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MHFC June 16, 2025 – MOU May 19, 2025 – CC April 7, 2025 – CC February 17, 2025 – P&Z February 10, 2025
District: 4 | Southwest Mesquite
313-Unit Mixed-use HFC | 23701 IH 635 | Approved
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DISTRICT: 4
Torrington Briarwood 23701 IH 635
Southwest Mesquite | 38 Acres | 313 Units | CC: Approved | Bonds: Reserved | MOU: Executed
Mesquite HFC 6/16/25
Transaction Documentation | Approved
MOU 5/19/25
Executed
JPI executed their MOU with Mesquite Housing Finance Corporation on May 19, 2025 and received financing document approval on June 16, 2025 for their 313-unit Torrington Briarwood development at 23701 LBJ Freeway. The deal structure shows how Mesquite is positioning their HFC deals in 2025 - total developer fee landed at $10,959,396 (~11.75% TDC) with HFC taking 30% ($3.3M) as PILOT payments to the city. This compares to the $11.1M developer fee shown in the January pro forma, suggesting some compression during negotiations.
The financing structure reveals R4 Capital came in as the equity investor through R4 TBTX Acquisition LLC, replacing Regions Affordable Housing from earlier documentation. Regions Bank remains the construction and permanent lender per April commitment letters, but they're no longer providing the tax credit equity.
U/ Finance
Ground lease payments start at $138,000 annually during the 15-year compliance period, escalating 3% yearly, then jump to $215,000 post-compliance. These flow directly to the City of Mesquite as PILOT payments and sit behind developer fee in the waterfall. The HFC also captures a $10,000 annual GP management fee with 3% escalation that gets paid before developer fee - a priority position worth noting.
The construction team structure shows Recon Foundation as the general contractor with JPI Construction as master sub. This arrangement caps total construction fees at 14% including a 2% contingency. The split payment terms give HFC leverage - they receive 50% of their contractor fee share at closing and 50% at completion.
Key deal points for developers evaluating Mesquite opportunities: HFC takes 1.5% of gross proceeds on any future sale or refinancing after developer fees and loans are repaid. The developer bears all predevelopment risk - if the deal dies, there's no HFC reimbursement for any costs incurred. Legal fees run the greater of 1% of bonds or actual hourly charges through Bracewell LLP, payable regardless of closing.
Term | |
|---|---|
HFC Developer Fee | 30% of $10,959,396 Developer Fee ($3,287,819 ) |
HFC Management Fee | $10,000/year + 3% escalator |
HFC Contractor Fee | 50% of General Contractor fee due at closing, 50% at construction completion |
Lease Payment to HFC | $138,000/year during compliance period + 3% escalator; $215,000/year after compliance period + 3% escalator |
First and Subsequent Sale/Refi Fee | 1.5% of gross proceeds from sale or refinancing (after payment of Developer Fee, Developer loans, and guarantor reimbursements) |
Contingency | 2% contractor's contingency for Contractor or Partnership use |
The 35-day timeline to form the GP entity after bond allocation creates a tight window. HFC only joins at actual closing, meaning all pre-closing actions need handling through developer affiliates. The developer also carries responsibility for maintaining the ad valorem tax exemption throughout the compliance period, with failure triggering a forced transfer of both GP interest and land at no cost.
Exit flexibility remains with the developer partner who can market the property freely after Year 15. HFC holds a right of first refusal with 120 days to match any third-party offer. Purchase price mechanics protect the tax credit investor with formulas ensuring their target returns plus coverage for any credit delivery shortfalls.
The property management contract caps at 4% of effective gross revenues going to RPM. A $5 million umbrella liability policy requirement covers both HFC and the GP. Bond-related fees total 0.5% at closing plus 0.25% annually (dropping to 0.125% after year two), while Hilltop Securities takes $2 per $1,000 bonds plus a $20,000 base as financial advisor.
Financing Evolution
1/11/25 – 5/19/25
The financing structure has undergone strategic refinements since the initial January pro forma through the May MOU execution. The most significant change is the shift in tax credit equity provider - R4 Capital entered as the equity investor through R4 TBTX Acquisition LLC, replacing Regions Affordable Housing from earlier documentation. While Regions’ initially proposed equity terms of $38,461,364 at $0.88 per credit could be be subject to change with R4, they could retain their role as construction and permanent lender per the April 2, 2025 commitment letter terms.
Per April commitments: Regions Bank provides a $44,818,922 first-lien construction loan and $25,703,864 bridge loan, both at 5.80% variable rate (SOFR plus spread) for 36 months with 6-month extension options. The permanent loan will convert to $44,020,464 as a FNMA M.TEBs product at 5.80% fixed for 15 years on 40-year amortization - a reduction of $798,458 from January projections.
The total developer fee compressed to $10,959,396 (~11.75% TDC) from the January pro forma's $11,094,825, with the deferred portion increasing to $10,272,708. This adjustment, combined with $500,000 in Lease-up NOI that appeared as a new source in April documentation, helps offset the permanent loan reduction while maintaining project feasibility.
Comparing the progression from January pro forma to current structure:
January 2025 Pro Forma:
Tax-Exempt Bonds: $50,000,000
Construction/Permanent Loan: $44,818,922
Bridge Loan: $25,703,864
LIHTC Equity: $38,461,364 (Regions at $0.88/credit)
Deferred Developer Fee: $9,478,096
Total Sources: $93,258,382
Current Structure (per April/May docs):
Tax-Exempt Bonds: $50,000,000
Construction Loan: $44,818,922 (April)
Permanent Loan: $44,020,464 (April)
Bridge Loan: $25,703,864 (April)
LIHTC Equity: TBD (R4 Capital as investor) (May)
Deferred Developer Fee: $10,272,708 (April)
Lease-up NOI: $500,000 (April)
The bond-to-basis ratio remains at 56.91% of the $87.86 million aggregate basis, maintaining qualification for 4% LIHTC generating $4.37 million in annual credits. While the specific R4 Capital equity terms aren't disclosed in the MOU, the deal structure suggests comparable pricing to maintain feasibility.
Debt Service Coverage
The April commitment letter shows the project maintains minimum 1.15x DSCR throughout years 1-15 per the attached pro forma. The cash flow projections show:
Year 1 DSCR: 1.17x
Stabilized operations improving to 1.44x by year 15
Effective gross income growing from $5.11 million to $6.74 million
NOI expanding from $3.38 million to $4.16 million
These metrics held constant despite the financing adjustments, validating the revised structure's viability. The non-recourse permanent debt terms formalized in April provide additional developer protection while maintaining lender requirements.
Term | Jan 11, 2025 | April 2, 2025 | May 19, 2025 |
|---|---|---|---|
Contingency | 3.04% | 3.04% | 2% (MOU) |
Permanent Loan | $44,818,922 | $44,020,464 | $44,020,464* |
Investor Equity | $38,461,364 | $38,465,210 | TBD (R4 Capital) |
LP Ownership | 99.98% / 0.01% | 99.98% / 0.01% | Not confirmed |
Construction Loan | $44,818,922 | $44,818,922 | $44,818,922* |
Bridge Loan | $25,703,864 | $25,703,864 | $25,703,864* |
Total Financing | $93,258,382 | $93,258,382 | TBD |
Land Acquisition | $3,000,000 | $3,000,000 | $3,000,000* |
Soft Costs | $9,422,827 | $9,422,827 | $9,422,827* |
Developer Fee | $11,094,825 | $11,094,825 | $10,959,396 (MOU) |
Deferred Dev Fee | $9,478,096 | $10,272,708 | $10,272,708* |
Hard Costs | $49,945,344 | $49,945,344 | $49,945,344* |
Financing Fees | $11,538,137 | $11,538,137 | TBD |
Reserves | $1,838,000 | $1,838,000 | $1,838,000* |
LIHTC Equity | $38,461,364 | $38,465,210 | TBD |
Additional | - | Lease-up NOI: $500,000 | $500,000* |
Loan Terms | - | Non-recourse | Non-recourse* |
*Per April pro forma | Bold = Changed/New info | TBD = To be determined
U/ Product
The development features 47 one-bedrooms, 148 two-bedrooms, 106 three-bedrooms, and 12 four-bedrooms, with an average unit size of 986 square feet. The affordable housing mix targets multiple income levels with 10% of units at 70% AMI, 80% at 60% AMI, and 10% at 50% AMI. JPI's Karsten Lowe presented the project, emphasizing their 35-year local development history and position as the largest multifamily developer in the metroplex for the past 8 years.
The development includes significant amenities: gated access with security cameras, 24-hour fitness center, resort-style pools, outdoor grilling areas, and walking trails. JPI incorporated feedback from council members in their design, including more two and three-bedroom units (Rodriguez-Ross's request), urban corridors (Green's suggestion), and creating a prominent presence along the 635 corridor (Boroughs's input). The property will maintain a natural green buffer between the apartments and neighboring residential areas.
The 14.84-acre multifamily tract is part of a larger 38-acre PD rezoning split into four tracts: 3 acres Light Commercial (maintaining existing self-storage rights), the 14.84-acre multifamily A-3 tract, 18.35 acres of multifamily A-1 (height limited to two stories), and 1.4 acres of Single Family R-3. The A-1 tract's restrictions suggest townhouse potential.
JPI secured a reduction in minimum one-bedroom unit size to 660 square feet from the standard 725 square feet requirement.
U/ Infrastructure
JPI navigated several key modifications: eliminated masonry requirements for carport columns, reduced open space requirements, and secured flexibility on tree preservation requirements (only 15% of required trees in front yards). The access design routes primary traffic through Dean Street to Lake June Road, with emergency-only access at Avis Circle - a template that satisfied neighborhood concerns about cut-through traffic.
City Council 4/7/25
4% Res of No Obj, Bonds | Approved
JPI’s 313-unit affordable deal at 23701 LBJ Freeway in Mesquite was welcomed with open arms. The city council unanimously approved both their resolution of no objection and the issuance of $50 million in tax-exempt bonds through the Mesquite Housing Finance Corporation. This project fills what Mayor Alemán called "a missing middle" in Mesquite's housing market, positioned between luxury developments like Talia, Solterra, and Iron Horse, and addressing workforce housing needs.
Despite concerns from absent Council Member B.W. Smith about tax exemptions creating a burden on city services, Ted Chinn, Director of Finance, clarified that the Payment In Lieu of Taxes (PILOT) agreement would direct funds to the city to offset public safety costs. Chinn stated these payments would be comparable to normal property tax revenue, ensuring the city would get "basically the same amount of money that we would receive in property taxes" over the 15-year term.
‟The deal terms are such where certain share of the net revenues and developer costs that go into the project will come back to the city.
Council Member Tandy Boroughs, representing District 4 where the development is located, noted minimal community opposition with only two residents attending a meeting about the project. He highlighted additional benefits including water utility revenue and economic impact from new residents patronizing local businesses. Jeff Casper emphasized that these tax credit developments help retain essential community members like "teachers, city employees, young professionals, young families" who might otherwise be priced out of Mesquite.
The financing structure leverages non-competitive 4% housing tax credits through the Texas Department of Housing and Community Affairs, with $50 million in private bond activity through the Mesquite Housing Finance Corporation. Casper characterized this approach as "an asset that taxes Texas resources instead of the city of Mesquite budget."
‟Projects like these help keep Mesquite affordable for residents who live and work here—that'd be your teachers, your city employees, young professionals, young families starting up... Projects like these help stabilize young families into a school system or local school where they'd like to be and like to stay connected to their PTO, to that teacher, to their friends.
‟Every time we sit with a developer they talk about available workforce housing and a lack of it in North Texas.
‟This tool is really smart and more local communities need to have it to strengthen their community. It's not a drain, it's actually an asset that taxes Texas resources instead of the city of Mesquite budget.
JPI plans to break ground in June 2025. They've demonstrated market demand through two successful properties nearby in Balch Springs - Torrington Arcadia and Parmore Arcadia Trails - which total 450 units and both leased up in less than a year. The development will be built on previously undeveloped land with access challenges and floodplain issues that JPI has addressed in their site design.
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City Council 2/17/25
PD-MF(A-3) → PD-LC, PD-MF(A-3), PD-MF(A-1), PD-R-3 | Approved
The entitlement process for Torrington Briarwood revealed strong council support, passing with a 5-2 vote on February 17, 2025. The development required rezoning from PD Commercial and Multifamily Ordinance 2434 to PD Multifamily A3 District Track B. While the original application sought to rezone 38 acres across four tracks, technical notification issues limited the hearing to only Track B's 14.84 acres for the proposed 313-unit development.
Council dialogue focused heavily on existing entitlements. District 2 Council Member Kenny Green emphasized this point early in deliberations:
‟We're not really asking whether or not we're going to allow apartments here - we're asking are we going to allow the modifications.
This sentiment proved crucial, as the site's current zoning already permits up to 755 multifamily units by right.
The modifications requested included allowing four-story buildings within 300 feet of single-family homes, reducing minimum one-bedroom unit sizes from 725 to 660 square feet, and counting floodplain areas toward open space requirements. JPI's presentation emphasized their local roots as a 35-year-old Dallas-based developer, noting their position as the 23rd largest developer nationally in 2024.
Council Member Tandy Boroughs, District 4, who attended the prior Planning & Zoning meeting, supported the project stating:
‟We as Council have to try to figure out the best development that can go on a piece of property without the least disturbance to the neighborhoods.
He added that preventing development entirely would be inappropriate given private property rights.
Council Member Green described the Council’s influence on site design:
‟When JPI first approached us with this thing, the layout was a little bit different. We asked them to pull the buildings closer to the freeway to make it more of a visual appearance…If we were to deny this tonight then I believe we would end up with an inferior product.
The primary opposition voiced during public comment centered on flooding concerns and wildlife displacement. Longtime resident Richard Huckabee testified about historical dumping on the site and worried about the loss of trees currently buffering highway noise. The development team addressed these concerns by highlighting the preservation of wooded areas in the floodplain and proper engineering controls.
Project timeline in documents indicates:
Expected construction start: 7/31/2025
First units placed in service: 8/31/2027
Construction completion: 8/31/2027
Stabilized occupancy target: 2/1/2028
The 5-2 council approval included B.W. Smith, District 5, and Elizabeth Rodriguez-Ross, District 3, against the deal without explicitly stating their reasons.
Pro Forma Comparison
1/11/25 – 4/2/25
U/ Finance
The financing structure shows what's working in early 2025. Torrington Briarwood represents a 3-part structure leveraging tax-exempt bonds, 4% Low Income Housing Tax Credits (LIHTC), and multi-layered debt financing. The project demonstrates effective use of bond-to-basis ratios and equity stacking.
The financing structure begins with $50 million in tax-exempt bonds issued through Mesquite Housing Finance Corporation, representing 56.91% of the $87.86 million aggregate basis - comfortably clearing the 50% test requirement. This qualifies the project for 4% LIHTC generating $4.37 million in annual credits. Beyond bond issuance, Mesquite HFC maintains a crucial role as 100% owner of the General Partner entity through a subsidiary LLC, securing full tax exemption benefits for the project.
Between January and April 2025, several key adjustments were made to the financing package.
Regions Bank is providing comprehensive financing through three complementary vehicles. Their construction financing consists of a $44.82 million first-lien construction loan and $25.70 million bridge loan, both at 5.80% variable rate (SOFR plus spread) for 36 months with 6-month extension options. The permanent financing will convert to a $44.02 million FNMA M.TEBs loan at 5.80% fixed for 15 years on 40-year amortization.
The January 11, 2025 pro forma shows the permanent loan amount as $44,818,922. However, the April 2, 2025 Regions Bank commitment letter (signed by Graham Dozier) specifies the loan amount as $44,020,464. This represents a reduction of $798,458 from what was initially projected in January.
The decrease in permanent debt appears to be offset by the increase in deferred developer fee (from $9,478,096 to $10,272,708) and the explicit inclusion of $500,000 in Lease-up NOI as an additional financing source.
The tax credit equity component delivers $38.47 million ($0.88 per credit) through Regions Affordable Housing, structured in strategic installments: 20% at closing, 5% at 75% completion, 10% at construction completion, 25% at permanent conversion, 35% at stabilization, and final portions at 8609 receipt and first tax return. The April documentation shows a slight increase in equity amount from the January pro forma's $38.46 million.
A significant update in the April financing package is the explicit inclusion of $500,000 in Lease-up NOI as an additional financing source, which wasn't specified in the January pro forma. Additionally, the permanent loan terms now formally establish the debt as non-recourse with no personal liability for payment defaults.
The project maintains strong debt service coverage, starting at 1.17x in year one and improving to 1.44x by year 15. Operating projections show effective gross income growing from $5.11 million to $6.74 million over 15 years, with NOI expanding from $3.38 million to $4.16 million.
The development budget includes $8.41 million for site work and $37.36 million in building costs. Total development cost remains steady at $93.26 million, with the financing adjustments working within this total project budget.
Term | Torrington Briarwood Pro Forma 1/11/25 | |
Contingency | 3.04% | No change |
Permanent Loan | $44,818,922 | $44,020,464 |
Investor Equity | $38,461,364 | $38,465,210 |
LP Equity Ownership Percentage(s) | 99.98% Limited Partner, 0.01% Special Limited Partner | No change |
Construction Loan | $44,818,922 | No change |
Bridge Loan | $25,703,864 | No change |
Total Financing | $93,258,382 | No change |
Land Acquisition | $3,000,000 | No change |
Soft Costs | $9,422,827 | No change |
Developer Fee | $11,094,825 | No change |
Deferred Developer Fee | $9,478,096 | $10,272,708 |
Hard Construction Costs | $49,945,344 | No change |
Financing Fees | $11,538,137 | No change |
Reserves | $1,838,000 | No change |
Housing Tax Credits Equity | $38,461,364 | $38,465,210 |
Additional Financing | Not mentioned | Lease-up NOI: $500,000 |
Loan Terms | Not specified | Non-recourse with no personal liability |
Planning & Zoning 2/10/25
PD-MF(A-3) → PD-LC, PD-MF(A-3), PD-MF(A-1), PD-R-3 | Approved
The P&Z approval process revealed evolving Mesquite priorities. Commissioners focused heavily on security infrastructure (gated access with FOB entry required), site lighting, and long-term operational stability.
Community opposition proved manageable: four responses against within the statutory notification area and split feedback (1-1) from the courtesy notice area. The sole public speaker at P&Z focused on drainage rather than opposing the development.
During P&Z, commissioners emphasized long-term operational stability through detailed questioning about ownership structure, security measures, and site lighting.
Here are questions the commissioners asked:
‟Can you speak to the parking issues and your car plans and EV charges, and importantly is this an all-electric apartment complex or is it a combo gas and electric?
‟Will the ownership be local ownership or they out of state... the lighting that's one of the things we're always concerned about is crime and having the complexes well lit.
‟What type of security... yeah what type of security?
The development team's ability to address these operational concerns directly, while maintaining focus on the core affordable housing mission, contributed to the unanimous approval.
Developer: JPI, Payton Mayes (MOU) Phone: (972) 556-1700 Email: [email protected] LinkedIn, Karsten Lowe (HFC, Bonds, Zoning) Phone: (210) 493-8633 Email: [email protected] LinkedIn, Andre Warren (Site Plan) Phone: (972) 556-8948, Anish Joseph (Site Plan) Phone: (214) 451-5908, Blake Taylor (4%) Phone: (469) 693-4641 Email: [email protected]
Capital Partners:
R4 Capital (Tax Credit Investor – Prev: Regions Bank), Jay Segel Phone: (646) 576-7660 Email: [email protected] LinkedIn
Regions Bank (Construction/Permanent Lender), Graham Dozier Phone: (404) 279-7462 Email: [email protected] LinkedIn, Rachel Thomas-Phillips Phone: (512) 466-6742 Email: [email protected] LinkedIn
Public Partner: Mesquite Housing Finance Corporation (MHFC), Ted Chinn Phone: (972) 216-6287 Email: [email protected]
Zoning Representative: ZoneDev, Maxwell Fisher Phone: (945) 248-4167 Email: [email protected]
Owner: Selvi Pohar Phone: (469) 417-8187
Staff Report: Z1024-0372
Pro Forma: Torrington Briarwood PF
Bond Review Board: Torrington Briarwood BRB
Project Plans: Z1024-0372 Plan
Deal Scan: Torrington Briarwood DS
Memorandum of Understanding (MOU): Torrington Briarwood MOU
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