Bill Targeting Structure Of Muslim-Led EPIC City-Type Projects Passes Texas House

A bill being considered by the Texas Legislature could upend the way developers of a Muslim-led master-planned community in North Texas — and those that follow in its footsteps — gather investors.

A bill passed by the Texas House would require companies to inform potential investors that they are purchasing interest in a business rather than physical property. It would also prevent businesses from receiving fees or proceeds should an investor opt to sell their interest in the company and bar faith-based developments from limiting home sales to a certain religion, The Dallas Morning News reported.

Rep. Candy Noble said she was inspired to co-author the bill by the business model for the planned 402-acre community near Josephine being developed by members of the East Plano Islamic Center.

EPIC City, as the mixed-use development is named, requires investors to purchase an $80K share of development company Community Capital Partners to reserve lots in the community. Investors then get a 15% discount and an $80K credit on the purchase of a lot in the development.

The community in Collin and Hunt counties is slated to include more than 1,000 homes, multifamily and senior living facilities, a K-12 faith-based school, a mosque, clinics and retail space. 

But it has faced a gauntlet of political hurdles before even breaking ground.

Issues began brewing in late February when state Rep. Jeff Leach asked Texas Attorney General Ken Paxton to investigate the planned development, as he said it may “incorporate elements of Sharia law.” EPIC City has since tallied at least four other investigations from the Texas Rangers, the Texas Workforce Commission, the Texas State Securities Board and the Texas Funeral Service Commission, as well as a Department of Justice civil rights investigation.

Community Capital Partners President Imran Chaudhary called the allegations “shocking” in an interview with Bisnow last month. 

Noble was unavailable for comment on the legislation but said in an April hearing that EPIC City was no typical subdivision or planned community, according to the DMN.

“It’s innovative in design, creative in structure and completely outside of what we’ve anticipated in Texas law,” she said.

Community Capital Partners called the legislation unnecessary. Since its shares are an offering of securities in a private transaction, state and federal laws require the company to monitor sales to prevent violation of private placement rules, a spokesperson for the developer told the DMN.

But the company won't prevent the “transfer of interests to other individuals” in private transactions, the spokesperson added. 

Comparing Community Capital Partners' structure to a lease-purchase agreement, Dallas attorney Jay Madrid told the DMN that he sees the bill as incomplete. 

“To me, the good thing would be an assurance that at the end of whatever payment period … the investor now has the right to purchase the land itself or that the monies that it has paid for the (share) now goes to securing that deed,” Madrid said.

The bill is now in the hands of the state Senate.