MINUTES OF REGULAR MEETING OF
THE HEALTH, EDUCATIONAL AND HOUSING FACILITY BOARD
OF THE CITY OF MEMPHIS, TENNESSEE
Wednesday, April 5, 2023
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 29, 2023, and 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 offices of the Board, located at 65 Union Avenue, Suite 1120, Memphis, TN 38103.
The following Directors were present:
Daniel T. Reid, Chairman Monice Hagler, Secretary (Zoom)
Buckner Wellford (Zoom) James Jalenak
Cliff Henderson Katie Shotts (Zoom)
The following Directors were absent:
Dr. Manoj Jain
Staff and others attending: Martin Edwards, Jr., Stephanie Bryant and Bryce Miller; Charles E. Carpenter and Corbin I. Carpenter, General Counsel; Cheryl Hearn, Deputy City Attorney.
Also participating via remote Zoom virtual platform and/or in person were Frank Carney and Elizabeth Friary of Evans Petree, PC and Mendel Fischer and Shrange Marasow of MCF Capital Management, LLC representing Timber Pines Apartments, and Eden Pointe Apartments; Deborah Payne and Luretha Phillips with Memphis Housing Authority representing Edgeview at Legends Park Senior Apartments; Hunter Humphreys of Glankler Brown, PLLC representing New Horizon Apartments; Justin Moore and Rose Eaton of Fallbrook Financial Services Company representing Winchester Grove Apartments; 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 5, 2023 @ 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.
Approval of Minutes
Cliff Henderson moved for approval of the Minutes of the March 1, 2023 Regular Meeting, which was seconded by James Jalenak, and the motion passed unanimously after proper roll call vote of the Board members.
Finance Committee Report
Cliff Henderson presented the financial results for the month ended February 28, 2023. Wellford asked where the Board stands in discussions of identifying ways of using some of the Board’s funds in working cooperatively with entities that are providing services such as infrastructure improvements or blight organizations that would be relevant to helping promote places for lower- and middle-income level multifamily housing. Dan Reid stated that he, Charles Carpenter, and Corbin Carpenter had a tour with Oasis of Hope and were very impressed with their missions and what they are doing and have begun to identify those who would benefit from assistance, but the Board has not identified a dollar amount. Reid stated that he has requested Oasis of Hope to provide a list of their programs and services to review. Reid asked Cliff Henderson if he had any additional comment on the matter. Henderson stated that he will be pulling together a committee to generate those ideas and bring them back before the Board. Wellford expressed his appreciation in finding a way to be proactive in this endeavor. James Jalenak commented on the potential benefits of establishing a foundation or a process for grants being offered to assist in the improvement of projects and assistance in bringing social services to projects. After discussion,
James Jalenak moved for acceptance of the Finance Committee Report for the month ended February 28, 2023, properly seconded by Buckner Wellford, and the motion passed unanimously after a proper roll call vote of the Board members.
Attorney’s Report
Charles Carpenter presented the legal report, as follows:
1. Carpenter reported on one (1) new claim filed against the Board, as title holder and PILOT Lessor in connection with one of the Board’s PILOT properties:
a. A Tennessee Human Rights Commission claim against New Horizon Apartments
Carpenter reported that this claim was filed through the Tennessee Human Rights Commission by a potential tenant of New Horizon Apartments who was denied. She alleged discrimination against her and her minor son, who has a disability. Carpenter stated that his firm has been communicating with the attorney for New Horizon Apartments and reviewed relevant portions of their internal records. Carpenter further advised that his firm has prepared an initial response to the Tennessee Human Rights Commission on behalf of the Board and the attorney for New Horizon Apartments has provided its initial response. Carpenter stated he is awaiting reply from the Tennessee Human Rights Commission as to the next steps in adjudication of this matter. Carpenter reported that after preliminary review, it appears that the tenant did not qualify under the basic underwriting guidelines at New Horizon Apartments and was not the result of any discriminatory action. Martin Edwards, Jr asked if this included any structural issues concerning New Horizon Apartments, to which Carpenter replied it was not. Carpenter stated that there appears to have been a delay in the filing of the complaint because the facts indicated the events to have occurred in the summer 2022 and the complaint is just now being processed; nonetheless, all PILOT Lessee records are in place, and they were able to reconstruct what happened and are in a position to properly defend this matter. Carpenter reminded the Board that is has no liability in the matter as the Board is providing a public service under the PILOT program, but the Board is involved because the property is deeded in the Board’s name. Carpenter advised that in these situations, his firm ensures that the PILOT Lessees are in compliance with all federal and state legal requirements. Carpenter will continue to monitor the matter and keep the Board advised.
2. Carpenter reported PILOT property activities, to wit:
a. Summit Park PILOT closed on March 30, 2023.
b. Bridgeport Manor PILOT closed on April 4, 2023.
Carpenter stated that Bridgeport Manor is on the agenda of action items for this meeting, but since it is now closed, that item can be removed from the active agenda today.
3. Carpenter reported receiving a new mechanics lien claim for resurfacing and make-ready services against Ashton Hills Apartments. Carpenter reported that the Board received a demand for payment stating that the claim is for less than three thousand five hundred dollars ($3500). Carpenter stated that his firm will contact the PILOT Lessee to find out what the circumstances are regarding this issue so that it can be resolved.
4. Carpenter reported that his firm has been working with the various parties of other PILOTs in the queue for closing to understand what needs to take place to finalize those closings.
5. Carpenter reported that notice has been received of a partial optional redemption for variable rate taxable bonds with Pedcor Investments for Ashland Lakes. Carpenter stated that this is a normal process with taxable bonds and is a voluntary redemption of ten thousand dollars ($10,000) worth of bonds, which is handled through the bond trustee. As the issuer, the Board does receive notice for record keeping purposes, but there is no action required by the Board.
6. Carpenter reported that the Environmental Court has been more active with Code Enforcement and with the City Attorney’s office. Carpenter stated that as legal counsel to the Board, his office facilitated the coordination among the PILOT Lessee, Code Enforcement, and the courts to make sure that PILOT Properties are in compliance with local code as well as all other requirements, so that the Board is timely aware and able to help facilitate compliance. Carpenter stated that there are currently several PILOT properties that are in Environmental Court and his office is overseeing and monitoring the compliance efforts of each PILOT property.
7. Finally, Carpenter advised the Board that Tennessee Housing Development Agency (THDA) has published its report for 2022, which includes a statewide analysis. THDA has estimated the economic impact of its related activities in Shelby County in 2022 was estimated to be approximately three hundred forty-six million dollars ($346,000,000). Carpenter advised that the Board could publish this information of its website or provide a link directed to THDA for an analysis of how THDA arrived at those economic impact figures for Shelby County.
There being no further questions or comments, the Legal Report was concluded.
Action Items-
1. PILOT Refinancing Application for Gowan Pines Apartments, LLC (d/b/a Timber Pines Apartments)
Charles Carpenter introduced the agenda by stating that this is a refinancing application for Timber Pines Apartments which is an active PILOT property in the Board’s PILOT program. Carpenter stated that the PILOT Lessee is represented by Frank Carney, legal counsel to the applicant, and the property has been reviewed by the Board’s internal and external monitoring teams. Carpenter stated that based on his firm’s review, the application is in compliance with the Board’s policies and procedures and would recommend approval. Carpenter invited Carney to make any additional comment. Carney stated that ninety-five percent (95%) of the units are rehabilitated, and some external work remains. Carney stated that this refinancing application is moving the refinancing from a bridge loan to get all the rehabilitation completed to a more permanent loan with a better interest rate. Carpenter stated that the application’s sources and uses show there is a reservation of approximately one million four hundred thousand dollars ($1,400,000) that will be used for ongoing work and reserves and asked Carney to provide additional details. Carney explained that there is ongoing external work that will continue to be done to get the property in tip top shape, so those funds will be used for that as well as ongoing maintenance and operations of the property. Carpenter asked what the time frame is for completing this ongoing work. Carney stated that the projected completion is December 2023. Cliff Henderson stated that according to the compliance report, there seem to be some drainage issues on the property and asked if this is on the list of items to be resolved. Mendel Fischer stated that drainage issues have already been resolved and completed on one side of the property and that the remaining drainage issues are part of the external work that is currently being done. There were being no further questions or comments,
Cliff Henderson moved to approve PILOT Refinancing Application for Gowan Pines Apartments, LLC (d/b/a Timber Pines Apartments). James Jalenak seconded, and the motion passed unanimously after proper roll call vote of the Board members.
2. 4th PILOT Closing Extension for Crane Manor Apartments
Carpenter presented this agenda item stating that the PILOT application for this project was approved by the Board in 2021 and three (3) previous closing extensions have been approved since that time. Carpenter stated that neither his office nor Board staff have received any recent communication from the applicant. The applicant’s previous legal counsel, Joe Aldridge, has passed away, but there have been other attorneys in the office who have previously assisted with this project. Carpenter invited anyone in attendance for this agenda item to make any additional comments. Hearing no one, Carpenter stated that since there being no one present for this agenda item, there being no recent communication received from the applicant, and statements from Board staff revealing that the applicant is not in compliance with Board policies and procedures, Carpenter recommended the denial of the 4th PILOT Closing Extension for Crane Manor Apartments. Carpenter stated that if there is no affirmative motion to extend the PILOT, then it would end the process and the 4th Closing Extension would be denied. There being no further questions or comments,
There was no motion to approve the 4th PILOT Closing Extension for Crane Manor Apartments and therefore, the 4th PILOT Closing Extension for Crane Manor Apartments was denied.
3. 3rd PILOT Closing Extension for Mazel in Eden LLC (d/b/a Eden Pointe Apartments)
Carpenter presented this agenda item stating that the PILOT is scheduled to close imminently, and his firm is working closely with legal counsel for the PILOT Lessee to complete this closing. Based on the Board’s policies and procedures, if the transaction closes within thirty (30) days of this approval, there will be no closing extension fee assessed. This approval would be for a six (6) month period. Carpenter recommended approval. There being no further questions or comments,
Monice Hagler moved to approve the 3rd PILOT Closing Extension for Mazel in Eden LLC (d/b/a Eden Pointe Apartments). James Jalenak seconded, and the motion passed unanimously after proper roll call vote of the Board members.
4. 5th Bond Inducement Resolution Extension for Legends Park Senior, LLC (d/b/a Edgeview at Legends Park Senior Apartments)
Carpenter presented this agenda item stating that action items four (4) and five (5) are the same development team, consisting of a joint venture public private partnership between Memphis Housing Authority (MHA) and Pennrose, a private developer in Atlanta. Carpenter stated that the Board has been working with this developer for a couple of years, as they initially came before the Board to induce new construction at the Legends Park property, previously Dixie Homes property, and subsequently came back before the Board for a PILOT. The applicant has applied to Tennessee Housing Development Agency (THDA), which is in the current round one for its 2023 multifamily housing allocation. The applicant had previously applied and did not receive a 2022 allocation. The announcement for Round 1 2023 allocation is expected to be made in early May 2023. Carpenter stated that the development team has worked diligently to move this matter forward, and his firm has participated in weekly calls with the bond financing working group to move this forward and recommended approval. Carpenter stated that though this is an unprecedented 5th bond inducement resolution extension, the Board should be notified within the next thirty (30) days as to whether this project will receive allocation from THDA. Also, the PILOT is scheduled to be closed at the time that the bonds are closed.
Let the record reflect that Monice Hagler recused herself from this vote.
There being no further questions or comments,
James Jalenak moved to approve the 5th Bond Inducement Resolution Extension for Legends Park Senior, LLC (d/b/a Edgeview at Legends Park Senior Apartments). Katie Shotts seconded, and the motion passed unanimously after proper roll call vote of the Board members.
5. 2nd PILOT Closing Extension for Legends Park Senior, LLC (d/b/a Edgeview at Legends Park Senior Apartments)
Let the record reflect that Monice Hagler recused herself from this vote.
There being no further questions or comments,
Cliff Henderson moved to approve the 2nd PILOT Closing Extension for Legends Park Senior, LLC (d/b/a Edgeview at Legends Park Senior Apartments). James Jalenak seconded, and the motion passed unanimously after proper roll call vote of the Board members.
PILOT Default Status Updates:
1. New Horizon Apartments
Carpenter stated that New Horizon Apartments is a property that the Board has had on its agenda for an extended period of time. Internal and External monitors have gone out to the property and Carpenter advised the board of the compliance reports included in the Board materials, as well as the PILOT Lessee has provided a written report to the Board. Carpenter invited Martin Edwards, Jr and Bryce Miller to provide additional comments from inspections of the property. Edwards stated that he and Miller visited the property as recently as April 4, 2023 and stated that there has been constant improvement at the property. Miller stated that he has also observed significant progress over the course of the last several months, specifically following a meeting held with the owners and representatives on site in December 2022. Miller stated that everything discussed at the meeting seems to be coming to fruition, workers are at the property, construction seems to be progressing very well, and there seems to be a very apparent change in the culture at the property. Miller stated tenants were riding around the property on personal golf carts, waiving, smiling, and happy to be there. Miller stated the there was a general appearance that the property has taken a significant turn for the better. Miller stated that security is still strong at the property, stopping every person pulling in and all persons are asked to identify themselves.
Miller stated that the residents appeared to have more of a sense of community that is growing. Miller also stated that work has commenced on several areas of the property that were burnt out and construction is being actively completed on those areas. In conclusion, Miller stated that overall, the property is in much better shape and made a turn for the better.
Carpenter invited Hunter Humphreys to make any comments on behalf of the PILOT Lessee. Humphreys stated that he is filling in for Mark Jobe, who typically represents the PILOT Lessee, and Yitz Horowitz was also not able to participate due to the Passover Holiday. Humphreys stated that the detailed report provided to the Board by the PILOT Lessee includes details on construction progress, security, Red Door Program expansion, and the HEAL 901 program initiated on the property. Carpenter stated that the Board is pleased to see the tenant services, Red Door and HEAL 901, implemented on the property and as commendable tenant services.
Carpenter asked about tenant maintenance calls, commending the property for the efficiency of tenants being able to submit those maintenance requests online, but stated that there seems to be a high number of maintenance requests and asked for further explanation. Humphreys stated that he would follow up with the PILOT Lessee and report back to the Board, though the calls are being responded to promptly and effectively. Humphreys also stated that security appears to be working well on the property and is very effective with three (3) officers on duty at all times and the ability to report directly to the security by residents. Carpenter stated that the property seems to have turned a corner and the Board is appreciative of the diligence that current ownership is putting forward. Carpenter stated that based on the report of the PILOT Lessee and compliance monitors, New Horizon should report at the June 7, 2023 Board meeting and the Board will assess the progress at that time and take the necessary steps going forward. Carpenter reminded the PILOT Lessee that all written reports are to be submitted to the Board a minimum of one (1) week prior to the meeting.
2. Winchester Grove Apartments
Carpenter stated that Winchester Grove is another property that the Board is familiar with because of the oversight and monitoring that has been exhibited over an extended period. Carpenter reminded the Board of internal monitoring compliance reports as well as a written update provided by the PILOT Lessee in the Board meeting materials. Carpenter then invited comments by Martin Edwards, Jr and Bryce Miller, to be followed by comments by representatives for Winchester Grove. Edwards stated that there seems to be a peaceful change for the better at this property and he and Miller are satisfied with the construction progress that has been made.
Miller asked the PILOT Lessee for an updated construction timeline, stating that the Board is aware of the delays involving Memphis Light Gas and Water (MLGW) placing meters on units as well as delays with plumbing inspections. Justin Moore reported that Building 11 construction is now complete and awaiting power to one (1) unit and working on plumbing permit for another unit. Moore stated that for Building 12, the PILOT Lessee is still waiting on the power issues with MLGW and working through plumbing inspections. Building 22 construction is complete and waiting for MLGW resolution for one (1) unit. Moore reported that common areas are under construction, a construction office, which is almost complete, the community center is approximately fifty percent (50%) complete and working on bringing MLGW on site in order to get a higher voltage line, as the building will house a common area kitchen and laundry room, and ownership wants to ensure that the proper there is a proper amount of power to the building.
Carpenter asked what the proposed completion date would be. Moore stated that completion is expected by the end of Quarter 2 2023 and his team is working closely with a third-party representative that is assisting them with MLGW issues as well as the property has on site management of Adirondack that is working to get the plumbing inspections completed.
Miller stated that Rose Eaton had reported that the PILOT Lessee was working with a security company regarding the front gate to the property and perimeter fence and requested an update on the progress. Moore stated that the PILOT Lessee has signed a bid with the gate company and repair are scheduled for the first week of June 2023. Moore reported that the entrance gate will be completely renovated, bringing it back so that there will be correct clearance for emergency vehicles and making sure the technology of the gate will integrate with the property management so that management can get the correct security codes out to the tenants. Rose Eaton stated that a contract has been signed with Dillard Door and they have ordered materials and they are approximately eight (8) weeks from commencement of that project. Eaton stated that representatives hope that the installation of a gate will reduce some of the issues that have been ongoing. Eaton reported that the property received a visit from the captain of the area precinct from Memphis Police Department and the property manager is involved in a managers group in the area and has been given referrals for additional security until such time as the gate is completed.
Further, Eaton explained that the property has twenty-five (25) units to complete and the community center construction is awaiting assistance from MLGW. Eaton advised that the property began submitting requests to MLGW in October 2022 and were told MLGW will only connect right (8) meters a day and the property would have to fall into the schedule. This was followed by several area weather delays because existing customers come first, which the property representatives understand. Eaton stated that it took more than three (3) months to get a transformer replaced for Building 12 and the third-party consultant that was hired has been working with the property and MLGW to complete the last of these units.
Carpenter stated that the Board understands the frustration of having completed units and not being able to get power to them so that they may be leased, but it sounds like representatives have found an effective way to navigate through the administrative process at MLGW. Carpenter asked that the PILOT Lessee continue its efforts and hopes that we are coming to an end of this long journey, and it has turned out to be a benefit for the residents in the Whitehaven community. Eaton stated that she would be on site April 19-20, 2023 and would be happy to schedule an on-site meeting with Board representatives during that time.
Carpenter stated that based on the report of the PILOT Lessee and compliance monitors, Winchester Grove should report at the June 7, 2023 Board meeting and the Board will assess the progress at that time and take the necessary steps going forward. Carpenter reminded the PILOT Lessee that all written reports are to be submitted to the Board a minimum of one (1) week prior to the meeting.
New Business
There was no new business.
Public Comment
Joe B. Kent commented that he has been perplexed about the cash balances of quasi-governmental balance sheets in the Memphis community for some time. Kent stated that he asked the EDGE Board to pay back the defense depot residents sixteen million dollars ($16,000,000) of the approximately twenty-six million dollars ($26,000,000) on their balance sheet. Kent stated that Downtown Memphis Commission (DMC) chose to use their cash assets on an elaborate network of public parking garages downtown, which he stated is rather offensive. Kent stated that based on his calculations he believes the Board would only require approximately one million dollars ($1,000,000) annually to operate the organization.
Kent commended the Board for taking up conversation on ways to give back to the community. Kent also commended the Board for its practices of publicly considering PILOT Extensions. Kent stated that expiring PILOTs are going to fund transit and each time the Board extends a PILOT, it is taking money away from transit and to the extent that the PILOT must be extended, it is always extended at the full previous amount rather than the new capital investment. Carpenter provided clarification that extensions approved by the Board are typically closing extensions, which provides the developer an extension in the time frame for the developer to close the PILOT, which is for a six (6) month period. Carpenter clarified that the Board does not have a payment extension. Carpenter stated that the Board may have a ten (10) year PILOT and that a ten (10) year PILOT Term can be extended for an additional ten (10) years based on a supplemental delegation of authority from the City Council, which took place in August 2018. Since that time, most of the PILOTs now are for the full twenty (20) year term, and once that twenty (20) year period is attained, there is no further extension, and the PILOT is terminated, and the property is returned on the tax rolls at the full fair market value. The Board does not have the ability to have a PILOT that is longer than a twenty (20) year term.
Kent thanked Carpenter for the clarification and stated that he is using the Shelby County Trustee PILOT Report as his reference and will send Carpenter a follow up question so that he may understand the difference in a closing extension and a term extension. Kent expressed his appreciation for the conversation around the topic and referenced an additional request submitted for clarification on abbreviations used on the Edgeview at Legends Park PILOT Application Summary. Kent stated that he has been asked to look into Memphis Housing Strategies and requested a meeting with the Board Chairman or Board legal counsel to better understand Memphis Housing Strategies. There were no further questions or comments.
Chairman Reid stated that the next meeting of the Board is scheduled for Wednesday, June 7, 2023 @ Noon. There being no further business, the meeting was adjourned by the Chairman at 12:56 p.m.