MINUTES OF REGULAR MEETING OF
THE HEALTH, EDUCATIONAL AND HOUSING FACILITY BOARD
OF THE CITY OF MEMPHIS, TENNESSEE
Wednesday, April 2, 2025
The regular meeting of The Health, Educational and Housing Facility Board of the City of Memphis, Tennessee (the “Board”) was held pursuant to public notice published in The Daily News on Wednesday, March 26, 2025, and continuously posted on the Board’s website at: www.memphishehf.com. The published meeting time was 12:00 Noon. The meeting was held in the conference room in the Board offices, located at 65 Union Avenue, Suite 1120, Memphis, TN 38103.
The following Directors were present:
Daniel T. Reid, Chairman Monice Hagler
Buckner Wellford (Zoom) Cliff Henderson
Howard Eddings, Jr. Vincent Sawyer
Courtnee Melton-Fant
Staff and others attending: Trey McKnight, Stephanie Bryant, JP Townsend and Nikki Abraham; Charles E. Carpenter, General Counsel; Katrina Shephard (Zoom), legal assistant to General Counsel; Cheryl Hearn, Deputy City Attorney; Janika White, Memphis City Council Liaison (Zoom).
Also participating in person and/or via remote Zoom virtual platform were Director Ashley Cash of City of Memphis Housing and Community Development (HCD) representing Cavelier Court and Gospel Gardens; Tie Lasater of KeyCity Capital and David Shores of Multi-South Management Services, LLC representing Grahamwood Place and Pinebrook Pointe; Chermeca Johnson of BGC Advantage representing MH Strategies Family RAD II, LP-College Park Projects; Daniel de Ojeda of Xela Capital, David Shores of Multi-South Management Services, LLC, Hunter Humphreys, Esq. of Glankler Brown, PLLC, Joe Gurley and Michael Rogers of Safeways all representing New Horizon Apartments; Michael Finch of MLK50; Simeon Ike of Greater Memphis Housing Justice Project; Shirley Bondon of the Black Clergy Collaborative of Memphis; Austin (A.T.) Harrison of Memphis Interfaith Coalition for Action & Hope (MICAH); Mike Humes; and several members of the public were also present.
With a quorum present, the regular meeting of the Board was called to order at 12:00 Noon by Daniel T. Reid, Chairman.
Chairman Reid stated that in compliance with the Open Meetings Law codified in Section 8-44-101 to 8-44-108 inclusive of the Tennessee Code Annotated, as amended, The Health, Educational and Housing Facility Board of the City of Memphis, Tennessee is holding its regular meeting on Wednesday, April 2, 2025 @ Noon as an open public meeting in its conference room located at 65 Union Avenue, Suite 1120, Memphis, Tennessee 38103.
Chairman Reid stated supplemental Board meeting materials could be accessed on the Board’s website: www.memphishehf.com and reminded all attendees participating via remote access to enter their name and affiliated entities into the Zoom platform for record keeping purposes.
Public Comment
Chairman Daniel Reid opened the floor for public comment and advised that all comments should be limited to two (2) minutes per speaker.
There was no public comment.
Approval of Minutes
Monice Hagler moved for approval of the Minutes of the March 5, 2024 Regular Meeting, which was seconded by Cliff Henderson and the motion passed unanimously after proper roll call vote of the Board members.
Attorney’s Report
Charles Carpenter presented the legal report, as follows:
1. Carpenter reported no new lawsuits to report from the last meeting.
2. Carpenter reported PILOT Activities for March 2025:
a. Tillman Cove PILOT property sewer easement was closed and recorded.
3. Carpenter stated that the PILOT Lessee Training Workshop that took place on March 24th, 2025 would be reported on later in the meeting and he would reserve any additional comment for that time. However, Carpenter stated that it was a well-attended and very successful meeting.
4. Carpenter reported that the most significant thing that has happened in the past month regarding the Board’s PILOT program has been through the Shelby County Commission. The Shelby County Commission PILOT Ad Hoc Committee has proposed a resolution to the full Shelby County Board of Commissioners requesting a 180-day moratorium on the issuance of PILOTs. This would have a very material adverse impact on the Board. Carpenter stated that he and his law partner, Corbin Carpenter, attended the Shelby County Board of Commissioners meeting on March 17th, 2025 and spoke on behalf of the Board, requesting that the resolution be returned to the PILOT Ad Hoc Committee for further deliberation. Carpenter stated that this request was approved. Chairman Reid asked if this is a 30-day stay to which Carpenter replied yes. Carpenter stated that the next PILOT Ad Hoc committee meeting will be held on April 17th, 2025, and one of the bases for the request to return the resolution to the committee level is that the committee has never asked for any information from the Board other than copies of PILOT applications for all active PILOTs. Carpenter stated that once the committee was advised that there would be tens of thousands of pages or more in documents, with over 125 active PILOTs In the program, the committee decided that was not what they wanted. Carpenter stated that the committee has not requested information regarding the mission of the Board's PILOT program, no results or other matrix to evaluate it, nor have any committee members spoken with anyone other than the Shelby County Trustee and the Assessor's office. Carpenter stated that his Firm was able to speak with other Commissioners to let them know the significance of what this action would be and advised that it takes several years at a time to put affordable housing deals together, and to have an arbitrary 6-month moratorium would cause significant devastation to the Board's PILOT program.
Carpenter stated that while it has not been currently confirmed, it is envisioned for the April 17, 2025 PILOT Ad Hoc Committee that his Firm, on behalf of the Board, would make a formal presentation about the Board and its PILOT program. Carpenter stated that there are approximately eleven (11) PILOT granting entities in Shelby County that this action would impact, but he believes that once the PILOT Ad Hoc Committee has been presented the information, it should make a difference, if not to the PILOT Ad Hoc Committee, then certainly to the full Shelby County Board of Commissioners. Chairman Reid asked Carpenter if the PILOT Ad Hoc Committee realizes the gravity of such a quick, uninformed decision. Carpenter stated that he does not, and he believes that the committee looked at preliminary reviews that Shelby County is losing X amount of dollars to PILOTs, which has accelerated their interest. Because it is a big body of information, law and facts to gather, the committee felt that putting a stop to everything would be the way they should move forward but it does not appear that they have considered much more information which has caused the fallacy to the entire analysis.
Cliff Henderson asked if the PILOT Ad Hoc Committee wants to apply the moratorium to all PILOT granting entities or only the HEHF Board, to which Carpenter responded they want to apply it to all PILOT granting entities. Carpenter stated the next PILOT Ad Hoc Committee meeting will take place on April 17, 2025 at 11:00 AM CT and his Firm has been coordinating with the City of Memphis, EDGE, and the Downtown Memphis Commission, which are the more prominent parties that are involved with this and there will be a formal presentation. Carpenter stated his Firm has asked all other commissioners to attend this meeting as well, and his Firm will be fully prepared to give a complete presentation at that time.
5. Carpenter reported receipt of a number of PILOT claims for maintenance liens or notice of non-payment on PILOT properties in the Board’s program:
a. Materialman’s lien of $36,100 filed against Jamesbridge Apartments from Haidee’s Remodeling;
b. Notice of non-payment for $10,053.54 filed against Jamesbridge Apartments from Sherwin Williams;
c. Materialman’s lien of $10,110 filed against Country View Apartments from Haidee’s Remodeling;
d. Materialman’s lien of $11,750 filed against Abington Apartments from Haidee’s Remodeling;
e. Notice of non-payment for $8,554.13 filed against Azure Place (f/k/a Kensington Manor Apartments) from Sherwin Williams;
f. Notice of Intent to File Materialman’s lien of $70,525 filed against Cedar Run Apartments from Haidee’s Remodeling;
Carpenter reminded the Board that there is no legal liability or exposure to the Board in these matters, but the Board does receive formal notice and service of process because it holds legal title in its role of providing a public function to the PILOT properties, and his Firm provides oversight and ensures these types of claims are monitored and adjudicated properly. Carpenter stated that his Firm would recommend going forward so that when these types of claims and liens are received by Board staff and legal counsel, that compliance staff would inspect the corresponding property to see if there is a problem going on that has not been indicated or observed through regular compliance monitoring and oversight.
6. Carpenter reported that his Firm filed the annual report on behalf of the Board with Tennessee Secretary of State that is due to be filed by April 1st of each year. Carpenter stated that this report includes an outline of all members of the Board and ensures that the corporation maintains its good standing with the State of Tennessee. Carpenter reported that this annual report requirement has been successfully accomplished.
7. Finally, Carpenter reported on activities of the Tennessee Housing Development Agency (THDA), who is the Board's partner in connection with the issuance of low-income housing tax credit (LIHTC) bonds for 4% credits. Carpenter stated that THDA also issues 9% tax credits that the Board is not involved with. Carpenter stated that with the 4% tax credits, the Board has induced several properties that are applying in round one for 4% tax credits allocations. Those applications have been submitted, and it is anticipated that the awards should be announced within the next 30 days, which will allow these properties to move forward. Carpenter reminded the Board that in addition to applying through the Board and holding the public hearings, there is a parallel process with THDA and THDA is going through its annual meetings and looking at their analysis of 2024 and how much money they will receive. Carpenter reported that the State of Tennessee typically receives approximately $800 million per year with approximately $600 million of that being used for single-family and the other $200 million for multifamily that is allocated through the three grand divisions of the state, West Tennessee, Middle Tennessee, and East Tennessee. With the three grand divisions, allocation is based on the prior year, so developers in West Tennessee must fight to receive the allocation that it really needs because the demand is great statewide.
Carpenter stated that in looking at mortgage reports for 2024, it is indicated that as far as single family is concerned, the high mortgage rates in 2024 strained the housing market and slowed down home sales. Carpenter stated that it was expected that the Federal Reserve Bank would cut interest rates in 2024 but that did not manifest, which created higher rates. Carpenter stated for example in April 2024, which is usually a prime season for purchasing a home, the mortgage rate exceeded 7% which dampened buyer interest. Carpenter stated that with THDA's Real Choice Mortgage Loan program, which is set up for first time home buyers, started off at 6.75% but increased to 7.12%, and those sort of interest rates made it more difficult for people to qualify, and increased the amount of the down payment, etc. Carpenter stated that in 2024, THDA was able to have a second round of low-income housing tax credit allocation because when single-family bonds and credits are not utilized, THDA is able to put more into the multifamily category. Also, Carpenter stated that in 2025 the new construction market is going to be slow because of the level of uncertainty, particularly with the new administration and their tariff, trade and immigration policies, which are adding a lot of disruption to the new construction market for single-family homes. Carpenter stated that according to the National Association of Home Buyers, immigration workers account for 31% of all workers in the construction trade so because of the disruption to the workforce and these different policies that are coming out it does not bode well overall with the fluctuation and interest rates for the housing market.
As for multifamily, Carpenter stated there may be more allocation available this year than there typically would be. Carpenter stated that there are different reports that his Firm can share with Board staff if any Board members want to hear more about this area, but the other aspects that are plaguing the homeownership market would be rising insurance costs and rising tax costs. Carpenter stated that this is not a tsunami, but there are a lot of obstacles and challenges that hurt people who are trying to transition from rental to the first-time home buyer market. Carpenter stated that another interesting point in the National Association of Home Buyers report for 2024 is the demographics and economic characteristics of THDA borrowers, which Carpenter briefly reviewed. Carpenter stated that THDA will be hosting its annual conference April 22-23, 2025 in Nashville, TN and encouraged all Board members and staff that are able, to attend, As THDA is the Board's leading partner in the State as far as tax credits and housing and it is important to strengthen those relationships as the Board carries out its mission of facilitating affordable housing in the City of Memphis.
Howard Eddings, Jr. asked how these challenges surrounding home ownership, the volatility in new construction and pending claims against PILOT properties will impact the Board's primary customer, low-income families that are renting the units that the Board has a responsibility. Carpenter stated that this is always a challenge and that one of the things that this Board is considering is how it can help its affordable housing constituents through facilitating tenant budgeting courses and money management, etc. Carpenter also reported to the Board that one of the projects induced by the Board for new construction, Covenant Gardens Senior Apartments, included in its capital stack a federal grant for over $1 million. Based on new executive orders that have come out, Carpenter reported that the grant has now been suspended. As opposed to moving forward in round one of THDA allocation, Carpenter reported that Covenant Garden Senior is going to wait until round two, if there is a round 2, to see how they are able to fill that gap. Carpenter stated that it is a challenge overall and the best way to move forward is to have all these tenants prepared through education and assistance.
Carpenter stated that THDA has a tenant assistance program for tenants that do not have the funds to pay their financial obligations. Carpenter stated that this program is very active throughout the state of Tennessee but seems not to be used often in Shelby County. Carpenter stated this program is something that local advocacy groups can look at to see how they can utilize the program to help tenants in Shelby County. Eddings stated that funds are being made available through nonprofits but not through for-profit entities. Eddings provided the example that a family who is living in a home rented by a for-profit entity will not have access to those funds and he is seeing through his experience more residents that are unable to pay their rent than he has observed in a long time and anticipates it will only get worse. Carpenter agreed and stated that Shelby County is always in this situation because of the level of wages that are paid. Carpenter stated that a lot of emphasis recently has been placed on having a livable wage, which in many cases these employees are not paid and there must be more skill, trade schools and emphasis to acquire the skills to earn more wages, which ties this all together. Carpenter stated that is why the mission of this Board is so important, but at the same time it is a total integrated process that needs to work together and to be pushing in the same direction. There being no further questions or comments, the Legal Report was concluded.
Action Items-
1. PILOT Status Update from Director Ashley Cash of Housing and Community Development (HCD) for (i) Cavelier Court Apartments and (ii) Gospel Gardens Apartments
Director Ashley Cash began by thanking the Board for the opportunity to attend today’s meeting and share an update on these two (2) properties. Cash began by reporting a status update on how Cavelier Court and Gospel Gardens are progressing toward the remediation they need to do. Cash reported that her team’s inspectors were at both properties the week of March 24, 2025, and both properties are continuing to make improvements on the sewer issues and plumbing work that needs to be done.
Cash reported that Gospel Gardens is now down to two (2) outstanding health code violations that ownership and management are trying to remediate. Cash stated that one of the outstanding health code violations requires the tenant to be home and allow Code Enforcement access to the building and they have not been able to align on the timing. Cash reported that as for the second health code violation, the work had been done but there was some additional damage that took place, and management had the additional repairs done, took pictures to hopefully show the code enforcement inspector, and the next Environmental Court date will be April 19, 2025 for that item.
Further, Cash stated that occupancy levels continue to be a challenge at this property. Cash stated management has reported that there should be five (5) move-ins this month, and there are 13 leases that have been signed but move in dates have not been decided for a variety of reasons. Cash reported that her office will check back with management and ownership to ensure that the five upcoming move-ins have happened and to see what additional move-ins are in the pipeline. Cash stated she has asked management about challenges around lease-up, and she was told that the property management company has a lot of steps and bureaucracy, which takes getting approvals little longer. Cash stated that her office is putting pressure on the PILOT Lessee, as she is aware of the Board's minimum occupancy requirement of seventy-five percent (75%).
Cash stated that Gospel Gardens was receiving four (4) inch sewer line replacements, and the contractor encountered some ground water when those full replacements were being done, so work was stopped, and the contractor will be adding either sand or gravel to stop that groundwater and continue the plumbing work. Cash stated that there are two (2) buildings where tenant housing has been impacted. Those tenants have been advised that they will need to relocate for one-two (1-2) weeks. Winn Companies management is working with those tenants on providing resources for either temporary hotel stays or providing a daily stipend if tenants choose to stay with relatives so that they can pay for food and other things while they are not able to access their apartment unit. Cash reported that direct project expenses spent at Gospel Gardens is $344,000 to date, but this number does not include operational expenses. Carpenter asked what the current occupancy rate is for Gospel Gardens, to which Cash responded there are one hundred thirty-three (133) occupied units, which is 67% occupied, and that rate should increase by at least five (5) units this month, with thirteen additional units that have signed leases. Carpenter asked if ownership has itemized the $344,000 in capital improvements references. Cash stated that she has a listing by large categories: (i) $174,000 spent on health code violations and sewer repairs; (ii)$50,000 spent specifically in units relative to sewer damage; (iii) $118,000 spent on unit turns, which included carpet replacement, cabinet replacement, painting, etc.
Cash reported on Cavelier Court, stating that there is one (1) new outstanding health code violation around HVAC repairs. Cash reported that the tenant is stating that their July 2024 HVAC was not addressed. The property management company, Winn Companies, does not believe that is the case, however, Cash reported management is going out and making sure that the air conditioning is fully functional as we enter into these warmer months. On the operational side, Cash reported Cavelier Court has one hundred thirty-two (132) occupied units, which is 66% occupied, with six (6) anticipated move-ins in the month of April 2025, with six (6) additional leases that have been signed, but a move-in date has not been established. Cash reported that she will follow up with management to check the status of these move-ins around mid-April. Cash stated that sewer line repairs at Cavelier Court are anticipated to start in the month of April 2025. Cash stated that the sewer line repairs for this property are not as impactful as those for Gospel Gardens, and there are the smaller lines and there are not as many repairs required overall. Cash stated that each sewer line repair is expected to take approximately three to four (3-4) days, and there are approximately six (6) lines to be replaced in total. Cash stated that no replacement lines will impact where residents are living, so there is no relocation expected. Cash reported that there is a building onsite that caught fire, 2583 Goodwill, and the repairs on that building are projected to start in the next two (2) weeks and will take approximately three (3) months to complete. Cash stated that the fire-damaged building is not occupied. Cash reported direct project expenditures to date for Cavelier Court is $149,000: (i) $66,000 spent directly on health code violations and tool repairs and(ii) $81,000 spent on unit turns.
Carpenter stated that in the Board’s experience in dealing with these two properties is that they do a great job of delaying by providing just enough information to buy another 30-60 days without making any real, significant progress. Carpenter stated that one of the reasons the Board took the action that it did is because no real significant progress was being made and the Board’s patience with the lack of candor ran out. Carpenter stated it seems that the ownership group has restarted that same cycle with the City Administration. Carpenter recommended that the City Administration consider having a deadline for these two properties to come into compliance. Carpenter stated that it is not a normal course of business for tenants to sign leases without establishing a move-in date, so it seems that there is something else going on. Carpenter stated that the Board understands that there are exceptional circumstances with these two properties that gained the attention of the City Administration because of the need for affordable housing, but the recommendation in dealing with these two properties is to establish deadlines that ownership is held accountable to.
Also, Carpenter stated the Board gave the developers well over eighteen (18) months or longer to come into compliance until things got to the point that the Board realized that this was not a viable approach to take in continuing to allow more time. Carpenter stated that the Board is willing to assist in helping the City Administration to understand the background and history and the prospect going forward for remediation, and the Board is certainly involved and ready, willing and able to assist. Carpenter stated that at the Board’s March 5, 2025 Board Meeting, the plan was to get these properties back into compliance and return them under Board oversight, so there needs to be some finality one way or the other. Cash thanked Carpenter for his comments and stated that these are great thoughts and she would like to take the opportunity to connect offline about the history and ideas in moving forward.
Cliff Henderson stated that WNC advised the Board at the October 2, 2024 Board Meeting that they had a project team in place, set up, etc. and were ready to hit the ground running. Henderson stated that barring weather, it seems like a lot of these things should have already been addressed, as it has been six (6) months since that meeting took place. Henderson stated that unless there were some weather delays, it seems like ownership should be accelerating or getting to a point to really close a lot of these things out. Henderson stated that his concern is the feedback Cash is receiving from ownership, and management is that the Board is still hearing about new and ongoing code enforcement violations that should have been addressed by now.
Chairman Reid asked Cash if it is true that the occupancy has remained very stagnant at both properties, staying between the 62%-65% occupancy range. Cash stated that occupancy has remained stagnant, and that HCD reviews certain things for compliance depending on the project type, and occupancy is not something they have been focused on. Cash stated that at the Board’s March 5, 2025 Board Meeting, she was made aware through Board and staff conversations of the Board’s 75% minimum occupancy requirement and the other compliance metrics the Board looks at, so HCD is now trying to incorporate that into its oversight of these two properties. Cash stated that HCD is questioning ownership and management about what the hurdles are in getting people housed at these two (2) properties, but also, that is the reason behind the intent to follow up mid-April to see if the units that were stated to would be occupied this month are accomplished so that there can be a closer look around what is happening around occupancy. Cash stated that relative to the time frame, the City Administration is comfortable with a six (6) month timeframe, and the transition of the properties coming under City Administration oversight took place in December 2024, so the City Administration is counting six months from January 2025, but to the Board’s point, there should be some additional progress.
Stephanie Bryant asked if there has been any progress concerning the land across from Gospel Gardens being used for parking by tenants to avoid the license plate readers at the entrance of the property. Cash stated that she did not ask her inspector to report on this issue during the most recent inspection, but the property has been cited, and her team will look back to see how that is being remediated. Carpenter asked if Cash would be able to continue to attend the Board’s monthly meetings to provide status updates, to which Cash responded yes. Chairman Reid thanked Cash for her attendance and appreciation for providing this report today. There were no further questions or comments.
Ashley Cash left the meeting.
Tie Lasater and David Shore entered the meeting.
2. PILOT Status Update for Grahamwood Place
Charles Carpenter introduced this agenda item, stating that agenda items two and three are both with the same owner and can be discussed together, but voted on separately. Carpenter stated that both Grahamwood Place and Pinebrook Pointe have been out of compliance for a period of time. Carpenter stated there was to be a full refinancing that was to come before the Board in September 2024, which never took place, but there was some agreement made with the primary lender and ownership that included a loan extension for both properties. Carpenter stated there have been ongoing issues with each of these properties as far as occupancy and other compliance items. Carpenter invited the Board's internal compliance inspector JP Townsend to provide a report of his observations for both properties.
Townsend began with Grahamwood, stating that there have been some repairs made to a larger issue with some of the roof shingles but there are still loose shingles present, along with damaged gutters and downspouts that have been present for a while. Townsend stated that the erosion issues are still present by the drainage ditch. Townsend reported there was a water leak at the property that has been repaired, but the caution tape is still up, and the drive still has the MLGW hole that has not been resurfaced. Townsend stated that there are also two areas of perimeter fence that are damaged.
Townsend reported on Pinebrook Pointe, stating that the property’s grounds are somewhat maintained, but there has been no change observed on the first two burnt out buildings. As to the third burnt out building, Townsend noted some painting that has been done, and what appeared to be HVAC work on the roofs but may have only been some roof work being done. Townsend reported there was less trash in his most recent visit but there are still multiple windows that are boarded up and units that are boarded up throughout the property. Townsend stated that the outdoor kitchen or grill is still not in place. Tie Lasater stated that the grill was in place as of this morning.
Townsend stated that if some of these issues were the first time that we were issuing these concerns, he would recommend giving more time to get some of these external observable issues taken care of, but most of these compliance concerns have been going on for too long and no real remedies have been observed, and he recommends moving both properties into a non-compliant status. Chairman Reid asked Townsend when his latest inspections were, to which Townsend responded he inspected Pinebrook on March 28, 2025 and Pinebrook on March 18, 2025. Cliff Henderson asked if these ongoing concerns and repetitive types of issues were the reason these two properties were moved from under observation status to compliance concerns status in February 2025, to which Townsend responded yes.
Stephanie Bryant advised the Board that Board staff has not received any kind of written update from the PILOT Lesse, Board staff has not received a March 2025 rent roll nor an April 2025 rent roll, of which Lasater committed to providing monthly rent rolls on the record at the Board's December 4, 2024 Board meeting. Bryant stated that Board staff did receive a January 2025 rent roll and a February 2025 rent roll, but no other rent rolls since that time. Bryant stated that Lasater also committed to during the Board’s December 4, 2024 Board Meeting to provide staff with all the lender requirements from all construction on both properties, which has also not been provided. Bryant stated the with the Board’s robust portfolio, when a PILOT Lessee makes commitments to the Board, those commitments must be upheld. Bryant stated that Grahamwood Place has two (2) active Code Enforcement violations, with one of those going before the Environmental Court on April 25, 2025. Bryant reported that Pinebrook Pointe has seven (7) active Code Enforcement violations.
Bryant reported that occupancy in the last fourteen (14) months has never gotten above a seventy-three percent (73%) occupancy rate, and Pinebrook Pointe has only achieved a seventy-five percent (75%) occupancy rate during the third quarter of 2024, but beyond that, Pinebrook Pointe has not achieved an occupancy rate above seventy-two percent (72%) in the past fourteen (14) months. Bryant stated that while occupancy rates showed promise in the past, since the property was removed from legal default in October 2024, Board staff has seen only decline, not progress. Henderson asked approximately when the Code Enforcement violations were issued. Bryant reported that with Grahamwood Place Code Enforcement violations, one was cited in January 2025, and the other was cited in March 2025 and involves roof leaks. Bryant stated that the seven (7) Code Enforcement violations for Pinebrook Pointe appear to be a combination of the fourth quarter of 2024 and this year 2025. Henderson stated that this collaborates with what Board staff has been observing and shows the decline of both properties. Capenter asked Board staff what the current occupancy rate is for both properties. Bryant stated that the most recent occupancy rates are per the February 2025 rent rolls which puts Grahamwood Place at seventy three percent (73%) occupancy rate and Pinebrook Pointe at a seventy-two percent (72%) occupancy rate.
Carpenter invited Lasater to make any comments concerning these two properties. Lasater stated that he has two overall comments, stating that the roof, he agrees with. Lasater stated that KeyCity Capital has had to go to its roofing contractor because new roofs were put on both buildings and they are having leaks not only with those two, but a third one that the contractor reroofed and with rain season coming, that is an ongoing issue with the roofing contractor and him coming out and managing his warranty work there. Lasater stated he does not know if the contractor is going to have to reroof some of the buildings because there are a number of significant issues. Carpenter asked if the roofs were reroofed or repaired. Lasater stated the roofs were new and were put on approximately two (2) years ago by Quick Roofing. Carpenter asked if the roofs are within the warranty period, to which Lasater responded yes, and that there is a ten (10) year warranty period and already showing significant leak issues, with forty-seven (47) known leaks at Grahamwood Place alone.
Lasater stated that the parking lot at the back of the property where the drainage ditch and erosion issue is located is not being handled directly by KeyCity Capital, stating that it is not an MLGW issue, but a City of Memphis issue. Lasater stated it is a retainage wall where the drainage river runs through the back of the property that has collapsed and KeyCity Capital has backfilled the hole several times and it continues to wash out. Lasater stated that until the City of Memphis comes in a rebuilds a retaining wall, there is nothing KeyCity Capital is going to be able to do. Lasater stated it is a major issue, and it is causing the parking lot to begin caving in. Lasater stated he does not have the capability of fixing the City of Memphis side of the property yet, but he is in communication with the City Administration and City Council currently trying to get the right people involved.
Lasater stated that his only discrepancy with Townsend’s report is that there were twenty-six (26) fire units and eight (8) of them have been fully finished in the back building and have tenants in those, so he is not sure where that is coming from. Lasater reported that two (2) other units have been completed in building “K”, which is the middle building, and tenants have moved in those, but there are still another sixteen (16) units to complete, with four (4) in the middle building and four (4) in the front building currently being worked on. Lasater reported that they are still boarded up because they do not currently have the windows and doors to be installed, but they are dried in, damaged sheetrock has been removed, and sheetrock is going up, so they are being worked on. Lasater stated that he reported to the Board in June 2024 that the twenty-six (26) fire damaged units would take at least a year to get all of those done, and they are relatively on track for that to happen.
Lasater stated that the major issue is pushing Pinebrook Pointe along because it is an eyesore and ownership should have started with the front buildings, but they started with the back buildings, so now when you pull into the property, the boarded-up units are right in front, as Townsend previously stated, with boards on the windows and boards on the doors, but those units are being turned. Carpenter asked Lasater what the timeframe is on all fire-damaged until being completed. Lasater responded that completion is still another six (6) months away. Lasater stated that without boots on the ground and him or another high-level team member living in Memphis, there are unique challenges that come with these properties, collections being one of them, and then just site management. Lasater reported that both properties are now being managed by Multi-South Management Services, LLC, under the direction of David Shores, as they have significant experience on these properties, as well as the other four (4) properties in KeyCity Capital’s Memphis portfolio. Lasater stated that Multi-South Management can expedite things that KeyCity Capital dos not and the company has unique experience in the affordable housing market in Memphis.
Carpenter asked Lasater if he has any response to his failure to comply with the administrative reports that he committed to. Lasater stated the he definitely committed to the lender requirements and an update report he was involved in working through, which he has in front of him right now and is unsure why it was not sent to Board staff, so he does not have an immediate answer, but he does have the report in front of him and he can make sure it is sent before the Board meetings, but there is no excuse for it not being done. Carpenter asked Lasater to provide an update concerning the change in management. Lasater stated that a change in management is moving forward as quickly as possible because there are issues at these properties that continue to compound quickly and grow, and Multi-South Management was referred to KeyCity Capital by multiple business partners. Carpenter asked if the management agreements have been finalized, to which Lasater responded that management agreements were signed March 25, 2025.
Carpenter invited David Shores to make any further comment to the Board. Shores stated his company took over both properties eight (8) days ago and his team is walking units and learning everything they can about the conditions of both properties. Shores stated that both properties are challenging, but his company has managed them before, with one of his long-term managers that is still with him had managed Grahamwood Place for many years, and she has gone back there to work again. Shores stated that his team is still in the process of assessing everything. Carpenter asked Bryant to advise the Board of the four-step compliance process again, and advise what level these two properties are currently in. Bryant advised that both properties are in the compliance concerns level of oversight, which is the second level after under observation, with level three being non-compliance, and level four being legal default. Bryant advised that both properties were placed into legal default in October 2023, and at the October 2, 2024 Board meeting, the Board voted to move these properties out of legal default and place them under observation because there was progress being made at that time. Bryant advised that while a property is under any additional level of compliance oversight, that property is inspected no less than once per month, but many times more often. Bryant stated that at the February 5, 2025 Board Meeting, she reported to the Board that staff had elevated both properties from an under-observation status to a compliance concern status and were awaiting reports from property ownership at the March 5, 2025 Board Meeting.
Bryant stated that Lasater was unable to attend the March 5, 2025 Board meeting in person due to a weather issue, so the Board determined to defer the PILOT Status Updates to today’s meeting. Bryant stated that based on staff’s compliance concerns, both with physical external observable conditions, administrative compliance concerns, and lack of progress, staff would recommend moving both properties to non-compliance status. Carpenter stated that the Board can let these properties remain in its current statuses of observation or can vote to move each property to a status of non-compliance, and both properties would appear for a PILOT Status Update at the May 7, 2025 Board meeting to determine that plan to get the properties back into full compliance or to see where things are at that time, or the Board could take some other action, and asked the Board for further comment.
Cliff Henderson stated he feels it is appropriate to move both properties to a non-compliance status, stating that he thinks Lasater realizes something systemic is happening at both properties, which he assumes is what prompted the hiring of a new property manager, and it is his opinion that these properties compliance concerns need to be addressed and representatives need to be before the Board each month to show the progress and make sure the appropriate attention stays to it. Vincent Sawyer asked if the Board moved these properties down two levels at one time. Bryant stated that when the Board removed a property from legal default, it is typically put under observation so that staff continues that monthly oversight and determines from there whether the property is showing enough progress to be moved into normal compliance oversight, or if the property is not showing the proper continued progress and needs to be moved back up to the next level of compliance oversight. Bryant reminded the Board that these two properties were reported on in prior months to have gone into foreclosure, but the sale was stopped the evening before the March 5, 2025 Board Meeting. Buckner Wellford stated his colleague, Spencer Clift, was involved in the foreclosure proceedings on behalf of the lender for these properties, and for that reason, he recused himself from these two discussions and votes. Chairman Reid stated that if things continue on this same track of going backwards instead of forwards, the Board is not going to look favorably at that. There being no further questions or comments,
Cliff Henderson made a motion to move Grahamwood Place into Non-Compliance Status and have representatives report back to the Board to provide a PILOT Status Update at the May 7, 2025 Board Meeting. Monice Hagler seconded, and the motion passed unanimously after proper roll call vote of the Board members.
Let the record reflect that Buckner Wellford was recused from this vote.
3. PILOT Status Update for Pinebrook Pointe
There being no further questions or comments,
Cliff Henderson made a motion to move Pinebrook Pointe into Non-Compliance Status and have representatives report back to the Board to provide a PILOT Status Update at the May 7, 2025 Board Meeting. Monice Hagler seconded, and the motion passed unanimously after proper roll call vote of the Board members.
Let the record reflect that Buckner Wellford was recused from this vote.
Tie Lasater and David Shores left the meeting.
Chermeca Johnson entered the meeting.
4. Bond Reissuance for MH Strategies Family RAD II, LP- College Park Projects
Charles Carpenter introduced this agenda item, stating that this is a public private partnership with Memphis Housing Authority (MHA) and Knight Development. Carpenter reported that the Board successfully closed bonds and a PILOT for these two projects, and due to certain delays in the completion of construction and placing these properties into service, the applicant has come back before the Board seeking a reissuance of these bonds because the delay in placing it into service is changing the yield on the bonds. Under the Internal Revenue Code, based on those facts, Carpenter reported that the Board must carry out technical requirements, including a new public hearing in order to move this reissuance forward. Carpenter reminded the Board that it took the same steps for the first RAD program bond financing and recommends approval. Chermeca Johnson introduced herself as the representative in attendance for this agenda item and stated that there were operations delays with construction. Johnson stated there was a fire on the property that was part of the operational construction delays, but construction is expected to be complete this week. Carpenter stated that based on his Firm’s review, it complies with the Board’s policies and procedures and recommends approval. There being no further questions or comments,
Vincent Sawyer moved to approve the Bond Reissuance for MH Strategies Family RAD II, LP- College Park Projects. Courtnee Melton-Fant seconded, and the motion passed unanimously after proper roll call vote of the Board members.
Chermeca Johnson left the meeting.
Daniel de Ojeda, David Shores, Hunter Humphreys, Joe Gurley and Michael Rogers entered the meeting.
5. Affordable Multi-family PILOT Application for NH Holdco, LLC (d/b/a New Horizon Apartments)
Daniel de Ojeda introduced himself as a principal of Xela Capital and all representatives in attendance for this agenda item: Hunter Humphreys, Esq. of Glankler Brown, PLLC, applicant’s legal counsel; David Shores of Multi-South Management Services, LLC, management company of New Horizon Apartments; Joe Gurley and Michael Rogers of Safeways, of which the property is a participant.
Charles Carpenter introduced this agenda item, stating that the Board, staff, and legal counsel are all very familiar with the property, and it has been a participant in the Board’s PILOT program for over a decade prior to PILOT Termination in 2024. Carpenter stated this property is located in the Whitehaven area on Mill Branch Road and is in a unique and significant location of Whitehaven and is the size of a small city with eight hundred seventy-eight (878) units. Carpenter stated that the property was originally built in the 1970s and has changed ownership several times. For the more than ten (10) years this property was a participant in the Board’s PILOT program, it was only in compliance with all of the Board’s policies and procedures for approximately twelve to eighteen (12-18) months out of that period. Carpenter stated that for that short time, it was a viable project, but since that time, the property has taken a sharp decline. One of the last efforts to rehabilitate the property was through a sales contract, but the sale did not go through. There have been multiple Code enforcement violations, the property is a frequent visitor to the Environmental Court and was not in compliance with any of the Board’s policies and procedures, and the Board had no choice but to terminate the PILOT in August 2024. Since that time, it is the Board’s understanding that the property has gone through foreclosure, the lender took control of the property, and the Board is here today to consider a proposed reverse 1031 transfer and a new team to seek a new PILOT on this property, which continues to be in very poor condition.
Thereupon, Carpenter turned the meeting over to the Board’s internal compliance inspector for further comment on his observations of the property. Townsend stated that prior to the PILOT being terminated, the property was in very, very poor condition. Townsend stated that he inspected the property in preparation for this Board meeting and has observed some progress being made. Townsend stated that some buildings had some work being done, some of the larger holes that were throughout the drive have been patched, and he has observed roof patches, but there is still considerable amount of work that is going to need to be done, as it is a large project.
Carpenter advised the Board that there was an application submittal conference that took place and that it was a robust and frank discussion about the property, and the applicant feels that they have ideas and a path forward. Carpenter brought the Board’s attention to Board Meeting materials, specifically the sources and uses table and how the capital stack is structured and how they intend to put funds into making this project work. Carpenter reminded the Board of one of the largest issues with this property is the crime issue on the property, which is also something the media has always focused on. Carpenter stated that this is one of the worst properties that the Board had in its portfolio, and that bringing it into compliance with policies and procedures is going to be a heavy lift.
Hunter Humphreys stated that he has represented Ojeda with respect to this project, as well as has represented him and his family on another major PILOT property they renovated in Memphis, Azure Place, formerly known as Kensington Manor. Humphreys stated that Azure Place was in a similar situation, in very poor condition and had been vacant for more than a decade., and the family did a tremendous job. Humphreys stated that the prior City Administration and several Board members attended the grand opening after the renovation, and it has been a tremendous success and everything he would think this group and the PILOT program would look for in a property. Humphreys stated that this is a new challenge for Ojeda and his family and Humphreys has been so impressed being able to represent them.
Ojeda stated that his team agrees that the property needs a lot of work. Ojeda stated that he believes many reasons the plans have not succeeded in the past were because there was not enough investment committed. Ojeda stated his team walked every single unit and tried to get deep into the workings of what is causing issues inside the units, which is why Ojeda stated his group has a healthy budget for these renovations to get into these units and fix them correctly. Ojeda stated his group plans to invest over $13 million in hard costs into the property, in addition to the other financing costs and soft costs. Ojeda stated that the plan has three (3) prongs: (i) the physical rehabilitation of the property, (ii) the service component of the property, and (iii) community engagement of the property. Ojeda stated that the physical rehabilitation will address systemic issues such as every year, there are over one hundred (100) burst pipes.
After investigation, it turns out the water lines for the washer and dryer connections that were added to the units were not properly insulated and are prone to freeze in the winter and burst. Ojeda stated that his team will also be going over the unit finishing to ensure the quality of the units. Ojeda stated there will also be a lot of work to the exteriors, including painting, making sure there are not boarded up units. Ojeda stated it is his understanding that Whitehaven used to be a highly sought after neighborhood to live in and this property has not had the love and care it needed to bring it back to what is once was, but his team will ensure this is a very positive place for residents to live and engage with. Ojeda stated that from the service component, his team’s approach is to make sure that teams are trained in understanding that tenants are the customers and they are there to provide a service. Ojeda described previous management as toxic including relationships between police and residents and stated that it is important for his team to treat the root causes so that tenants can have a positive experience with office personnel, including removing previous physical barriers between staff and tenants that does not promote a welcoming atmosphere for tenants. Ojeda described how delayed maintenance requests have been addressed and management is holding tenant engagement meetings and encouraging residents to come in and management is really educating them and asking that they put in work orders so that any delayed maintenance issues can be taken care of, and Ojeda stated management must do their part to also be responsive to those requests.
Ojeda stated management was able to address over two hundred work orders in January and February 2025, and over four hundred work orders in March 2025, which is part of training the maintenance teams to be better and more responsive and training residents to build comfort and trust in management and ownership. For community engagement, Ojeda stated that his team does a lot to make sure residents make this property a home, so they hold community events, and a neighborhood watch to make sure everyone is part of making this a safer place to live. Ojeda stated that this takes a large capital commitment up front and a lot of personal involvement. Ojeda stated he has relocated to Memphis full-time and is on the property every day to make sure that the team is implementing the plan and things are moving forward. Ojeda stated the property is currently thirty-seven percent (37%) occupied, and his team is doing everything it can to get units ready and everything that has been delivered is getting rented.
Cliff Henderson asked how many units are in need of full renovations versus light renovation. Ojeda stated that two hundred twenty (220) units will need full renovation, as those are in rougher shape and are down to the studs, but that gives his team the ability to complete a more luxurious unit, like Azure Place with granite countertops, new cabinets, nice backsplashes. Ojeda stated that with the light renovations, his team is working with what is there and repairing the necessary items, and there are three hundred forty (340) units that require light renovation. Ojeda stated the remaining units were the occupied units when his group took over ownership of the property. Ojeda stated that those occupied units also needed a lot of work, and his team is addressing those as people move out, but they are in livable condition. Henderson asked if Ojeda has funds allocated for those occupied units in need of repair, to which Ojeda responded that those repairs are being performed out of the operating budget. But there is a budget included for units as they become occupied, to have the site team address them, and then additional capital to perform those, if necessary.
Henderson asked if Ojeda expects to have everything ready and completed by December 2027, and if that completion date includes the units that Ojeda is deeming acceptable today. Ojeda stated that by December 2027, all units that are vacant today will be back online and all units will be turned and put back into the rental pool as well. Ojeda stated that units that are occupied today will be renovated as those units are vacated, but he hopes to retain as many residents as they can by giving them a better offering than they received in years prior. Henderson asked if Ojeda could have access to additional capital if necessary. Ojeda responded yes, stating that part of the loan requirements is that he keeps $5 million in liquidity on his balance sheets for that, but there are a lot of layers of cushion in the structure, and the loan itself includes over $1 million in contingency and $2 million in interest reserve, a $1 million operating expense reserve and $1 million working capital reserves, almost $5 million in cushion within the loans, and then the lender required him personally to keep on his balance sheet an additional $5 million to support the project.
Howard Eddings, Jr. asked about the community engagement levels and if anything more is being done or that goes beyond the community building itself. Eddings stated that even with other amenities, it is a big place and asked how Ojeda plans to provide other options. Ojeda stated that in addition to the renovated community building and the events that are being put together each month for residents, his team is working with Red Door on-site and has units that are dedicated to them, and they engaged with Neighborhood Christian Center at the Board’s 2025 Annual PILOT Training Workshop, and he plans to rehabilitate some space on-site and make it available to them. Ojeda stated he had concern that there would be a conflict by having both Red Door and Neighborhood Christian Center on-site, but he has learned that would not be a conflict and New Horizon would be able to house services from both organizations for the residents. Ojeda stated that the neighborhood watch program also includes residents in addition to surrounding people that are starting to join including representatives from True Line Church, representatives from the single-family community next to New Horizon, and he hopes to extend the invitation to neighboring apartment complexes, including Winbranch across the street. Ojeda stated his team is also working to build involvement with the church, and they have offered to do on-site Bible studies and Sunday buses to church. Ojeda stated that his team is continuing to look for additional partners that can add more services, especially for kids with summer approaching. Eddings stated that with the size of New Horizon, it is a small town, and children are going to schools within the community, and Neighborhood Christian Center, Agape, Red Door, and others are great organizations, but asked if Ojeda has a liaison that speaks to these different organizations. Ojeda stated that he does, and she is very good and includes a staff of six (6) people in the office and maintenance. Ojeda stated that as he is expecting to add more services, they have looked at partnerships with the community schools through sponsorships and through community clean-up initiatives that would also engage residents.
Henderson asked if the $5 million reserve on the balance sheet is just for this entity or is that a consolidation of entities. Ojeda responded that the $5 million reserve is kept on his personal balance sheet, but it is not restricted and is a general liquidity requirement, but he is unable to go under that amount without being in violation of the loan.
Vincent Sawyer asked about the security for the property. Ojeda stated that security is also a multi-pronged approach, and they have found that a large percentage, between eighty percent and ninety percent (80%-90%) of issues will be either residents or guests of residents, so the first thing the property must be responsible for is on the screening up front on who is let into the community. Ojeda stated that when there are issues, it is their responsibility to address them quickly to let the community know issues of that nature are addressed quickly and management will ask those residents to move out. After these steps, management will work to get residents involved positively with the community watches. Ojeda stated that while they have on-site security, if there are approximately nine hundred families keeping an eye out for the property and letting management know where the trouble is, that makes it much easier for management and ownership to take action. Ojeda stated that, as with work orders, it is the property management’s responsibility to be very responsive when residents are putting themselves out there and reporting on someone that is misbehaving, that they take quick action so that residents have the confidence and trust in management and ownership if they participate.
Ojeda stated there has been good involvement in the neighborhood watch program, including community police officers that have joined the meetings. Ojeda stated that security also includes engagement with the Memphis Police Department (MPD) and he has been fortunate to have motivated and dedicated officers that want to make sure they can clean up the crime. Ojeda stated that his team and onsite security have been able to meet with the MPD to ensure all the different parts are supported and work together. Ojeda stated that the MPD was very complimentary of the changes they have seen so far. Sawyer asked if there is manned security at the Kings Gate entrance to the property, to which Ojeda responded yes, there are three (3) security guards 24/7 and there are two (2) gates that are operated, with one only operated during business hours on Mill Branch, and it is closed when the office is not open. Ojeda stated that the gate on Winchester is not as attractive and is a little bit hidden but provides a little more queuing for when residents are coming in, so they are not waiting in the street, but rather on the long drive. Ojeda stated that there is one guard at each gated entrance and one guard patrolling the property at all times. Ojeda reported that the property just changed security companies from Cobra to All Secure. Ojeda stated that Cobra was very good with cleanup and got rid of the worst troublemakers, but he wanted to offer a higher level of service and has now changed to All Secure, who also provides security at Azure Place. Ojeda stated his team wanted to implement something that would ensure patrols were happening, so now he has GPS on the security patrol to ensure that the guard is patrolling the property. Ojeda stated that while security must be stern to ensure they are keeping troublemakers out, he also wants to ensure that residents feel like they are there for them and not being disrespectful to them.
Carpenter stated that with Cobra, the Board was previously made aware of the high cost for the delivery of the level of services required at New Horizon, and questioned how sustainable it is to maintain that level of security. Ojeda stated that All Secure is a higher level of service, but slightly less expensive, so where he was paying $80,000 a month for Cobra, All Secure will come in at around $63,000 a month. Ojeda stated that including security and all other expenses, the property will be able to operate, with a PILOT in place, with an occupancy around fifty-five percent (55%), so the PILOT is a huge help in making sure that the property is able to sustain some of this extra operating expense for security.
Carpenter stated that Ojeda had mentioned $13 million in hard costs earlier in today’s meeting and asked what that cost breaks down to per unit. Ojeda stated that with light renovations, his team is looking at $8,000 per unit, and with heavy renovations with the units down to the studs, the cost comes in at approximately $30,000 per unit. Carpenter stated that the Board sees a lot of numbers and those numbers are pretty light as far as the high costs for unit renovations today, particularly with units of this age. Carpenter asked for confirmation that Ojeda is comfortable with those numbers after his inspections of all units. Ojeda responded yes, and that is based on his experience with Azure Place, and his group is able to put together their own pricing and cost analysis, which gives them an advantage to negotiate with general contractors, and they review each line item so that they know exactly how much they should be paying for each line item. Ojeda explained that he also has direct access to all the subcontractors and suppliers so that they can get better pricing for the same amount of work than some other people that do not have that same in-depth involvement.
Carpenter asked what Safeways’ involvement would be with the property. Ojeda responded that they were deeply involved with Azure Place, and their knowledge and expertise in Crime Prevention Through Environmental Design (CPTED) is priceless to his team. Ojeda stated that prior to the consideration of the PILOT for this property, it was important to his team to go ahead and sign New Horizon up for Safeways participation to begin getting the property into compliance with Safeways program standards from the beginning, which has already included the landscaping and the visibility, but also on the security, and it was important that the initial inspection was done up front so that the work did not have to be done twice, and whatever changes needed to be made could be implemented from the beginning. Ojeda stated that the initial Safeways property inspection was performed in November 2024 so that could be integrated in, and they are working on the lighting study so that he can get with MLGW on the light poles and get all outages replaced and see where any blackout areas or dark spots remain. Ojeda turned the meeting over to Joe Gurley for further comment regarding Safeways. Gurley stated he is the Director of Operations for Safeways and stated that Safeways worked with Ojeda initially at Azure Place, which is also a participant in the Board’s PILOT program, and the property was brought into compliance within the first year of operation, and New Horizon is headed down that same path as far as getting things completed. Gurley stated there is a lot of work to be done as far as the inside of the buildings, but there have already been a lot of improvements made to the outside, including much of the landscaping which has already been taken care of. Gurley stated that the initial inspection report rated the property at forty-three percent (43%) in compliance. Gurley asked Michael Rogers to comment on where the property is today. Rogers stated that Safeways is currently focusing in on the trees and monitoring the progress, but those improvements have not ben categorized yet because the project is not far enough along, but there has been a 180-degree turnaround from where things were. Rogers stated that all trees and shrubs have been trimmed and there is now a natural line of sight through all the buildings, including the abandoned ones, so there has been a lot of progress on the landscaping and cleaning up the blight within the complex. Gurley stated that since then, Safeways is also monitoring the crime data that comes in and ownership is getting the reports, calls and arrests made on the property, so they are able to deal with that on their own through their own processes, but since new ownership’s takeover in November 2024, the crime has been on a continuous down pattern and the reports have been almost cut in half.
Carpenter asked Ojeda how he anticipates getting tenants, whether there is some agreement with the utilization of Section 8 vouchers, through marketing to the public, or some other approach. Ojeda stated that the property has a healthy marketing budget, so they are able to list on all internet listing services such as Apartments.com, Zillow Rent.com, and other subsidiary websites. Ojeda stated they are also putting up billboards, in-person outreach to the businesses around the community, and through making the streetscape more welcoming to appeal to the drive-by traffic and working with residents to get referrals. Carpenter asked if Ojeda plans to rebrand the name or continue to go with the current name. Ojeda stated that he and his team would like to change the name, as the current name has a negative association in the marketplace, but he would like to wait for a rebranding until the exterior is visually different because ownership does not want to sully a new name with the way the property looks today, and the exteriors are going to look markedly different. Ojeda stated that in his discussion with people in the community, they are excited for the change, but ownership needs to show them, so once change is able to be demonstrated and shown to build that faith and trust that the change is happening, that is when ownership will look to rebrand and change the name. Bryant asked what the timeline looks like to a rebranding, to which Ojeda responded the original timeline looked to be sometime in 2026, but he is hopeful that this will be accomplished sooner. Ojeda stated that he also understands from the 2025 PILOT Lessee Training Workshop that they must notify the Board prior to any rebranding or name change going into effect.
Sawyer stated that he is aware that the previous PILOT was terminated for this property, but he is unsure of what has happened during that time up to this point, as he has heard a receivership previously mentioned but is unsure of the status of that. Carpenter stated that there was an active receivership in Chancery Court, but the receivership is now terminated. Chairman Reid stated that the receivership began in May 2024 and was terminated in November 2024. Carpenter stated that the property went through a non-traditional foreclosure. Ojeda stated that his company purchased the note from KeyBank the day before, technically making his company the lender for one day, when they foreclosed and credited the amount of the purchase, and there were no other willing buyers, so his company took over as the lender.
Carpenter stated the biggest concern the Board has is that it has heard it all before and there is a balance that must be achieved. Carpenter stated that Ojeda made mention of Winbranch Complex located across the street from New Horizon, and that property has been able to turn things around and are doing well, but the property is not as large or have as tainted a reputation in the community. Ojeda stated that Winbranch Complex was mentioned at the Board’s 2025 PILOT Lessee Training Workshop as one of the properties that has achieved a 95% or higher occupancy rate for all four quarters in 2024, which is very positive to see that properties in the area are able to achieve this. Carpenter stated that the area needs affordable housing, which has been the reason the Board has been involved with New Horizon as long as it has, because the need is great and that is part of the mission of the Board. Carpenter stated that the Board also knows that a PILOT is intricately involved in all of that and it does not want to have a situation where the PILOT is approved, just to be terminated two years later because that helps no one.
Chairman Reid asked for any questions from the Board. Henderson stated that the takeaway is that all Board members have mixed feelings about this and to Carpenter’s point, the community needs this property to come back online, but it must be with the right owner and right diligence. Henderson stated that from his perspective as a Board member, he appreciates what he has heard today and he believes Ojeda has addressed a lot of concerns that he had, but he still thinks what is being faced is a formidable challenge, but he does not know of anything else that could be asked from Ojeda from his perspective of what was laid out, and it is really going to be perseverance of the diligence to continue through those plans. Chairman Reid stated that he was not in favor of this application, and when he looks at an average of $21,700 a unit to be spent on rehabilitation after acquisition cost, in his opinion, is not adequate for eight hundred seventy-eight (878) units. Reid stated that he does appreciate what has been stated today and had the address to the Board not been so robust and passionate and confident, he would have moved not to approve this application. Because of where the Board and staff have been with this property absolutely wore staff out for months at nauseam, it is important that everyone is comfortable with how this moves forward. Reid asked if the amount per unit to be expended in renovations is enough and this is an elephant that he is unsure of if this can be decided on in this meeting. Carpenter asked what the timeframe for the rehabilitation is and getting the property into full compliance. Ojeda stated that what has been committed to in the application documents is by December 2027, with the goal to accomplish sooner.
Reid stated that the Board can vote on this today or defer action until the May 7, 2025 Board meeting to further deliberate with more information and a renewed commitment letter. Reid stated he is aware that the applicant has had to request a renewed commitment letter once. Eddings asked what additional information the Board will be looking for, to which Reid responded additional inspections of the property and to ensure staff is comfortable with moving forward. Eddings stated that missionally, and given the need in the city, the more quickly we can get these units back online, the better because we do not have a lot of referrals and resources to send people to in order to get units that are safe, decent, quality, and affordable. Reid stated that he understands Eddings’ comments and agrees, but his concern is the reputation of this Board and is it prudent to turn around and issue another PILOT to a property that almost killed us. Eddings stated he believes it is the Board’s duty to issue the PILOT, and to know that the property needs the framework to make sure that it is linking with and connecting to the groups, organizations, companies, and providers who can provide the service that is needed in the community. Eddings stated that he cannot speak to the staff’s perspective, but Memphis needs housing that is going to meet the needs of families who cannot afford to live anywhere else. Eddings stated that New Horizon is a tough place with eight hundred seventy-eight (878) units, but it sounds like there is a group of folks here who are interested in it and a property manager that is involved. Henderson stated that the Board does have a base case to compare with Azure Place, so his suggestion would be to look at the renovation costs of Azure Place and let that be the driver, because if they were able to do the renovations described at Azure Place, or somewhere around a similar approach, that is the strongest thing the Board could have, given the estimates Ojeda is providing. Ojeda stated that Azure Place had significantly higher renovation costs per unit for the scope of renovations because those units had been vacant for over ten (10) years and renovations included all the electrical, mechanical, and plumbing from scratch, but renovations were under $30,000 per unit.
Henderson stated that the Board has that as a base and can confirm that. Bryant stated that staff is happy to audit what the per-unit renovation costs were for Azure Place, and staff experience with Azure Place has been great. Bryant stated the property was in fact vacant for over ten (10) years when the Ojeda family purchased the property and the property’s construction was completed timely and the property has remained in compliance for the duration of its participation in the PILOT program. Bryant stated that one of the biggest concerns is the per-unit renovation costs, and as referenced earlier, light renovations are estimated at an $8,000 per unit cost, and full renovations are estimated at a $30,000 per unit cost. Bryant asked what the full renovations entailed at the $30,000 unit cost. Ojeda stated that on the light renovation units, ninety (90) units have already been delivered on budget, so he is confident that his team can do those renovations for that price. Ojeda stated that on the full renovation units, approximately seventy (70) units still have drywall, air handlers, and condensers there, so the $30,000 per unit is a blended average with some units being worse and come in at around $50,000 per unit, while others are less because all they need is the new cabinets, countertops, and things of that nature. Ojeda stated that the average is high-level for the full renovation units, but as previously stated, his team has walked every single unit and made a budget accordingly. Henderson asked Bryant if Azure Place had a similar per-unit budget, to which Bryant responded she did not recall. Henderson stated that if staff finds that similar costs were given for Azure Place, he is comfortable moving forward, and he is trying to balance the concerns of the Board and staff with the timelines to move forward. Henderson stated he is unsure of how specific a motion could be made, but if the Board staff finds that the estimates at Azure Place are in line and the Board sees the results of Azure Place in good standing, he is ready to move forward. Eddings asked if the Board can move forward today with a condition, to which Carpenter responded yes and asked what Eddings had in mind.
Eddings stated he is ready to move forward with a vote based on what he has heard, and he trusts Board staff to help the Board navigate the realities, but if he understands correctly, there is time sensitivity around compliance, good faith and loans, so if the applicant is ready to move forward, but the Board is not ready to move forward, what needs to happen for them to be able to move forward. Monice Hagler stated that certain conditions can impact the lender. Reid stated that the Board does have the option to defer this for thirty (30) days, and there is a lender commitment letter in place that will expire during that time, the lender has already extended the commitment letter once, and he is uncertain of how agreeable the lender would be to extending the commitment letter another thirty (30) days. Ojeda stated that it would be difficult, as both the proposed lender and the existing lender, KeyBank, have already extended once, and it would be very difficult to get both lenders to extend again. Hagler stated that this area deserves to have a positive influence of affordable housing, and the applicant seems willing to take the steps to make it happen, and she is really encouraged by the passion that Ojeda has related to this, and it sounds like with Azure Place, that ownership has been able to accomplish what was needed there based on the numbers. Hagler stated she understands that the applicant has done the due diligence for this project and is impressed with that and stated that she would be willing to make a motion to move forward today. Vincent Sawyer stated that he believes it is reasonable to request a detailed development plan through 2027 showing exactly what the applicant intends to do and something to hold them accountable to in moving forward. Hagler asked if that was part of the application. Bryant stated that there is detail included in the application and requested that the property be under monthly oversight throughout the construction process and would request monthly rent rolls from property management software, and a detailed construction schedule and timeline with hard deadlines of completion for each month, and a monthly written progress report each month detailing what items have been completed so that Board staff can track the tangible progress and report that to the Board. Bryant stated this would establish strict oversight of the property to ensure the Board is kept abreast of exactly what progress is being made, and ensure deadlines are met timely.
Reid asked Hagler if she would amend her motion to include these details, to which she agreed. Bryant clarified for the record the following today’s meeting; the Board would require the submission of a detailed construction timeline and with hard deadlines and construction completion dates and a timeline of anticipated occupancy progress, to be provided within seven business days of this Board meeting, followed by monthly rent rolls, monthly progress reports and construction progress updates to be provided no later than the 5th of each month. Ojeda stated that a detailed development plan does exist today in an excel format, which he would provide to the Board following today’s meeting.
Carpenter asked if there is any current litigation matters or Environmental Court issues presently with the property, to which Ojeda replied no, and that ownership has worked closely with Code Enforcement to ensure nothing has carried over or been missed, and all issues were resolved as of February 2025, but they are constantly in touch with Code Enforcement to ensure that. Carpenter stated that prior ownership had the same maintenance personnel performing maintenance requests as well as construction, which was not successful, and asked Ojeda what the approach would be moving forward. Ojeda stated that the property has a large maintenance team of six (6) people, and they would be strictly dedicated to addressing work orders and maintenance requests and cleaning up the property, and all renovations are outside of that and under contract with a third-party contractor. There being no further questions or comments,
Monice Hagler moved to approve the Affordable Multi-family PILOT Application for NH Holdco, LLC (d/b/a New Horizon Apartments), subject to a detailed construction timeline and occupancy timeline, to be submitted within seven business days from today, and monthly progress reporting requirements, including monthly rent rolls and monthly construction updates to be submitted to Board staff via email no later than the 5th of each month until construction is complete and the project is fully leased. Vincent Sawyer seconded, and the motion passed unanimously after proper roll call vote of the Board members.
Daniel de Ojeda, David Shores, Hunter Humphreys, Joe Gurley and Michael Rogers left the meeting.
Executive Director’s Report
Trey McKnight stated that the Board’s 2025 Annual PILOT Lessee Training Workshop was a well-attended and successful event and thanked all Board members that were able to attend.
Operations Report
Stephanie Bryant presented the Operations Report as follows:
A. Review of 2024 Board Activity:
1.New PILOTs approved and/or closed in 2024:
a.1,359Total units (This is a combination of new and rehabilitated units)
i. New Units:79 units
ii. Rehabilitated Units:1,280units
1.1,247Units closed and PILOT applied
a. New Units: 79units
b. Rehabilitated Units:1,168units
b.$194,602,877New Capital to be invested in the City of Memphis(This new capital investment in the city will provide countless jobs within the community from both new and rehabilitated investment)
i.$184,202,877 New Capital invested for projects closed and PILOT applied
2.PILOT Term Extensions approved and closed in 2024: These projects were allowed to apply for an extended term per the Resolution passed by City Council in August 2018.
a.1,373Totalunits preserved
3.PILOT Refinancings approved and/or closed in 2024:
a.1,477 units refinanced
4.Bond Inducements approved and/or closed in 2024
a.$84,200,000Total Bonds approved
b.$13,700,000 Bonds approved and closed
B. Review of Compliance Oversight for March 2025
Bryant began by reminding the Board of the four (4) levels of additional compliance oversight that were put into place by staff in 2024 and this report will review movement of certain properties within these four (4) levels: (i) Under Observation, (ii) Compliance Concerns, (iii) Non-Compliance, (iv) Legal Default. Bryant reported as follows:
1. Bryant reported that in March 2025, staff has moved two (2) PILOT properties up from “Compliance Concerns” to “Notice of Non-Compliance:
a. Sunrise villas: Notice of Non-Compliance was issued on March 14, 2025
b. Hillcrest Apartments: Notice of Non-Compliance was issued on March 14, 2025; this property is in administrative non-compliance
2. Bryant reported that all seven (7) properties included in developer Mendel Fischer and Shrage Marasow PILOT Property Portfolio have been issued a Notice of Non-Compliance on February 17, 2025 due to serious delays in construction, pending Environmental Court issues, and other compliance issues. These properties include seven (7) active PILOT Properties owned by this development team:
a. Bridgeport Manor Apartments
b. Eden Pointe Apartments
c. Grainge Hill Apartments
d. Scenic Hills Apartments (formerly Hunters Ridge Apartments)
e. Timber Pines Apartments (formerly Gowan Pines Apartments)
f. Watkins Manor Apartments
g. Coronado Manor Apartments (formerly Willow Oaks Apartments)
Bryant stated that the PILOT Lessee has submitted a response, and staff is thoroughly reviewing that to determine next steps.
Finally, Bryant stated that the PILOT Lessee Training Workshop was a successful event and Board staff has received great feedback that the conference was very informative, and PILOT Lessees received a lot of information they either did not know or did not understand how everything worked together, and they appreciated the event. Bryant also stated that many PILOT Lessees have reached out directly to see how they can be a part of the solution and assist the Board with the pending PILOT Ad Hoc Committee requested moratorium. Bryant advised the Board that Board staff is working with legal counsel to distribute a letter template to all PILOT Lessees in opposition to the 180-day moratorium so that they can modify that template as necessary to fit the respondent and submit those letters to the full Shelby County Board of Commissioners in preparation for the next PILOT Ad Hoc Committee meeting on April 17, 2025.
Carpenter stated that his Firm has also received a lot of positive feedback concerning the 2025 PILOT Lessee Training Workshop. Carpenter stated that one item that the Board has been asked to consider was the submission timeline surrounding PILOT Refinancing Applications and the timeframe it takes because most commitment letters are for a thirty (30) day period, and the Board is requiring a longer period of time to review the application. As the Board goes forward with staff, Carpenter stated this may be something to consider, in shortening that submission period, as PILOT Refinancing Applications are for properties that are already participants in the Board’s PILOT program and the Board staff is aware of the property’s performance. There were no other questions or comments.
Finance Committee Report
Cliff Henderson presented the financial results for the month ended February 28, 2025. After discussion,
Vincent Sawyer moved for acceptance of the Finance Committee Report for the month ended February 28, 2025, properly seconded by Howard Eddings, Jr., and the motion passed unanimously after a proper roll call vote of the Board members.
New Business
There was no new business.
Chairman Reid stated that the next regular meeting of the Board is scheduled for Wednesday, May 7, 2024 @ Noon. There being no further business, the meeting was adjourned by the Chairman at 02:10 p.m.