MINUTES OF REGULAR MEETING OF
THE HEALTH, EDUCATIONAL AND HOUSING FACILITY BOARD
OF THE CITY OF MEMPHIS, TENNESSEE
Wednesday, July 10, 2019
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, July 10, 2019. 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:
Daniel T. Reid, Chair Cliff Henderson
Monice Hagler Brittney Rowe
The following Directors were absent:
Buckner Wellford Dr. Manoj Jain
Also present were:
Staff members Martin Edwards, Jr., and Stephanie Wright were in attendance. Charles E. Carpenter and Corbin I. Carpenter, General Counsel, and Cheryl Hearn, Assistant City Attorney, were also in attendance.
Marcia Lewis and Dexter Washington with Memphis Housing Association (MHA) and Holly Knight with BGC representing MH Strategies Family RAD, LP.; Vanecia Kimbrow and Carl Mabry representing Feels Like Home Senior Living; Steve Rudesill representing Hillcrest Apartments; and Ronald Harkavy with Harkavy, Shainberg, and Kaplan, Dragan Kocic and David Upton representing New Horizon Apartments were also present.
With a quorum present, the regular meeting of the Board was called to order at 12:00 Noon by Chairman, Daniel T. Reid.
Approval of Minutes
James Jalenak moved for approval of the Minutes of the June 5, 2019 Regular Meeting. Brittney Rowe seconded, and the motion passed unanimously.
Finance Committee Report
Cliff Henderson presented the financial results for the month ended May 31, 2019. A discussion of the financials was completed and
Nancy Willis moved for acceptance of the Finance Committee Report for May 31, 2019, 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 there were no new lawsuits, but one claim was received for the period, being a materialman’s claim filed against Eden at Watersedge Apartments for unpaid supplies invoices. Carpenter reported that this claim was just received this week, so he and his firm are still performing the due diligence necessary to evaluate the claim and communicate with the lessee. Carpenter’s firm has reached out to the PILOT Lessee for Eden at Watersedge and the Lessee is looking into the matter and will report back to Carpenter’s firm. Carpenter reminded the Board that it does have statutory immunity because it is providing a public service on behalf of the City of Memphis, so there is no liability that will attach to the Board or its members financially or otherwise.
2. Carpenter reported that the refinancing for Sunrise Terrace Apartments has been completed. This refinancing will provide the cash flow needed to complete the rehabilitation of the project. Martin Edwards, Jr. expressed his approval of the refinancing of this project as well. Carpenter stated that this property is located next to another PILOT property, Bent Tree Apartments, which is currently moving in the right direction and occupancy numbers are increasing. Carpenter stated that the success of both projects will be a great rejuvenation for the Whitehaven/Airport community.
3. Further for informational purposes, Carpenter provided an update to the Board on the Jehl Cooperage property. Carpenter reminded the Board that this is the environmentally challenged vacant land surrounded by several projects owned by the Elmington Capital Group that the Board has provided support through tax-exempt bond financing and PILOTs. Carpenter reported that his firm has been working with the Downtown Memphis Commission (DMC), as agent for the Board, EnSafe and Sheila Jordan Cunningham, Esq., who has considerable history on the blighted properties in downtown Memphis. Carpenter provided a brief recap that the Board had previously approved a two hundred thousand-dollar ($200,000) grant subject to reclamation if in fact the environmental remediation efforts to the property were successful, and the property is able to be restored for commercial use. If the property is not able to be restored for commercial use, the grant would not be repaid. Further, Carpenter reported that on July 11, 2019, there is a court hearing regarding the blighted property scheduled before the Environmental Court involving the City of Memphis and the DMC; Carpenter will represent the interests of the DMC and the Board at the hearing. Carpenter reported that his firm has been working Laurel Williams, Esq., attorney for EnSafe and Sheila Jordan Cunningham on the form of the proposed court order outlining the purpose and agreement in connection with the two hundred-thousand-dollar ($200,000) grant being made by the Board; as well as, to make it clear that the Board is not intending to advance any additional funds. Moreover, if it is determined by preliminary testing that the land is too environmentally contaminated, the testing will be shut down and the Board will receive a refund of any remaining unused funds. Carpenter stated that he will continue to provide updates on the testing as the process moves forward.
4. Lastly, Carpenter reported that his firm has closed the refinancing for Jamesbridge Apartments and is working toward the closing of the Pershing Park PILOT Term extension.
The above concluded the legal report and there was a brief question and answer session with members of the Board.
PILOT COMMITTEE REPORT
Martin Edwards, Jr. advised that the PILOT Committee did meet earlier and considered various matters, but he would reserve his report and comment under the heading of Action Items on the Board’s agenda.
BOND INDUCEMENT RESOLUTION FOR MH STRATEGIES FAMILY RAD, LP
Marcia Lewis, Dexter Washington, and Holly Knight entered the meeting.
The presentation began with introductions: Marcia Lewis as the Chief Executive Officer of the Memphis Housing Authority, Dexter Washington, the Chief Operating Officer of the Memphis Housing Authority, and Holly Knight, the Chief Executive Officer of BGC Advantage, the master developer for the conversion of the RAD project. Lewis stated the HUD is responsible for over ninety percent (90%) of funding for MHA, which has continued to decline over the years. This funding includes operating funds and capital funds, which are used for the constant upkeep of MHA properties. Lewis stated that MHA has approximately two thousand six hundred (2600) public housing units throughout the City of Memphis and another eight thousand (8000) Section 8 housing vouchers throughout Shelby County, Tennessee. HUD has a program called the Rental Assistance Demonstration Program (RAD). Lewis stated that before the implementation of RAD, federal appropriations were being reduced each year, and as a result, MHA was unable to keep up with repairs on many of its housing developments. In addition, the Board was advised that under the current system MHA had no ability to take out loans against its public housing portfolio, because public housing cannot be used as collateral; therefore, RAD has been developed to provide additional financial options to maintain and improve public housing portfolios. In general, RAD will allow conversion of public housing to Section 8, allow the tenants to remain in their homes, and will permit MHA to complete a financial restructuring of the existing asset by allowing the units converted to Section 8 funding to be used as collateral, for new funding sources, such as tax-exempt bonds and low income housing tax credits. Lewis further expressed her desire to partner with the Board and the Tennessee Housing Development Agency (THDA) with this application for bond inducement. The bond application being presented to the Board today provides for a new non-profit entity to be created, named Memphis Housing Strategies Family RAD, which will include College Park Senior and College Park Family, Askew Place, Uptown Rental Homes, as well as a new construction project on vacant land currently owned by MHA, which is currently proposed for veteran housing. These properties include a total number of four hundred seventy-two (472) RAD units, with the potential for a total of five hundred fifty-seven (557) units at project completion. It is anticipated that job creation will provide over one thousand nine hundred (1900) temporary jobs and approximately thirty-seven (37) permanent jobs to be created through this project. MHA has partnered with BGC Advantage. BGC Advantage has completed over thirty-five (35) RAD conversions. Lewis also explained the background shared by herself and Holly Knight with HUD. Knight also explained that BGC Advantage is specifically focused on working with housing through the partnership. Knight also stated that BGC does not take from the cash flow of the project in terms of developer fees in an effort to position housing authorities for long-term success with the ability to have resources available to continue to reinvest in their properties. This project has submitted an application to the THDA for four percent (4%) Low Income Housing Tax Credits (LIHTC). There was a brief discussion among the Board and the representatives for MH Strategies family RAD. Charles Carpenter stated that the Board is excited about the opportunity, particularly the structure, as it is very pleasing that MHA will have an equity position going forward. Carpenter asked what the proposed timetable will be for the project. Knight responded that, if approved by the Board, an application will be immediately submitted to THDA with a goal to close by the end of 2019, but no later than first quarter of 2020. Lewis stated that they have been in close communication with THDA and THDA is ready for the submission of their application. Nancy Willis asked if there is insurance in place on the properties under MHA. Lewis and Knight responded that there is a requirement for insurance on all properties, that included extensive underwriting. Lewis also stated that there are requirements for physical needs assessments and special needs assessments for these properties in this particular project. Carpenter stated that this Bond Inducement Resolution will allow the developer to begin the application process with THDA and move forward with underwriting, and this project certainly fits within the mission of the Board and qualifies for his favorable recommendation for approval by the Board. Martin Edwards, Jr. also stated his support for the application. There being no further questions or comments,
Brittney Rowe moved to approve the BOND INDUCEMENT RESOLUTION FOR MH STRATEGIES FAMILY RAD, LP. Cliff Henderson seconded, and the motion passes unanimously.
Marcia Lewis, Dexter Washington, and Holly Knight left the meeting.
AFFORDABLE MULTIFAMILY PILOT APPLICATION FOR FEELS LIKE HOME SENIOR LIVING
Vanecia Kimbrow and Carl Mabry entered the meeting.
Dan Reid began by stating this application has been reviewed by the PILOT Committee and is a great application. Reid asked if the representatives present would provide a brief background of the project. Vanecia Kimbrow introduced herself as the managing partner of the ownership group for the project and introduced Carl Mabry as a consultant with Results Management. Kimbrow began by stating that Feels Like Home Senior Living is an operating, one hundred twenty-unit senior living facility that is under redevelopment. The property was first acquired in 2016, which is also when work began on the project and has continued at a slow and steady pace. All units are unsubsidized, and if granted the PILOT, the ownership is committed to transitioning forty percent (40%) of these units to residents whose income is below sixty percent (60%) of the area median income. Kimbrow went on to explain that there are many benefits provided to these seniors so that they are able to age more comfortably in place. Kimbrow stated that all meals are part of the monthly rent, as well as utilities and social activities. This is an independent living facility that was founded out of personal missions and experiences of Kimbrow and the co-owner of this facility. There being no further questions or comment,
James Jalenak moved to approve AFFORDABLE MULTIFAMILY PILOT APPLICATION FOR FEELS LIKE HOME SENIOR LIVING for a twenty (20) year term. Brittney Rowe seconded, and the motion passed unanimously.
Vanecia Kimbrow and Carl Mabry left the meeting.
AFFORDABLE MULTIFAMILY PILOT TERM EXTENSION APPLICATION FOR HILLCREST MEMPHIS, L.P. D/B/A HILLCREST APARTMENTS
Steve Rudesill entered the meeting.
Dan Reid stated that the PILOT Committee has met and had looked favorably upon this application for a PILOT term extension and asked that Steve Rudesill provide a brief background on the project. Rudesill began by stating the he has thirty-five (35) years’ experience in multifamily housing, with thirty (30) years of his experience being in the City of Memphis. Rudesill also stated that Hillcrest has been under his partnership’s control for over thirty (30) years. He advised that the property underwent a tax credit renovation in 2007, during the economic and housing recession; notwithstanding, the ownership has been able to continuously maintain the property as quality, affordable housing in the Whitehaven area. If approved, the ownership plans to provide additional tenant benefits with the savings from a PILOT term extension to continue its mission. Martin Edwards, Jr. stated that the application promises that the entirety of the tax savings is to be reinvested in the property. Rudesill agreed and also stated that no cash flow has been taken out of the property, but has been reinvested in the property for the benefit of the tenants and maintaining quality housing. Edwards stated this this is a great property that has done a wonderful job in maintenance and restoration and has continued to be in compliance throughout the duration of the original PILOT term. There being no further questions or comments,
Monice Hagler moved to approve AFFORDABLE MULTIFAMILY PILOT TERM EXTENSION APPLICATION FOR HILLCREST MEMPHIS, L.P. D/B/A HILLCREST APARTMENTS for a ten (10) year term. Brittney Rowe seconded, and the motion passed unanimously.
Steve Rudesill left the meeting.
AFFORDABLE MULTIFAMILY PILOT TERM EXTENSION APPLICATION FOR CAPITAL EQUITIES LLC D/B/A NEW HORIZON APARTMENTS
Dragan Kocic, David Upton, and Ronald Harkavy entered the meeting.
David Upton introduced himself to the Board, then proceeded to introduce Dragan Kocic, the managing partner of New Horizon Apartments, and Ronald Harkavy, legal counsel for New Horizon Apartments. Dan Reid stated that the PILOT Committee has met and looked favorably upon the PILOT Term Extension application for New Horizon Apartments. Martin Edwards, Jr. added that the Board appreciated the steps that ownership has taken with New Horizon Apartments within the last year in terms of moving forward with increased occupancy, as well as the investment of funds into the property, which is located in a key area of the Whitehaven community. Kocic thanked Edwards for his kind remarks. Kocic proceeded to address the Board, stating that the PILOT program facilitated by the Board and the support of the Board is invaluable to the longevity and stabilization of this community. Kocic stated that New Horizon currently serves approximately two thousand eight hundred (2,800) residents in six hundred eight (608) units. When full occupancy is reached, New Horizon apartments will be serving close to five thousand (5,000) residents. Kocic explained that operating and managing this property is more like managing a small city, and without the approval of the PILOT term extension, this property would not be facing any reliable future. Kocic also expressed appreciation to many other branches of the city, including the City of Memphis, MLGW, and the Memphis Police Department. Kocic concluded with the statement that nearly one hundred percent of the residents at New Horizon Apartments are low income residents, and expressed his appreciation again to the Board for helping to make the project possible. Edwards mentioned that the Board has made huge efforts in this part of the City, referencing work at Bent Tree Apartments, Sunrise Terrace, and Winbranch Apartments, which are all active participants in the PILOT program and that New Horizon Apartments is a vital part of this community. James Jalenak stated his support of the project and support for approval of this term extension, however, Jalenak wanted to make certain the New Horizon ownership is aware of the PILOT payment increases that will be an integral to the extension as outlined in the Resolution passed by City Council on August 28, 2018. Upton responded that this does not come as a surprise and there will be a plan in place to comply with this aspect of the PILOT program and the Resolution. Kocic agreed, and stated that New Horizon has a lender in place that is prepared to commit funds to this project that will help to reach stabilization in order to create long term stability. The ownership also plans on a refinancing, which will be presented to the Board at the appropriate time. Edwards stated that in his review of this term extension application and the financing portion, that this will provide the property with positive cash flow that will allow ownership to complete the project and move in the right direction. There being no further questions or comments,
James Jalenak moved to approve the AFFORDABLE MULTIFAMILY PILOT TERM EXTENSION APPLICATION FOR CAPITAL EQUITIES LLC D/B/A NEW HORIZON APARTMENTS for a “High Impact” fifteen (15) year PILOT extension term. Brittney Rowe seconded, and the motion passed unanimously.
Dragan Kocic, David Upton, and Ronald Harkavy left the meeting.
PILOT TRANSFER APPLICATION FOR LAKES AT EPPING WAY (F/K/A LANTERN SQUARE APARTMENTS)
Martin Edwards, Jr. began by stating that the new ownership in this PILOT transfer application for Lakes at Epping Way is the same ownership as Jamesbridge Apartments. Edwards stated that this a great property and ownership with sources and uses that speak to the same. There being no further questions or comments,
Monice Hagler moved to approve the PILOT TRANSFER APPLICATION FOR LAKES AT EPPING WAY (F/K/A LANTERN SQUARE APARTMENTS). Cliff Henderson seconded, and the motion passed unanimously.
Executive Director Report
Martin Edwards, Jr. began by commending the Board for being engaged in the Jehl Cooperage property. Edwards proceeded to mention how valuable the environmental testing will be for that property as well as the surrounding areas. Charles Carpenter agreed with Edwards comments and stated it is truly a community effort to reclaim the property and restore it to a good use. Carpenter also stated that the first environmental report should be received within the next sixty (60) to ninety (90) days. Edwards also mentioned that he had received a letter from the Mayor of the City of Memphis, requesting that he serve on the advisory committee for the Affordable Housing Trust Fund. Edwards stated that he has declined the invitation to serve on the committee because he felt that a Board member would serve better as a member of this committee rather than himself; as well as, Edwards did not want to cause any potential of conflict of interest. Edwards asked that the Board consider which member could best serve on this committee as a representative for the Health Ed Board. Dan Reid mentioned what an honor it was to have received a personalized letter to Edwards requesting he serve on this committee, and asked that the Board members consider the possibility of serving on the advisory committee. Reid mentioned that discussion would be available on this subject and Edwards could also be contacted for further discussion and consideration. Edwards stated that he believes the Affordable Housing Trust Fund will be something great for the city and provide the opportunity to build something up that may not otherwise be possible.
The above concluded the Executive Director Report.
Dan Reid reported that Board member, Brittney Rowe, has recently accepted new job responsibilities causing her to relocate to Nashville, Tennessee and will be resigning from the Board. Brittney Rowe addressed the Board and stated that this was not on the horizon when she accepted her position on the Board and apologized for the brief term, but also expressed her appreciation for her time spent serving on this Board. Reid stated that Rowe was sought out for this Board because of her extensive knowledge in bond financings, as well as, her experience with multifamily housing, and she will be missed. Reid further expressed that the Board will seek an individual to fill Rowe’s position on the Board with these same strengths and experience. Reid expressed that although Rowe served for a short amount of time, that she has been extremely valuable, and the Board appreciates everything that Rowe has done. Rowe expressed that she is happy to make herself available as long as needed for Board meetings to continue to meet a quorum until a replacement is selected.
Martin Edwards, Jr. expressed his appreciation to the Board for the work that was accomplished in this meeting and for making themselves available to be present and take on such a heavy agenda. Dan Reid seconded Edwards’ comments and also expressed his appreciation to the Board members that consistently attend and work through each Board meeting and serve on the Board.
Charles Carpenter added that he is also very appreciative of the Board and explained that he has seen a new definition of the Board and the mission of the Board is becoming clearer and more enhanced. Carpenter stated that with the talent of the Board members, the Board is getting it right and it is helping to move the community forward and thanked the Board members for all they do.
There was no public comment.
It was announced that the next scheduled meeting of the Board will be held on Wednesday, August 7, 2019 @ Noon. There being no further business, the meeting was adjourned by the Chair at 1:10 p.m.