires 40% at 60% AMI.

City Council 10/21/25 & P&Z 8/27/25

The project requires substantial off-site improvements to bring the surrounding roadway up to municipal collector standards.

The Developer is required to reconstruct Roselawn Drive along the site frontage. The existing 24-foot paving section must be widened to 39 feet within a 65-foot right-of-way to meet City Collector Street standards. This includes removing a "hard ninety-degree turn" at the southeast corner and replacing it with a sweeping radius.

Due to topography, the project utilizes a private lift station on-site that pumps to a private 4-inch force main. This line encroaches into the public ROW to connect to the city sewer, requiring a $42,920 license fee and a specific construction requirement that the line be bored rather than open-cut to preserve the roadway surface.

City Council 2/18/25

The project secured an initial key municipal approval on February 18, 2025, when the Denton City Council passed Resolution No. 25-103 with a 5-2 vote. This resolution provided the state-required "Resolution of No Objection" for the project's 4% Low-Income Housing Tax Credit (LIHTC) application and included necessary waivers for the "Twice the State Average of Units Per Capita" and "One Mile Three Year" rules. The development's financial structure relies on a 100% property tax exemption, enabled through the PFC's controlling interest in the project's General Partner.

According to the May-June 2025 application documents, the total development cost is $93,554,799, which equates to $314,999 per unit. The project is financed through $49,000,000 in Private Activity Bonds issued by the Legacy Denton Public Facility Corp., another DHA instrumentality. The debt structure consists of a $75,960,000 construction loan and a $47,460,000 permanent loan, both provided by Truist Bank. The permanent loan has an estimated interest rate of 5.95% with a 40-year amortization and a 17-year term. The LIHTCs are projected to generate $32,225,086 in investor equity from Truist Community Capital, calculated from a credit price of $0.905. A $6,494,613 deferred developer fee is also a key component of the financing sources.

The project will serve families using an income-averaging model, with units restricted at 30%, 50%, 60%, and 70% of the Area Median Income (AMI) to achieve an overall project average of 59.83% AMI. The stabilized pro forma projects a Net Operating Income of $3,581,354 and a Debt Coverage Ratio of 1.15x.

While financing and initial political support are established, the project's entitlement process is facing a critical deadline. The Final Plat (Case FP25-0022) was on the agenda for the June 25, 2025, Planning & Zoning Commission meeting. City staff recommended denial of the plat as submitted, citing numerous points of non-compliance with the Denton Development Code. The applicant requested, and staff did not object to, a 30-day extension to address the issues. That extension was granted to a date certain of July 23, 2025.

The May 20, 2025, Memorandum of Understanding (MOU) between The NRP Group and the Denton Housing Authority (DHA) establishes a financial and operational framework that heavily favors the developer while delivering the critical 100% ad valorem tax exemption. The structure effectively trades a share of the project's economics for control, risk mitigation, and a clear exit path for NRP.

– Economic Splits: The core financial trade-off is clear. NRP receives 65% of the 15% developer fee, with the DHA receiving the remaining 35%. After all priority payments, long-term cash flow and proceeds from any sale or refinance are split 50/50. In exchange for this significant economic participation, the DHA's financial contributions are limited. However, the project budget must cover a $75,000 administrative fee to the DHA at closing, in addition to $150,000 for its legal counsel and $125,000 for its owner's representative.

– Risk & Control: The MOU assigns all meaningful risk to NRP, which provides all financing, operating, and completion guarantees. The DHA provides no guarantees. In return, NRP, as the Special Limited Partner, retains substantial control, with approval rights over budgets, property management changes, rent increases, and any sale or refinancing. This structure ensures that while the DHA is the General Partner, the experienced developer maintains day-to-day and strategic control.

– Downside Protection: The most critical developer protection is the "loss of exemption" clause. If the tax exemption is lost for any reason other than NRP's gross negligence, the DHA forfeits its General Partner interest, the ground lease terminates, and fee simple title to the land transfers to the partnership. This provides a powerful safeguard for NRP and the tax credit investor against political or administrative risk from the public partner.

– Exit Strategy: The MOU provides NRP with a well-defined, two-pronged exit strategy post-compliance. First, it has the right to "put" its interest to the DHA for a nominal $100, offering a simple and clean exit. Second, and more importantly, NRP retains the perpetual right to market the project for sale, ensuring it can realize the asset's appreciated value. The DHA's only recourse to prevent a sale is to exercise its Right of First Refusal, which requires matching the third-party offer.

The Roselawn Village project has substantially matured between its initial presentation for the February 18 council approval and the submission of its formal tax credit application in June. The updated documents reveal a development that has not only grown in scale but has been fundamentally re-underwritten to reflect current market costs and a more conventional financing structure. The project expanded by 9 units, from 288 to 297 units, triggering a cascade of adjustments that increased the total development cost by nearly $7 million, from $86.56 million to $93.55 million. This pushed the all-in cost per door from $300,573 to $314,999.

One of the most noteworthy evolutions is the de-risking of the capital stack. The initial structure included a $3.2 million GAP loan, which is no longer present in the updated sources and uses. That gap was filled by upsizing the primary financing sources, indicating strengthened commitment from the senior lender and equity partner. The permanent loan from Truist Bank increased by $6.65 million to a total of $47.46 million, while the tax credit equity from Truist Community Capital grew by $2.69 million to $32.23 million. This equity increase was driven by both the larger project size and a slight improvement in the credit pricing, from $0.90 to $0.905 per credit dollar. For the development team, this results in a simpler, more secure two-party capital structure for the permanent financing.

The developer fee itself also saw a material change. While the total fee increased from $8.23 million to $8.93 million, the deferred portion decreased from $6.85 million to $6.49 million. This means a larger portion of the developer's compensation is now projected to be paid from the initial financing sources rather than being dependent on future cash flow. In the February structure, 83% of the fee was deferred, whereas in the current model, that figure has improved to 73%.

The operational underwriting was also recalibrated across the board. The Gross Potential Rent increased substantially to $5.56 million annually, reflecting the added units. In a corresponding adjustment, the vacancy assumption was made slightly more conservative, rising from 7.0% to 7.5%. The projected expense ratio improved, decreasing from 34.88% to 31.62%. The critical outcome of these adjustments is that despite the higher costs, increased debt, and shifting operational metrics, the project was re-underwritten to maintain the precise stabilized Debt Coverage Ratio of 1.15x, satisfying the lender's threshold. The AMI mix was also fine-tuned, increasing the share of 50% AMI units from 7% to 10% of the total, while slightly reducing the 30% and 70% tiers, all while keeping the overall income average stable at 59.83%.

Based on the "Agreement of Purchase and Sale," NRP has not yet closed on the land, as the anticipated closing date is October 14, 2025. This date is a projection that is contingent upon the developer exercising available extensions and satisfying all closing conditions outlined in the agreement.

City Council 2/18/25

The NRP Group secured a 5-2 council approval in Denton for Roselawn Village despite the Mayor’s concerns about more tax-exempt projects in Denton.

In February 2025, the deal metrics were: $86.56 million total cost ($300,573/unit), positioned on 22 acres in District 3, with rents spanning $515-$2,020. The financing stack leverages $40.81 million in tax-exempt bonds (2.75% + SOFR/36 months), generating 4% credits that yielded $29.54 million in equity at a $0.90 price point.

Key to the deal's feasibility is NRP's partnership with Denton Housing Authority (DHA), which provides full property tax exemption worth $543,000 annually. The DHA board approved two separate resolutions in April 2021 - one for family apartments and another for senior housing on the same site - indicating a broader development strategy.

The tax exemption strategy sparked significant council debate. Mayor Hudspeth highlighted that Denton has nine tax-exempt multifamily properties while surrounding cities average 1-2:

Council Member McGee's response suggests continued support of tax-exempt affordable housing.

Local politics revealed shifting sentiments about affordable housing in Denton. The project had previously received approval in 2021 but stalled due to infrastructure constraints. Mayor Pro Tem Meltzer noted the community meeting dynamics:

NRP's application benefited from Denton's recently approved affordable housing toolkit incentives. The site's Mixed Use Neighborhood zoning permitted multifamily by right, though tax credit approval required council action. This zoning advantage proved significant given increasing regional resistance to multifamily entitlements.

Developer: The NRP Group, Nick Walsh (VP of Development) Phone: (708) 941-0199 Email: [email protected]

Public Partner: Denton Housing Authority (DHA) / Denton Essential Investments PFC

Original Owner: The Rayzor Company (19.13 Acres), Philip Baker Phone: (940) 387-8711 Email: [email protected], Denton ISD (2.86 Acres)

Capital Partners:

Representatives:

2/18/25 4% RONO Staff Report: Roselawn Village

ROW / Final Plat Staff Report: FP25-0022

Pro Forma: Roselawn Village PF

Closing Documents: Regulatory Agreements / Deed of Trust

Project Plans: Roselawn Village Plan

Memorandum of Understanding (MOU): Roselawn Village MOU

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