Image courtesy of Elkus Manfredi Architects

A $173 million tax-exempt bond from MassDevelopment will finance Tufts University’s largest dormitory project, a partnership with a private student housing developer.

Site work is beginning on the 664-bed dorm at 401 Boston Ave. in Medford.

Tufts is partnering with Capstone Development Partners of Birmingham, Alabama on the 10-story, 270,000 square-foot building project, designed by Elkus Manfredi Architects.

MassDevelopment, the state’s finance and development agency, issued the bonds on June 18 through a public offering underwritten by Barclays Capital, MassDevelopment spokesperson Kelsey Schiller said.

The development entity, PRG Medford Properties Inc., ground-leased the property near the Medford/Tufts MBTA station on June 18.

Medford officials approved the project in February. After residents in the Hillside neighborhood objected to the height of the building, the development team agreed to a community benefits package that includes a $500,000 contribution to the city’s affordable housing trust fund and a $500,000 contribution to a neighborhood improvement fund. The developer also will sponsor a free public shuttle service to Medford Square.

Completion of the project, led by Burlington-based Erland Construction, is scheduled for August 2027.