MINUTES OF REGULAR MEETING OF
THE HEALTH, EDUCATIONAL AND HOUSING FACILITY BOARD
OF THE CITY OF MEMPHIS, TENNESSEE
Wednesday, April 11, 2018
The regular meeting of The Health, Educational and Housing Facility Board of the City of Memphis, Tennessee was held pursuant to public notice on Wednesday, April 11, 2018. The published meeting time was 12:00 Noon. The meeting was held at the Board office, located at 65 Union Avenue, Suite 1120, Memphis, TN 38103.
The following Directors were present:
Buckner Wellford James Jalenak
Monice Hagler Dr. Manoj Jain
The following Directors were absent:
Daniel T. Reid Nancy Willis
Also present were:
Staff members Martin Edwards, Jr. and Lauren Magallanes were in attendance. Charles E. Carpenter, General Counsel, Corbin I. Carpenter and Cheryl Hearn, Assistant City Attorney, were also in attendance.
Stephen Turgeon, Jerry Johnson, and Darin Burns, representing Owens Place Apartments, and Sheila Jordan Cunningham, representing Neighborhood Preservation Inc., were also present.
With a quorum present, the regular meeting of the Board was called to order at 12:00 Noon by Vice-Chair, Monice Hagler.
Approval of Minutes
James Jalenak moved for approval of the Minutes for March 7, 2018. Buckner Wellford seconded and the motion passed unanimously.
Finance Committee Report
Martin Edwards presented the financial results for the month ended February 28, 2018. After a complete discussion of the financials.
Manoj Jain moved for acceptance of the Finance Committee Report for February 28, 2018, and properly seconded by James Jalenak, the motion passed unanimously.
Charles Carpenter presented the legal report, as follows:
1. For the Board’s information, Carpenter reported no new lawsuits or claims for the period.
2. Carpenter reported the Oakshire Apartments PILOT Termination closing has been rescheduled for April 16, 2018. Carpenter added he will update the Board at the May meeting.
3. Carpenter reminded the Board of its approval of the Thompson Court PILOT amendment to incorporate an additional parcel of land within the PILOT agreement. Carpenter reported proper PILOT documentation has been amended and is now awaiting an updated project cost certificate from the developers.
4. Carpenter reported the developers of Patterson Flats Apartments have pursued a Brownfield agreement (the “Agreement”) with the State due to possible environmental concerns at the property. Carpenter reminded the Board that as nominee title owner of the property, the Board is a party to the Agreement; however, there is no financial or legal exposure to the Board, nor any current action that needs to be taken by the Board because of the Agreement. Carpenter recommended the execution of the Agreement.
5. Carpenter reported the Dogwood Trace PILOT Transfer is ready for Board execution. Carpenter reported the Millcreek PILOT Transfer is scheduled to close not later than May 16, 2018.
6. Carpenter reported Pendleton Place and Keystone Landing have received from Tennessee Housing Development Agency (THDA) their (i) volume cap and (ii) low income housing tax credit allocations and will be on the May Board meeting agenda for Final Bond Resolution consideration. The developers plan to close both the Bond and PILOTs for both properties in May.
7. Carpenter reported ongoing work with staff at the City and County offices to clarify current outstanding PILOTs for their records. Carpenter also reported ongoing work with staff and the independent auditors regarding outstanding bonds.
Buckner Wellford asked to the status of disbursement of funds owed to the City for MHA PILOT project closings, to which Carpenter reported a letter was sent to the Memphis Housing Authority (MHA) stating a set time frame in which to produce a written modified agreement with the City regarding the disbursement of funds. Carpenter added that the date passed without any word from MHA and the funds on hand for MHA PILOTs were disbursed according to the Board’s current written agreement with the City.
The above concluded the legal report and there being no further concerns or questions, the legal report was completed.
Martin Edwards, Jr. stated the PILOT committee met and their recommendations would be detailed in the Action Items portion of the meeting.
CONSIDERATION OF AFFORDABLE MULTIFAMILY PILOT APPLICATION FOR OWENS PLACE TOWNHOMES
Stephen Turgeon, Jerry Johnson and Darin Burns entered the meeting.
Darin Burns outlined the 81-unit Church of God in Christ (COGIC) owned property, including plans to develop an additional 20 units on an adjoining lot. Burns added they are in application proceedings with HUD to develop market rate units across the street. Stephen Turgeon stated the timeline for new development construction to begin is set for Fall 2018.
James Jalenak moved for the approval of AFFORDABLE MULTIFAMILY PILOT APPLICATION FOR OWENS PLACE TOWNHOMES. Manoj Jain seconded and the motion passed unanimously.
Stephen Turgeon, Jerry Johnson and Darin Burns left the meeting.
CONSIDERATION OF AFFORDABLE MULTIFAMILY PILOT APPLICATION FOR HIGHLAND CREEK APARTMENTS
Martin Edwards reminded the Board of the existing PILOT agreement and funding challenges the owner has faced. Edwards reported the THDA tax credits for the property have now been successfully transferred for the 2018 allocation year. Edwards stated the owner is currently pursuing a termination of its existing PILOT and consideration of a new PILOT agreement for the property based on the special factual circumstances as has been previously outlined the Board. Per the revised plan, the owner has committed to spending approximately $11 million to revitalize the 446-unit apartments, which would qualify the property for a new PILOT under the Board’s current eligibility criterion.
James Jalenak moved for the approval of AFFORDABLE MULTIFAMILY PILOT APPLICAION FOR HIGHLAND CREEK APARTMENTS. Manoj Jain seconded and the motion passed unanimously.
Corbin I. Carpenter left the meeting.
CONSIDERATION OF BOND INDUCEMENT RESOLUTION FOR EAST GATE VILLAGE APARTMENTS
Charles Carpenter stated the property is owned by the Christian Methodist Episcopal (CME) Church, whose headquarters are located in Memphis. Carpenter reminded the Board that the owners were approved for a PILOT and Bond for John Madison Exum Towers in 2015. Carpenter stated the property is located in Union City, where there is not a Health, Ed. Board. Carpenter added that because the developer has had past experience with the Board and are headquartered in Memphis, they have elected to move forward with an application here. The developer is pursuing (i) volume cap and (ii) 4% low income housing tax credits from THDA. Buckner Wellford stated his concerns for approving an application outside of City limits. Carpenter added that the Board has statewide authority and holds no liability in facilitating the inducement resolution. Wellford asked that all parties involved would submit, for the record, their written support of the Board facilitating the bond inducement. Carpenter added the CME Church plans to use the tax credits to substantially rehabilitate the Section 8 apartment community, which otherwise would not be possible without State involvement. Martin Edwards stated the verbal appreciation he has received from the THDA Executive Director for the Board’s consideration of this bond inducement and added that the property would be subject to HUD REAC inspections.
James Jalenak moved for the approval of BOND INDUCEMENT RESOLUTION FOR EAST GATE VILLAGE APARTMENTS. Manoj Jain seconded and the motion passed; Buckner Wellford abstained from the vote.
CONSIDERATION OF PILOT REFINANCING FOR LANTERN SQUARE APARTMENTS
Martin Edwards referenced the project summary and recent photographs of the 179-unit property. Edwards stated his support for refinancing approval.
Manoj Jain moved for the approval of PILOT REFINANCING FOR LANTERN SQUARE APARTMENTS. Buckner Wellford seconded and the motion passed unanimously.
Presentation from Sheila Jordan Cunningham
Sheila Jordan Cunningham entered the meeting. Cheryl Hearn left the meeting.
Martin Edwards reminded the Board of the brief discussion during the March meeting of the vacant downtown lot located at Fourth Street and Virginia Avenue that is facing environmental issues. Sheila Jordan Cunningham detailed the challenges facing the development of the three-acre downtown lot, including: environmental concerns, delinquent taxes and lack of responsible ownership. Cunningham stated she has spoken with several downtown developers who would be interested in developing the property, once the site has been properly tested and cleaned. Cunningham added the estimated cost for environmental testing is in the range of $150,000. Monice Hagler asked what a worse-case scenario might look like from a financial standpoint, to which Cunningham responded that after the funds were spent for environmental testing, it might be determined that clearing the property for developmental compliance would not be fiscally responsible or possible for a prospective multifamily developer. Cunningham added that should that scenario come to happen, there are other options for developing the property, such as paving for a parking garage. Buckner Wellford asked if we might be presented with a list of priority blighted projects that might maximize the Board’s investment moving forward. Cunningham stated that after thorough investigation into blighted multifamily projects, it was difficult to determine a single project that might be desirable for redevelopment. Charles Carpenter asked if there might be a full or partial return of funds invested by the Board, once the property is properly sold, to which Cunningham responded positively. Hagler asked that Cunningham might return at the May Board meeting with a more defined structure of possible funding sources and other steps for moving forward.
Sheila Jordan Cunningham left the meeting.
Executive Director Report
1. Martin Edwards, Jr. stated his discussions with Amy Schaftlein, Executive Director for United Housing, regarding the removal of blighted properties for veteran use with the assistance of THDA. Edwards added he does not have full details on the proposed process or possible HEHF involvement, but stated he would continue discussions for the Board’s information. Charles Carpenter stated that the Board’s involvement would need to be clear within the multifamily mission statement.
There was no official new business; however, the Board engaged in a general discussion of the following items:
1. The Board discussed the merits and concerns of proceeding with the priority of the Cunningham suggestion regarding the environmental cleanup of the downtown acreage and how the potential involvement of the Board could best be accomplished. It was discussed that the project would be too large for the Board to pursue alone, however, it could consider entering a memorandum of understanding (“MOU”) with other appropriate public/private parties, outlining a pledge of repayment of funds advanced, contributions to be made by the other entities to the environmental and pre-development costs and other relevant considerations. It concluded with a commitment for further discussions after obtaining additional information.
2. Further, Manoj Jain asked how developers determine profitability from a project, to which Martin Edwards referenced an example of the cash flow analysis worksheet that was submitted for the Owens Place Townhomes. In discussing how site management and occupancy rates directly impact the viability and success of a multifamily property, Jain questioned best practices for management and how quantifying those practices might be beneficial for future developers and managers. After further discussion, Jain suggested the Board consider various broad impact practices that might be discussed to improve project safety and success, with an emphasis on site management. Monice Hagler suggested consideration might be given to what site management practices might be added to the tenant benefits portion of the application. The discussion was deferred pending further staff consideration.
There being no public comment, it was announced that the next scheduled meeting of the Board will be held on Tuesday, May 8, 2018 @ Noon. There being no further business, the meeting was adjourned by the Vice-Chair at 1:41 p.m.