The Health, Educational and Housing Facility Board

 MINUTES OF REGULAR MEETING OF

THE HEALTH, EDUCATIONAL AND HOUSING FACILITY BOARD

OF THE CITY OF MEMPHIS, TENNESSEE

Wednesday, July 9, 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, July 2, 2025, which simultaneously caused the continuous posting to the Daily Memphian website at: www.dailymemphian.com, and the public notice was continuously published 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:

Cliff Henderson, Vice Chairman                          Monice Hagler (Zoom)            

Buckner Wellford                                                         Howard Eddings, Jr., Secretary

Vincent Sawyer                                                              Courtnee Melton-Fant (Zoom)

The following Director was absent:

Daniel T. Reid, Chairman

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 and interns Max Laumann and Jonathan Bostick; Janika White, Memphis City Council Liaison (Zoom).

Also participating in person and/or via remote Zoom virtual platform were John Hatcher of Banks, Finley, White & Company, CPAs; Jessie Wilson and Bill Ganus of November 6 Investments, Ted Fellman of Raymond James, Director Ashley Cash, City of Memphis Housing and Community Development, and Kelcey Johnson, Matt Goud and Richard Harris of Hospitality Hub all appearing in connection with Hospitality Hub-Hub North, LP; Thomas Robinson and Mallory Key of Alco Management Inc. and Ted Fellman of Raymond James representing Hilldale Apartments, Ridgecrest Apartments, Surrey Apartments, Creekwood Village, and Eastern Heights; Nathan Chandler of Key City Capital, David Shores of Multi-South Management Services, LLC, Sarah Brinkman and Gine Osborn of Arbor Realty all appearing in connection with Grahamwood Place and Pinebrook Pointe; Tabetha Thomas of Garden Villas Management and Elizabeth Friary of Evans Petree Law Firm representing Sunrise Villas Apartments; Michael Finch of MLK50; Simeon Ike of Greater Memphis Housing Justice Project; Jan Kidder, Sandra Summers, La Francine Bond, and Curtis Davis of Memphis Interfaith Coalition for Action & Hope (MICAH);  Aerial Ozuzu and Randy Truong of Community Foundation of Greater Memphis; Regina Clarke of SHE Series; Mike Humes; Priscilla McGowan; 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 Cliff Henderson, Vice-Chairman, acting Chairman for today’s meeting in Chairman Daniel T. Reid’s absence.

Chairman Henderson 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, July 9, 2025 @ Noon as an open public meeting in its conference room located at 65 Union Avenue, Suite 1120, Memphis, Tennessee 38103.

Chairman Henderson 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 Cliff Henderson opened the floor for public comment and advised that all comments should be limited to two (2) minutes per speaker.

There were no public comment.

Approval of Minutes

Vincent Sawyer moved for approval of the Minutes of the June 4, 2025 Regular Meeting, which was seconded by Howard Eddings, Jr. and the motion passed unanimously after proper roll call vote of the Board members.

Review of Audit for FYE December 31, 2024

John Hatcher entered the meeting.

John Hatcher of Banks, Finley, White & Co., CPAs, independent auditor for the corporation was introduced. Thereupon, Chairman Henderson reported that the Audit for FYE December 31, 2024 was presented to the Finance Committee members and was approved. Chairman Henderson discussed a summary of the audit and the management report with the Board and confirmed that the auditing firm had issued a clean opinion with no findings, being the highest assurance that could be granted by the auditors. There being no other questions or comments,

Howard Eddings, Jr. moved to approve acceptance of the INDEPENDENT FINANCIAL AUDIT OF THE BOARD FOR PERIOD ENDING DECEMBER 31, 2024. Monice Hagler seconded, and the motion passed unanimously after proper roll call vote of the Board members.

 John Hatcher left the meeting.

Attorney’s Report

Charles Carpenter presented the legal report, as follows:

1.    Carpenter reported on Notices of Non-judicial Foreclosure Sale on the courthouse steps involving two (2) PILOT properties:

2.     

a.    Cedar Run Apartments: This non-judicial foreclosure was originally scheduled for June 20, 2025 and was rescheduled for July 21, 2025 to allow the PILOT Lessee to work with the lender in order to make acceptable financial arrangements. Carpenter stated his Firm has been in communication with the attorneys from Baker Donelson Law Firm representing Fannie Mae who is handling the non-judicial foreclosure sale, and Carpenter will keep the Board advised.

b.    Sunrise Villas: This non-judicial foreclosure did take place on June 27, 2025. Carpenter stated that this is also being handled by attorneys from Baker Donelson Law Firm representing Fannie Mae, and Fannie Mae was the successful purchaser of Sunrise Villas. Carpenter stated that under the Board’s policies and procedures, Fannie Mae steps into the shoes of the PILOT Lessee, and his Firm is working with Fannie Mae as a single-asset entity is being set up to manage the property. Once that single-asset entity is identified, Carpenter stated he will report that to the Board and will also make the entity aware of the covenants of the PILOT Lessee under the PILOT program. Carpenter stated that typically, the primary lender will hold the property until a successful new purchaser is identified, and at that time, the new purchaser would come before the Board with a PILOT Transfer Application to be considered by the Board at a regular Board meeting, so the Board will always know who it is doing business with.

3.    Secondly, Carpenter reported in addition to the Notice of Foreclosure for Cedar Run Apartments, there are two (2) lawsuits that have been filed against Cedar Run Apartments for vendor non-payments, to wit:

4.     

a.    Drew Ellis (d/b/a The Lead Professionals) v. Cedar Run Apartments: This is a matter pending in Circuit Court because it is over the $25,000 limit for General Sessions Court. Carpenter stated his firm has responded to that on behalf of the Board to let plaintiff's counsel know about the statutory immunity of the Board and that the Board is holding the title only as a public function and public service on behalf of the City of Memphis. Based on state law, counsel for the Plaintiff agreed to dismiss the Board from the lawsuit.

b.    Drew Eaton (d/b/a US Lawns) v. Cedar Run Apartments: This is a matter pending in General Sessions Court. Carpenter stated his firm has responded to that on behalf of the Board to let plaintiff's counsel know about the statutory immunity of the Board and that the Board is holding the title only as a public function and public service on behalf of the City of Memphis. Carpenter advised that this matter is set for July 16, 2025, and the Court will dismiss the Board as a party defendant at that time.

5.    Carpenter reported that his Firm has filed responses to the Shelby County Commission PILOT Ad Hoc Committee. Carpenter stated that the committee continues to do its due diligence and gather information as to the various policies and procedures and the program specifics of the various PILOT granting entities throughout the City of Memphis and Shelby County. Carpenter stated that the formal response consisted of the Board’s policies and procedures and how the PILOT program operates. The PILOT Ad Hoc Committee has acknowledged receipt of the Board’s response.

6.    Carpenter reported that there has been an amendment made to the Tennessee Open Meetings Publication requirements that have gone into effect July 1, 2025. Carpenter stated that his Firm has communicated with Board staff regarding these changes, and the Board has been advised and is in full compliance with the new notice requirements. Buckner Wellford asked for details on the changes made. Carpenter stated that this new amendment requires that all public notices must be published in print in a newspaper of general circulation, as well as a secondary publication on a separate and distinct website from the newspaper of general circulation that is owned by an entity other than the newspaper of general circulation, and the website does not require a fee or subscription for the public to view the website. Carpenter stated that the Board has always published its Notice of Public Meeting in The Daily News newspaper, as well as its own website, and that to be in compliance with this new amendment, the Board will also publish Public Notices to the Daily Memphian website. Stephanie Bryant advised that the Board materials includes information that explains these changes that she would also report on this item during the Operations Report.

7.    Carpenter reported that his Firm has been involved in coordination meetings with the City of Memphis Housing and Community Development, Memphis Housing Authority, and others to have a more efficient operation of all of the PILOT properties and affordable housing initiatives that are going on because the need is becoming greater, and the cost of rental units is going up. Carpenter stated that there is a lot of anecdotal information that is being published that shows how much of a rental increase there has been over the past five (5) years and how difficult it's going to be going forward just to be able to rent affordable housing and to have a sufficient number of affordable housing units available.

8.    Carpenter reported Bond activity for the month of June 2025 as follows:

a.    Alco Management, Inc., who is on the Board’s agenda today for different action items, has received allocation of awards for low-income housing tax credits (LIHTC) issued through Tennessee Housing Development Agency (THDA) for Hilldale, Ridgecrest, and Surrey Apartments in Round One. Carpenter stated his firm has been involved with the working group meetings on these bond financings and will reserve additional comments for the action items section of the agenda.

9.    Carpenter reported that by October 1st of each year, all PILOT Lessees are required to submit an annual report to the Tennessee Comptroller’s Office, with a copy being filed with the Shelby County Register’s Office. Carpenter stated that his Firm has shared that information with staff to be posted to the Board’s website so that all PILOT Lessees can access that information. Carpenter stated that there are penalties involved if the report is not filed timely with the Tennessee Comptroller’s Office, followed by a filing of the same report to the Shelby County Assessor’s Office.

10. Finally, Carpenter reminded the Board that it serves as administrator for the Memphis Housing Authority (MHA) PILOT program, which is a twenty (20) year term. Carpenter stated that some MHA properties have reached and/or nearing the end of that 20-year period or will be within the next 6-12 months. Carpenter stated that MHA serves very low-income families, and at the end of a PILOT term, there are still going to be a lot of challenges in returning these properties back to the tax rolls at fair market value. As a result, Carpenter reminded the Board of the 90-day abeyance request that was approved at the Board’s June 4, 2025 Board Meeting to allow time for MHA to explore any options that would be available to either seek a modification of authority or some other mechanism that would permit these properties to retain some sort of tax abatement due to the need of the properties and the population they serve. Carpenter stated that his Firm has been in discussions with MHA and there may be a need to get the Memphis City Council involved. Trey McKnight stated that Mayor Young has asked that the Board get involved with this as well. McKnight stated that he met with Mayor Young about a month ago concerning this trying to seek some type of remedy for MHA PILOTs going back onto the tax rolls.

Carpenter stated he would reserve any additional comments for action items. There being no further questions or comments, the Legal Report was concluded.

 Action Items-

Jessie Wilson, Bill Ganus, Ted Fellman, Ashley Cash, Kelcey Johnson, Matt Goud and Richard Harris entered the meeting.

1.    Bond Inducement Resolution for Hospitality Hub-Hub North, LP

Charles Carpenter began by asking all representatives for this agenda item to introduce themselves to the Board. Following introductions, Carpenter stated that this is a very exciting project that is coming before the board today for a bond inducement. Carpenter stated that he, Trey McKnight, and Stephanie Bryant had the privilege and pleasure to tour the Hospitality Hub site located at 590 Washington Avenue on Monday, July 7, 2025. This location is the old inspection station right down from Juvenile Court. Carpenter stated that Kelcey Johnson and his team were very gracious in hosting and showing them around the facility and are doing a tremendous amount of work. Carpenter stated that he did not know about the great work that is being done there and has been done for a number of years now. Carpenter reported that the Hospitality Hub deals with the unsheltered population, families and children in particular, and coordinates various social services for all the agencies in Memphis, with a focus on families and children. Carpenter stated that this new project will be located where the old Manasses High School was located and there will be a new construction of modular homes to specifically address unsheltered families and students in the public school system.  Carpenter stated that THDA is expected to hold a Round Two for LIHTC allocation this year, which should be announced soon, and all transactions granted allocation during the year must close prior to December 15th of that year. Carpenter turned the meeting over to Ted Fellman to explain the proposed bond structure for this project.

Fellman stated he is located in the Raymond James’ Nashville office, but works with this Board a lot, and with the Hospitality Hub-Hub North project bond structure, this will be a cash-collateralized bond and is like bond structures the Board has seen with many other projects. Fellman stated this will be a short-term cash-collateralized bond structure with a 2–3-year maturity of the bonds, so they would only be outstanding through construction. Fellman stated this project is looking at a $15 million inducement, Raymond James has reviewed the financials, and there are plenty of resources to collateralize the bonds, and it is a structure the Board has seen multiple times.

Trey McKnight stated that as Carpenter had already reported to the Board, he did tour the Hospitality Hub facility and could not have been more impressed with what they are doing at that location. McKnight stated that as Carpenter has previously stated, they are doing work that no one else is doing, and McKnight wants the Board to assist them in any way it possibly can.

Carpenter invited representatives of the Hospitality Hub to provide any comments they would like to make. Kelcey Johnson stated that what Hospitality Hub is doing at 590 Washington Avenue is the primary starting point for someone who begins to find themselves with nowhere to go. Johnson stated that this facility serves individuals and families suffering from domestic violence, mental health, and addiction issues. Johnson stated that the fastest growing group of people experiencing homelessness they are seeing are those that are exiting out of foster care. Johnson stated this is being seen all over the United States and one of his project managers spearheaded the Pilot YSTP Program that was put in approximately 20 cities and was put in place to shelter and then house young people coming out of foster care and only one city in the United States was successful in maintaining funding for the program, which was Hospitality Hub. Johnson stated that the program has now been expanded, and Hospitality Hub works with over 120 partners, and this is not just about sheltering people and helping them get housed and working through the challenges of addiction or other things that is common knowledge. Johnson stated that Hospitality Hub is a place where people can get vital documents, birth certificates from around the world so that people are able to get state ID to get benefits, drivers licenses, and things like that. Johnson stated that Hospitality Hub has partnered with both the City of Memphis and Shelby County, the Downtown Clergy Association, and others to fill the gaps. Johnson stated that one of the things Hospitality Hub has found with people in Memphis is that they are freezing to death when it is cold outside, and Shelby County was struggling to incentive transport and get people to come into a centralize location when it is freezing or when it is very hot. Hospitality Hub has picked that up and is now the heating and cooling shelter for the entirety of Shelby County.

Johnson stated that in his first meeting with Memphis City Council, both the City Mayor and County Mayor were present because there are 2,690 children in Shelby County that have come to a principal, guidance counselor, or teacher and said they were homeless. These children are sleeping at friend’s houses, cars, grandparent’s assisted living residences, abandoned buildings, etc. Johnson stated the Memphis City Council asked Hospitality Hub what could be done. Johnson stated that there are studios on the campus, but those are designed to shelter people found on the street. Johnson stated that they are seeing more and more single dad with kids and single moms with kids, and if a parent has a male child over five (5) years old, those male children over five (5) years old are not allowed in most shelters, but at Hospitality Hub, those boys that are 16-17 years old are there, trying to make it through high school and sheltering there, but the need greatly outweighs the supply.

The proposed Hospitality Hub Studio Village project will consist of sixty (60) cottages with kitchenettes, bathrooms, security on-site 24-hours a day, laundry service on campus, food services for three meals a day plus snacks on campus, and other things. Johnson stated that Hospitality Hub has already partnered with the church located across the street from the project site and with the new Manasses High School principal to provide tutoring services to all those children, and are working with Shelby County Schools to provide transportation to head start and to school for all the children that will be on campus. Johnson stated that he believes this is a wonderful project and will be a model for the United States, as the Hospitality Hub campus is now.

Carpenter stated that the Board could feel Johnson’s passion and thanked him for his comments. Carpenter then turned the meeting over to November 6 Investments representatives, a partner on this project. Bill Ganus stated that from a real estate development perspective, this is a dream project. Ganus stated that the ability to use financial vehicles and relationships to leverage grant funding has already been increased capital to take the proposed project from what was originally going to be 10 cottages to now 60 cottages, and is developing a professionally managed, world-class community with the appropriate resources and education infrastructure. Ganus stated that the Board’s bond inducement will allow this team to go through the tax-credit process to take the original $5.2 million in grant funding and be able to leverage that forward to be able to do the full 60-cottage development. Ganus stated that instead of going dollar for dollar grant funding into real estate, the ability to use this LIHTC process lets this project become a bigger version of what the City really needs it to be. Trey McKnight stated that the group is being humble and that they have about 26,000 square feet that they are servicing the lowest of the low and his tour of the project brought a depth of understanding of what they are doing, and it is very impressive. Vincent Sawyer stated that he would also like to concur with the great work Hospitality Hub is doing, as he was able to tour the facility between 2021 and 2022, and one thing that cannot go understated is that Hospitality Hub provides mailing addresses, which is remarkable. Johnson stated that Hospitality Hub provides mailing addresses for over 1,650 people.

Howard Eddings, Jr. also commended the work that is being done and stated he appreciated the passion and commitment to this demographic and asked if the community has been engaged regarding this new project and if so, what has been the response. Johnson stated that at the first public meeting for the project, there was a lot of pushback against it. Johnson stated that his team worked with Pastor King of the church located across the street from the project site and the pastor put together a community meeting with other churches, pastors, teachers, administrators, and everyone in the community to come and ask any question they wanted. Johnson stated that this team used this opportunity to let the community know that this land that is being used for the project would always be owned by the people of the community, and this is not a place for people to show up if they are homeless, and that type of work would take place at Hospitality Hub at 590 Washington Avenue. Johnson stated that the second community meeting was better, and by the third community meeting, the people wanted to see what the cottages were going to look like, so Johnson’s team brought them into the design process, they held a design meeting, and the original design was totally thrown out and the community put their ideas together and have gone through the process together and now they love the project because Hospitality Hub invited the community in from the beginning from ideation to design, now to implementation.

Johnson stated the community members were at the groundbreaking wearing purple shirts and they served everyone that came and it was a beautiful thing to see a community that was very protective and even combative to the idea of homeless people, but then to find out it was going to be children and their parents. Additionally, the principal and vice principal of the new Manasses High School have become very supportive and they are very interested in having these children attend their school. Johnson stated he explained to the principal that this will not be a situation where families live in these cottages for a few months, this is where they will live, and little brothers and sisters will go to the elementary school, and the community has embraced it.

Buckner Wellford stated that these homes are much different than the ones that are at Hospitality Hub, and even if the project was ultimately scaled back to fewer cottages, the project would still go forward with the financing because the group would not have to go get the land use issues worked out, and this is a very exciting project. Carpenter advised the Board that this group does anticipate applying for a PILOT for this project. But the structuring will be a little different because the City of Memphis actually owns the vacant land. Carpenter stated that his Firm has had preliminary discussions with Dexter Washington of MHA, and this project may be a better fit under the MHA PILOT program than the program administered by the Board. Carpenter stated that though the PILOT application is not on the agenda today, he wanted to let the Board know that if the THDA LIHTC allocation is awarded to this project in Round Two, this group will come back with a PILOT application for the project and would place the Bond and PILOT closings on the same track. Carpenter stated that his Firm has analyzed this project and is supportive of the good work that is being done and would recommend that the Board look favorably upon this bond inducement application. There were no further questions or comments.

Buckner Wellford made a motion to approve the Bond Inducement Resolution for Hospitality Hub-Hub North, LP. Vincent Sawyer seconded, and the motion passed unanimously after proper roll call vote of the Board members.

Chairman Henderson stated to Johnson that he appreciates his perseverance and leadership, this is great work, and he is glad the Board can share in this project and help move this forward.

Howard Eddings asked the group why the project is using modular housing. Ganus stated the project will use modular units because all 60 units are intended to be the same and there is a modular production facility nearby that can produce them, travel them up the highway, and install them, so this will help on the timeline and the cost. Ganus stated that these modular cottages are beautiful and built to the exact same permit codes as if they were built on site. There were no further questions or comments.

Jessie Wilson, Bill Ganus, Ashley Cash, Kelcey Johnson, Matt Goud and Richard Harris left the meeting.

Thomas Robinson and Mallory Key entered the meeting.

2.      1st Bond Inducement Resolution Closing Extension for APP Hilldale Partners, L.L.L.P. (d/b/a Hilldale Apartments)

Chairman Henderson stated that Action Items 2-7 are all the same developer, Alco Management, Inc. and will be discussed together but voted on separately. Charles Carpenter introduced these agenda items by stating that Alco Management, Inc. is a very prominent and highly regarded developer based in our community, and the Board has worked with them over a number of years. Carpenter stated that these three projects, Hilldale Apartments, Ridgecrest Apartments, and Surrey Apartments, have all been awarded 4% LIHTC by THDA and each has also been approved by this Board for bond inducements and PILOTs. Carpenter stated that Hilldale Apartments has already gone through the process with Housing and Urban Development (HUD) and received all necessary approvals and authorizations to move forward, whereas the other two projects are still in process, so the Hilldale Apartments project will be on a different timeline. Carpenter reminded the Board that with the approvals for the bond inducement resolution and PILOT approvals completed earlier this year are valid for a 6-month period. If the transaction is not closed within that 6-month period, the developer must come back before the Board to provide a status update and either request a closing extension or withdraw the project. Carpenter stated that all three (3) of these projects are seeking a first closing extension. Also, because all three (3) projects have been awarded allocation from THDA, for efficiency purposes the Board staff and applicant are asking that the bond and PILOT transactions be put on the same schedule, currently, each PILOT Closing extension for the above projects are not due to be considered until August 2025. Further, Carpenter noted that because Hilldale has received all necessary approvals and authorizations to move forward, the applicant intends to appear before the Board at the August 6, 2025 Board meeting seeking a Final Bond Resolution and intends to close the bond and PILOT transactions for that project shortly thereafter. The other two projects, Ridgecrest Apartments and Surrey Apartments, are anticipated to close by the end of November 2025 or beginning of December 2025.

Carpenter turned the meeting over to Thomas Robinson, Alco’s representative in attendance for these agenda items, for any further comments. Robinson introduced himself and Mallory Key, and stated he and Key are on the development team for each of these projects. Carpenter stated that Ted Fellman of Raymond James is also working on these projects with Alco. Vincent Sawyer asked for clarity if the bond and PILOT transactions are now to be on the same closing schedule. Carpenter stated yes and reiterated that what is being requested today is the first closing extension for bonds and PILOTs for Hilldale, Ridgecrest, and Surrey Apartments. With each extension, this would allow an additional 6-month period, which will go through the end of this year, and under the current structure, all projects that received THDA LIHTC allocation must be closed by December 15, 2025, so the approval of these closing extensions would get all three projects to that point. Carpenter confirmed Chairman Henderson’s earlier statement that each extension would require separate votes by the Board, and it is anticipated that all three project bonds and PILOTs will be closed prior to December 2025. There were no further questions or comments.

Monice Hagler made a motion to approve the 1st Bond Inducement Resolution Closing Extension for APP Hilldale Partners, L.L.L.P. (d/b/a Hilldale Apartments). Howard Eddings, Jr. seconded, and the motion passed unanimously after proper roll call vote of the Board members.

3.    1st Bond Inducement Resolution Closing Extension for APP Ridgecrest Partners, L.L.L.P. (d/b/a Ridgecrest Apartments)

There being no further questions or comments,

Howard Eddings, Jr. made a motion to approve the 1st Bond Inducement Resolution Closing Extension for APP Ridgecrest Partners, L.L.L.P. (d/b/a Ridgecrest Apartments). Buckner Wellford seconded, and the motion passed unanimously after proper roll call vote of the Board members.

4.    1st Bond Inducement Resolution Closing Extension for APP Surrey Partners, L.L.L.P. (d/b/a Surrey Apartments)

There being no further questions or comments,

Buckner Wellford made a motion to approve the 1st Bond Inducement Resolution Closing Extension for APP Surrey Partners, L.L.L.P. (d/b/a Surrey Apartments). Howard Eddings, Jr. seconded, and the motion passed unanimously after proper roll call vote of the Board members.

5.    1st PILOT Closing Extension for APP Hilldale Partners, L.L.L.P. (d/b/a Hilldale Apartments)

There being no further questions or comments,

Monice Hagler made a motion to approve the 1st PILOT Closing Extension for APP Hilldale Partners, L.L.L.P. (d/b/a Hilldale Apartments). Vincent Sawyer seconded, and the motion passed unanimously after proper roll call vote of the Board members.

6.    1st PILOT Closing Extension for APP Ridgecrest Partners, L.L.L.P. (d/b/a Ridgecrest Apartments)

There being no further questions or comments,

Buckner Wellford made a motion to approve the 1st PILOT Closing Extension for APP Ridgecrest Partners, L.L.L.P. (d/b/a Ridgecrest Apartments). Vincent Sawyer seconded, and the motion passed unanimously after proper roll call vote of the Board members.

7.    1st PILOT Closing Extension for APP Surrey Partners, L.L.L.P. (d/b/a Surrey Apartments)

There being no further questions or comments,

Buckner Wellford made a motion to approve the 1st PILOT Closing Extension for APP Surrey Partners, L.L.L.P. (d/b/a Surrey Apartments). Vincent Sawyer seconded, and the motion passed unanimously after proper roll call vote of the Board members.

8.    Affordable Multifamily PILOT Term Extension Application for Alco Eastern Creek Partners, L.P. (d/b/a Creekwood Village and Eastern Heights)

Charles Carpenter introduced this agenda item stating that this is also an Alco project, and they are seeking a PILOT Term Extension of ten (10) years. Carpenter stated that at the time the original PILOT was applied, the Board only had a delegation of authority for a ten (10) year term, that delegation of authority has been amended, and now this PILOT Lessee is before the Board today seeking an additional ten (10) year term. Carpenter stated this project is unique because there are two (2) different properties under the same PILOT agreement and directed the Board to the information contained in the Board meeting materials for their review. Carpenter turned the meeting over to JP Townsend, the Board’s internal compliance inspector, for further comment. Townsend stated that he is happy to say that both Creekwood Village and Eastern Heights are very well-maintained properties, and he cannot recall a time when he had any compliance concerns or compliance issues with either property and thanked representatives for their hard work and dedication to this project.

Thomas Robinson stated that he appreciates the Board’s support and that this was one of his first projects with Alco approximately ten (10) years ago and he is very excited about what they did then and what they are going to do to continue to take care of these projects for the next ten (10) years. Robinson stated that the renovation and work that was done at the beginning of the PILOT term will continue to require additional capital needs, which is the reason for the PILOT term extension request to allow Alco to complete another long-term redevelopment investment plan. Carpenter stated that this application complies with the Board’s policies and procedures and would recommend the Board look favorably upon this request.

Buckner Wellford asked about the Watchtower Security Camera System that is in place at these properties, as he is not familiar with it, and asked what Alco’s experience has been with the company. Robinson stated that Alco has used a couple of different security camera vendors over the years and Watchtower provides a monitored style camera oversight of the properties where the owner, management company, or police can submit requests for footage, and they package it up and share those. Robinson stated that Alco is in partnership with Safeways, but these two are not directly related, but Watchtower is one of two primary vendors that Alco uses. Robinson stated that Alco has recently moved more of its properties to a new company that provides a similar service, but Alco is comfortable with either of those on any project. There were no further questions or comments.

Buckner Wellford made a motion to approve the Affordable Multifamily PILOT Term Extension Application for Alco Eastern Creek Partners, L.P. (d/b/a Creekwood Village and Eastern Heights). Howard Eddings, Jr. seconded, and the motion passed unanimously after proper roll call vote of the Board members.

Carpenter stated that Alco has been very helpful to the Board in helping set up best practices for PILOT Lessees for different areas, not only security, but tenant benefits and related areas because they have established relationships with nonprofits and that has been very helpful. There were no further questions or comments.

Thomas Robinson, Mallory Key, and Ted Fellman left the meeting.

Nathan Chandler, David Shores, Sarah Brinkman and Gine Osborn entered the meeting.

9.    Status of PILOTs in Legal Default:

Chairman Henderson stated that at this time, the Board will begin its review of PILOTs in Legal Default, stating that under the Board’s new compliance step structure, any property that is included under Legal Default is on a rotation of appearing before the Board to provide status updates.

a.    Grahamwood Place

b.    Pinebrook Pointe

Charles Carpenter introduced this agenda item, stating that both properties are owned by the same developer and can be discussed together. Carpenter stated that Grahamwood Place and Pinebrook Pointe have been represented by Tie Lasater of Key City Capital and have been in trouble since October 2023 and since that time, there has been a number of issues, fire damages, certain concerns with management, and other deficiencies that ownership has been working through, which has caused the occupancy at each property to be less than the required minimum occupancy levels are under the Board’s PILOT policies and procedures. Carpenter stated that there have been times during this period that things have gone further into deficiency, and there have been times that they have improved and indicated that the projects were trending in the right direction. Notwithstanding, Carpenter stated that both properties are still below the minimum standards, which is why the properties have been placed back into a Legal Default status. Carpenter stated that today, the Board is to determine what to do with these two properties; whether to terminate the PILOT, or based on good cause shown, to extend the period for curing these deficiencies and keeping the properties in the PILOT program. Carpenter directed Board members to their Board meeting materials, which include the written response of the PILOT Lessee as to what they intend to do to bring the properties back into full compliance. Carpenter turned the meeting over to Stephanie Bryant for additional comment.

Stephanie Bryant stated, beginning with Grahamwood Place, that Grahamwood Place was issued a Notice of Legal Default on October 27, 2023. Bryant stated that this PILOT Lessee has reported status updates to the Board since that time at thirteen (13) of the last (18) Board meetings. Bryant stated that both Grahamwood Place and Pinebrook Pointe were removed from Legal Default status and stepped down to Under Observation status at the Board’s October 2, 2024 Board meeting because there was progress being made to support both properties were trending in the right direction. However, since that time Bryant stated that both properties have again begun trending in the wrong direction and were voted to be placed in Legal Default by the Board at the May 7, 2025 Board Meeting. Bryant stated that the PILOT Lessee was provided 30 days from the date of issuance of the Notice of Legal Default, May 16, 2025, to respond in writing and provide a formal cure plan. Bryant stated that neither property has been in compliance with the Board’s policies and procedures since October 2023 and in fact, the occupancy has even taken a downward turn to 48.7% occupancy for the month of June for Grahamwood Place. Bryant stated that Pinebrook Pointe has followed much of the same path and was issued a Notice of Legal Default on October 10, 2023, and occupancy is currently 49.5%, both well below the Board’s minimum occupancy requirement of 75%. Bryant reported that neither property has been in compliance with minimum occupancy requirements at any point since current ownership purchased these properties in 2021. Bryant turned the meeting over to JP Townsend for comment on the external observable conditions of the property.

Townsend began his report with Grahamwood Place stating that there are still serious concerns with the roofing, and there has been some back and forth about the roof conditions at this property, and he has been advised that some but not all roof leaks have been addressed, and there are still loose shingles. Townsend reported that some of the gutter systems still need to be replaced, and some are completely missing. Townsend reported that he has observed some work has been done to the perimeter fence, as there were some gaps and holes that have been repaired. Townsend reported that the laundry facility and security gate remain inoperable.

Townsend reported his observations of Pinebrook Pointe, stating that there has been some work done to one of the fire damages buildings that includes approximately 2-3 units, but there are still two other buildings that have fire damage and no movement has been observed on these buildings, aside from windows being boarded up for all unoccupied units. Townsend stated he did not note any new broken windows during his most recent inspection, but there is still a substantial amount of work that needs to be done. Townsend reported that the perimeter fence is seriously damaged, and security is a big issue at this property.

Stephanie Bryant stated that with Pinebrook Pointe, Tie Lasater reported to the Board at the December 6, 2023 Board meeting, that all fire damaged units has been cleaned out and were ready for renovation and Key City Capital was awaiting some insurance proceeds, but Lasater also indicated at that same Board meeting that Key City Capital has the funds in capital reserve funds and loan reserve funds to perform the work, but they wanted to wait to receive the insurance proceeds before performing that work. Lasater reported shortly thereafter that Key City Capital has received the insurance proceeds, but as of today, July 9, 2025, the fire damaged units still have not been completed.

Trey McKnight stated that he has toured both Grahamwood Place and Pinebrook Pointe with compliance staff several times, and his recommendation would be to terminate each PILOT. Chairman Henderson stated that the Board has in front of it two PILOT properties under the same ownership and management structure, and the decision the Board has today is to determine whether to terminate the PILOTs or to provide the PILOT Lessee additional time, thus giving a vote of confidence that this group can move forward and continue to improve and does the Board allow additional time for that to happen. Henderson stated the thing that jumps out to him is the occupancy that is on the first page of the compliance staff notes included in the Board meeting materials, and both properties follow a similar trend. Henderson stated that both properties were coincidentally at 66% occupancy in Quarter 4 of 2024 and then both drop to 52% occupancy for Grahamwood Place and 45% occupancy for Pinebrook Pointe by the end of Quarter 1 of 2025. Henderson reminded the Board that staff also performed a PILOT Lease File of both properties at the end of April 2025, so there was also some suspicion of the accuracy of the quarterly occupancy reports that had been submitted by the PILOT Lessee up to that point.

Henderson stated that representatives are present for Grahamwood Place and Pinebrook Pointe to answer questions the Board may have but asked why Tie Lasater is not present. Nathan Chandler stated that he is the representative present today for Key City Capital. Henderson asked why Lasater did not show up for today’s meeting. Chadler stated that Lasater had other obligations. Henderson asked if this was not important enough to require Lasater to be present. Chandler stated that this is important, but that Key City Capital has many important things on its table right now.

Buckner Wellford stated he would like to clarify whether his Firm, Baker Donelson Law Firm, is involved with these properties in any ongoing matters. Wellford stated that he knows his Firm does not represent the PILOT Lessee but asked if there is any lender activity presently going on, such as foreclosure or litigation or anything involving the lenders. David Shores stated that the foreclosure for each property is not moving forward right now. Sarah Brinkman and Fine Osborn of Arbor both stated the foreclosures for each property have been adjourned, and there are continuing discussions with the borrower with regard to whether it will be cancelled. Wellford stated that under those circumstances, he had previously recused himself due to foreclosure proceedings and will recuse himself today as well.

Carpenter stated that David Shores with Multi-South Management Services, LLC is here today and is the current management company in place for both Grahamwood Place and Pinebrook Pointe and tuned the meeting over to him for further comment. Shores stated that Multi-South Management took over the management of both sites at the end of Quarter 1 of 2025 and the occupancy that the Board sees reported for that quarter did not line up with occupied units on site and many of the units that were being shown as occupied were not. Shores stated there were huge balances that tenants had skipped out on long before his company took over management. Shores stated that Multi-South Management has started making some of the repairs that Townsend has noted, has just finished building a retaining wall for the ditch at Grahamwood, has a bid to repair the laundry room, that the pool must be replastered to make it operational, and he has bids for finishing the fire damaged buildings at Pinebrook and that all those items are in process.

Shores stated that Grahamwood occupancy rate is currently 51% and Pinebrook occupancy rate is currently at 50%, both well under the 75% minimum occupancy requirement. Shores stated he wanted to give the Board some indication of the community response to a cleaner, better looking property than what it was, Shores stated that Grahamwood has 20 rent-ready units, there are many roof leaks at Grahamwood, but these 20 units do not have roof leaks today. Shores stated that the application of the roof repair done a few years ago is completely inadequate and has to be redone. Shores stated there are 20 rent-ready units and two more in process, but for the rest of the units, roof leaks have to be fixed. Shores stated that management received 17 applications in June for Grahamwood, which is a strong number for that property, and indicates that management will be able to lease 80% of the property by the end of the year. Shores stated that 4 of those applications were denied. Shores stated that they had 352 leads through marketing sources and 40 actual visits to the property with 4 move-ins and 4 move-outs. Shores stated that Grahamwood now has 16 pre-leased units to tenants that will move in over the next 2-3 weeks, and that is progress.

Shores stated that with Pinebrook, there are 15 rent-ready units with 10 units in progress being made ready. Shores stated management received 12 applications and 2 were denied. Shores stated it is not as strong as the report for Grahamwood, but it is also progress. Shores stated there were 98 total leads from marketing sources with 28 property visits with 12 move-ins and 8 move-outs, so occupancy did improve, but it is not near 75% occupancy and there is a lot of work to do to get there. Shores stated that he reported to the Board in May 2025 that he believed his management company could get occupancy to 75% at each property by the end of September, but that is an optimistic goal at this point, rains have not been kind, but he does believe deficiencies can be cured this year 2025, with hopes of the first part of the fourth quarter 2025. Shores stated that Key City is supportive, the lender is supportive, and the funds are available to do what needs to be done and asked that the Board indulge them to do that and keep the PILOT in place. 

Henderson stated that what is really battling the Board is the Lasater appeared before the Board in December 2023 following the Notice of Legal Default that was issued for each property in October 2023 in a manner to say that basically his partner was not managing the properties correctly and he was stepping in to basically do a reclamation project and right the path. Henderson stated that here we are over 18 months later and probably the best thing Lasater has done up to this point is bring Multi-South Management in as the manager of these properties, but again this is a situation where the Board must weigh the optics of allowing this to go forward. Henderson stated that the Board thought in Quarter 3 of 2024 that progress was being made, as has been previously stated, and the Board saw occupancy numbers rising, but Shores has now validated recent suspicions that those occupancy numbers that were being reported were not true and accurate. Henderson stated that this information is to recap this situation for some Board members that have not been on the Board for the duration of these issues. Henderson stated that what Shores has reported is encouraging, but this is the question that the Board must weigh in the decision it must make today.

Vincent Sawyer stated that the PILOT Lessee’s written response indicates that all issues would be resolved by the end of August 2025. Shores stated that the response to the Board was provided by Key City Capital and not Multi-South Management. Chandler stated that if Board members were to go to the properties today, he hopes that it is evident that this is important to Key City and Key City is committed to meeting all the requirements of the Board and they are more effective now with Multi-South Management in place as the manager. Chandler stated that Key City Capital has addressed all the tenant benefits and deficiencies that they were able to do, with the exception of things that are affected by the roof leaks. Chandler stated that the roofs were repaired in the past and the work fell short of the minimum requirements of the manufacturer, and it was a forward shift, so that is the issue that Key City Capital is asking for more time to work through. Chandler stated that Key City is in a cure period with the subcontractor that installed the roofing correctly, and there are steps beyond that if it is not cured. Chandler stated that the roof repairs will allow Key City to get this property across the finish line meeting all these requirements, specifically the occupancy requirements.

Chandler stated that without the roofing repairs, the maximum occupancy that can be achieved at Grahamwood is about 65%, so it has been a significant issue with meeting the requirements, but one they have been diligently working on and hopefully approaching the end of that. Sawyer asked for clarification that all items associated with the roof leaks would be completed by Quarter 1 of 2026, but all items not associated with the roof leaks would be completed by August 2025. Shores stated that he believed that the 75% occupancy standard can be accomplished by some time in Quarter 4 of 2025, but with Grahamwood and the roof issues, that is a bigger problem that is trying to get resolved. Shores stated that the issue at Pinebrook is there are three fire damaged sites and Multi-South Management has provided a bid on one of them that would bring 8 units back online, but the other two he has not been bid out yet, and hopefully the funds are there in the lenders reserve account to complete that work, but Multi-South Management intends to get that bid too. Shores stated the rebuild of the fire damaged building of 8 units will take between 2-2.5 months.

Shores stated that as to the other issues, the sites are cleaned up, landscaping is cleaned up, and they look a lot better than they did 6 months ago. Shores stated that Multi-South Management has taken care of life-safety issues that they see, and the fence mentioned at Pinebrook may not be the property’s fence, so Shores stated he would have to look at a survey to confirm that. Shores stated he does not believe they will have everything cleared up in August 2025 for Pinebrook because of the fire damaged units and for Grahamwood because Multi-South Management still must sort through this issue with Key City’s subcontractor for the improper roof work.  Sawyer asked if Pinebrook could achieve 75% occupancy with the 3 fire-damaged sites still being burned. Shores stated that yes, they could, as there is not near the magnitude of roof problems at Pinebrook, and it is also a flat roof like Grahamwood.

Howard Eddings asked that beyond the optics, if the Board were to extend and grant additional time for the PILOT Lessee to remedy these deficiencies, the Board knows the value of the keeping the properties available and responding to the needs in terms of affordable housing, but is this a way for Key City to take advantage of what is available because of the credits or what is the harm, other than the optics. Carpenter stated that it is important that with the mission of the Board, that the Board try to preserve affordable housing as much as possible, and but for Multi-South Management, Key City Capital has lost all credibility with this Board based on previous statements they have made and the lack of ability to perform those statements. Carpenter stated he is even now confused about the roof at Grahamwood because it is clearly stated that the roof is insufficient, and it has been previously stated that the roof needed replacing in full, so from the Board’s view, the Lessee has an obligation to mitigate its damages, which means paying to get a new roof, and that is what the Lessee should do, as it seems clear that without a new roof, the property is not going to be able to move forward. Carpenter stated it is not clear, even from listening to representatives today or from the written responses about what the plan of action is. Carpenter stated that the Board has been previously told that the subcontractor thinks that their work is within normal workmanship, so there is no agreement that the work was not done correctly. Carpenter stated the Board has not heard of any litigation or that ownership is going to replace the roof and sue the subcontractor to get that money back or anything of that sort. The Board is only hearing that ownership if working through this and that does not allow on a timely basis for the property to come into compliance, even after over 18 months of being out of compliance so this is more than optics because the Board has over 120 PILOT properties in its PILOT portfolio, and if the Board makes concessions for these two properties, how is it to hold others accountable to compliance standards. Carpenter reiterated that the Board has heard no definite plans and has not seen definite actions as to how these deficiencies are going to be cured in a timely manner, and 18 months is far beyond a sufficient time; and even today, the Board is hearing it may be 5 or 6 more months, and even at that point, the properties may not be able to come into compliance. Carpenter stated that this is beyond optics and beyond what this Board can tolerate without specific timetables and specific action in place.

Further, Carpenter reminded members of the Board as to the fire damaged units, the Board has been told that funds were there to address all of these burned-out units, and with the pool, the Board had been told that the pool was going to be filled up and ownership did not want to maintain the pool from a risk management standpoint and now the Board is hearing today that it is being refurbished and put back into service. Carpenter stated that the Board has does not have a clear picture of what is going on, and the messages have been inconsistent. Finally, Carpenter reminded the Board from the standpoint of a refinancing, the Board was told a refinancing was to take place in September 2024 for the entire Key City Capital portfolio in Memphis, consisting of 6 properties, and the lender was requiring the occupancy to be at a certain level of stabilization and that day came and went with no refinancing occurring; afterwards, Lasater reported to the Board that this was no big deal. Carpenter stated that the refinancing promises were a major highlight of everything that Key City was trying to do, so again, the messaging has been inconsistent, and the credibility is gone.

Henderson stated to the Board as a fellow Board member that Lasater has lost confidence and the only thread holding this together is Multi-South Management, so the Board must determine if there is enough confidence in Multi-South Management to see a path over the next couple of months that the Board is willing to grant leniency or does the Board say that Lasater has fumbled this by underestimating this and misspoken multiple times, thus the Board should not allow the PILOT Lessee to carry forward given the transactional history over the last 18 months. Sawyer stated he would like to consider an option of a 30-day extension to provide a plan that gets both properties into compliance by Quarter 4 of 2025 by the Board’s next meeting. Shores stated he would be glad to come back with a plan that Multi-South Management will produce to give answers to all these questions and provide what the Board is looking for, but the only thing Shores stated he cannot respond to is whether the roof issue can be fixed at Grahamwood and that is squarely in Key City’s hands. Shores stated that the cost of replacing the roofs there with all new materials would be close to $750,000, as all HVAC equipment is on the roofs and is an expensive and tedious project.

Nathan Chalder stated that all of this has not been communicated clearly, and Key City is in a legal process where the subcontractor is in a cure period and there would be litigation beyond that if the cure is not completed. Carpenter asked for additional details. Chandler stated that the subcontractor has until the end of July to fix the roof, otherwise there would be a lawsuit. Carpenter asked if they are actively doing that now, to which Chandler responded that they have not responded to Key City yet. Sawyer asked if litigation is required, does Key City plan to get the work done during litigation and recoup the funds? Chandler stated that it is something that Key City could take 30-days, which would get them through the cure period and would have a path forward from there. Howard Eddings stated that it sounds like Key City is not going to do the work outside of the subcontractor coming in and curing the problem, and if Key City moves forward with a lawsuit, it does not plan to do the work until that process is completed. Chandler stated that Key City would need legal advice on how to proceed with its in-house counsel. Chandler stated that Key City would be willing to, but he cannot speak to where they would need to go at that point. Eddings stated that if the Board had to assume, if a lawsuit is required, that process would not happen very quickly, to which Chandler agreed, and stated that if Key City is able, they would go ahead and fix the roofs while that process is going on.

Shores stated that by the Board’s August 6, 2025 Board meeting, his team can figure out how many of those roof leaks they believe they can repair without having to wait on the subcontractor, and he believes he can put together a plan that will get each property to 75% occupancy by sometime in Quarter 4 of 2025 and he believes they can have enough units made ready. Shores stated that right now they must determine if they want to do a lot of work in a unit that does have a leak because with flat roofs, a storm can open fissures that were not there and a lot of leaves and dry weather can close it, so it is not that a leak that is there is there forever, but sometimes it is. Shores stated he believes he can get the Board a plan by the August 6, 2025 Board Meeting to show the Board there is a path.

Stephanie Bryant advised the Board that both these properties were due to report to the Board at the June 4, 2025 Board meeting, but due to the timing of the issuance of the Notice of Legal Default on May 16, 2025 for each property, staff and legal counsel wanted to ensure the this PILOT Lessee was provided the entire 30-day period from the date of the issuance of the Legal Default before reporting to the Board, and during that time, the PILOT Lessee was to provide a written cure plan of a path forward. Bryant advised that based on the timing, the PILOT Lessee has in fact been provided more than 30 days to provide a written cure plan, but they did not, and this is what the Board is asking for again now. Bryant stated that if the Board is considering an additional 30-days for the PILOT Lessee to provide a detailed written sure plan, is the Board asking that this plan come from Key City Capital or from Multi-South Management Services. Shores stated he would take full responsibility in providing a cure plan from Multi-South Management. Sawyer stated there are several possible outcomes: (i) Key City does not replace the roof at all, (ii) wait until the case is resolved, or (iii) find substitute repair and get recouped on the back end. Sawyer stated his question is if there is a possibility that the roof does not get replaced, if the subcontractor does not cure, if Key City loses that trial, what happens. Chandler stated that the roof must be repaired. Sawyer asked if that is the case, then why wait past the cure period. Chandler stated that the best avenue is for the roofs to be repaired by the subcontractor.

Trey McKnight stated again that he has toured these properties with compliance staff, and he has discussed these matters in depth at certain times, and he would air on the side of caution in regard to recommending termination for these PILOTs. Sawyer asked for clarification that the Board has previously requested from the PILOT Lessee hard plans for the properties to get into compliance. Bryant stated that when the PILOT Lessee was issued the Notice of Legal Default on May 16, 2025, that Notice, which is included in the Board meeting materials, references the items that are not in compliance and allows the PILOT Lessee 30-days to provide a detailed written cure plan. Bryant stated that the written cure plan that was received is in the Board meeting materials, as previously referenced by Carpenter, and there are no hard dates nor detailed written cure plan provided by Key City to get these properties into compliance. Bryant stated that staff has struggled with this since prior to October 2023 that Key City would provide these statements that the Board has on record, and they are not completed. Bryant referenced the specific example of the fire damaged units at Pinebrook and Tie Lasater has stated on the record multiple times since December 2023 that all fire damaged units were cleaned out and ready for renovation and that Key City had the funds to do it, as well as having stated on the record having received approximately $2 million in insurance proceeds to complete the renovations on those fire damaged units. Bryant reported that these statements were made to the Board on record at the end of 2023 and into 2024 status updates provided by Lasater. Bryant reported that she is only stating what has been stated to the Board by Lasater on record, and the Board still cannot get a commitment to a timeline, and inspectors have seen no notable progress. Bryant stated that while there has been some work done at each property over the years, there have been other PILOT properties in a similar situation and compliance staff is able to clearly observe progress through occupancy and through external observable conditions, but staff cannot confidently say that with either of these properties.

Sawyer stated that he is interested in seeing what Multi-South Management can commit to. Bryant stated that Multi-South Management was not engaged as management for these properties until March 25, 2025, so all responses up to this point have been from Key City, and not from Multi-South Management. Henderson asked Chandler if the information shared with the Board concerning the insurance proceeds is correct and if he is an agreement with that. Chandler stated that Key City has the insurance proceeds to fix all the units. Brinkman stated that Key City has insurance proceeds for one building. Chandler stated that Key City has a quote that would be able to fix all of those buildings for those proceeds.

McKnight stated the question is not whether Key City received the insurance proceeds; they stated to the Board that the proceeds were there to do the work. Chandler stated that the renovation was part of the roof issue too and that is why renovation has been delayed. Chandler stated that Key City’s written response was turned in early and they were trying to address everything they believed was in legal default and asked for feedback and if there was anything more needed and Key City has been able to accomplish everything, including all tenant benefits, except for the roofs. Henderson stated that his feedback would be about a return on investment perspective from the city and the tax break that is being provided essentially from multiple years where the properties have been under the Board’s threshold of compliance and where capacity that the city needs is not available as a result of management decisions by Key City. Henderson stated that the Board has provided a lifeline of extensions and a lot of credibility from this Board to allow Key City to get these properties on track and to get things back to where they need to be, and that is the pressing decision because at this point, everything is resting on Multi-South Management, which is the thread that is holding this together right now.

Eddings stated that he would like to allow Multi-South Management the time to come back before the Board in a timeframe that other Board members are comfortable with. Shores stated he would come before the Board to provide an update at every Board meeting if that is what is necessary, but he will commit to having a very thorough report to the Board for the August 6, 2025 Board meeting on the obstacles, the progress, and everything about it. Shores stated again that he believes they will need until the Quarter 4 of 2025 to get these issues to a point where 75% occupancy can be reached, and the property conditions can meet the conditions of the PILOT program. Eddings asked that this plan include specific outcomes, to which Shores agreed. Eddings stated that if this is the result, it will allow the Board to keep affordable housing in the marketplace.

Henderson asked if this is not approved, then what would be the procedures the Board should take. Carpenter advised that if the motion fails, there will need to be a formal motion to terminate the PILOT for each property separately. Carpenter stated that the plan would be required to be submitted prior to the Board’s August 6, 2025 Board meeting. Carpenter also stated that Grahamwood is the property with the roofing issue, and if there is no affirmative plan to fix the roof by a date certain, then all the Board is doing is running in place and spinning our wheels, as it has been doing for the last 18 months. Carpenter stated that the roof has been a problem all along and did not just recently happen, and Key City has had knowledge that the roof was a problem, and they have not fixed it yet, and there is still no affirmative plan to fix it, so without that being in place for Grahamwood, the Board is at the same place.

Sawyer stated what he has heard is that Multi-South Management can potentially produce a plan to get the properties to 75% occupancy without the roof repairs. Shores stated that he will have a solution that gets the properties to 75% occupancy repairs to point to viability, but he does not believe it will be a long-term solution unless Key City’s contractor comes through this month during the cure period and replaces all the roofs because that is what is necessary. Shores stated that he suspects that since the subcontractor has not shown up to the property, they are not going to do that within the cure period. Shores stated that Multi-South Management will produce a plan that resolves the roof issues enough that the property is viable and will get occupancy to 75% or greater.

Carpenter stated that the Board is giving a lot of credit to Multi-South Management, but Multi-South Management is an agent, and they could be fired in a month and Multi-South Management does not have the resources other than what Key City provides to them. Carpenter stated that as Multi-South Management is an agent for the owner, the owner is not making any commitments, so the agent cannot overstep the owner and promise more than the owner promises. Carpenter stated that as Bryant previously reported to the Board, the written response to the Board has come from ownership. As for the motion, Carpenter stated that there needs to be clarity for the record on what is expected of the PILOT Lessee, and if the motion is not successful, then the Board would consider a separate motion or different arrangement to extend it or a motion to terminate. There was discussion on specifics that may be included in the motion for consideration.  

There being no further questions or comments,

Howard Eddings, Jr. made a motion defer action for PILOT termination until the August 6, 2025 Board Meeting and required a (i) written plan of action and specific timeline with a viable plan and concrete actions that will be taken to be provided to the Board for Grahamwood Place, (ii) the plan of action and timeline requires commitment to said plan of action and timeline from both Key City Capital and Multi-South Management Services, (iii)  said plan of action and timeline shall cure all compliance deficiencies, including meeting occupancy levels no later than quarter four of 2025, (iv) plan of action and timeline to be submitted in writing and shall be discussed at the August 6, 2025 Board Meeting, (v) Tie Lasater of Key City Capital is required to be present at the August 6, 2025 Board Meeting for this presentation and consideration and (vi) a specific plan of action and timeline to address the roofs at Grahamwood Place (vii) and at the August 6, 2025 Board meeting, the Board will vote to either accept the plan as presented or make a motion to terminate Grahamwood Place from the PILOT program. Monice Hagler seconded, and the motion passed by majority vote after proper roll call vote of the Board members.

Let the record reflect that Buckner Wellford was recused from this vote.

Let the record reflect the Cliff Henderson and Courtnee Melton-Fant voted not to accept this motion.

There being no further questions or comments,

Howard Eddings, Jr. made a motion defer action for PILOT termination until the August 6, 2025 Board Meeting and required a (i) written plan of action and specific timeline with a viable plan and concrete actions that will be taken to be provided to the Board for Pinebrook Pointe, ((ii) the plan of action and timeline requires commitment to said plan of action and timeline from both Key City Capital and Multi-South Management Services, (iii)  said plan of action and timeline shall cure all compliance deficiencies, including meeting occupancy levels no later than quarter four of 2025, (iv) plan of action and timeline to be submitted in writing and shall be discussed at the August 6, 2025 Board Meeting, (v) Tie Lasater of Key City Capital is required to be present at the August 6, 2025 Board Meeting for this presentation and consideration and (vi) a specific plan of action and timeline to address the roofs at Pinebrook Pointe (vii) and at the August 6, 2025 Board meeting, the Board will vote to either accept the plan as presented or make a motion to terminate Pinebrook Pointe from the PILOT program. Vincent Sawyer seconded, and the motion passed by majority vote after proper roll call vote of the Board members.

Let the record reflect that Buckner Wellford was recused from this vote.

Let the record reflect the Cliff Henderson and Courtnee Melton-Fant voted not to accept this motion.

Chairman Henderson stated to representatives that this was a split vote and things are not in their favor if this continues with no definitive action or progress.

Nathan Chandler, David Shores, Sarah Brinkman and Gine Osborn left the meeting.

c.    Sunrise Villas

Charles Carpenter reported during the Attorney’s Report that this property had gone into foreclosure and was successfully sold to Fannie Mae as the highest bidder. Representatives that were in attendance for this agenda item left the meeting prior to these final comments. Carpenter stated he has received confirmation of the successful foreclosure sale from Kelly Haigee of Baker Donelson Law Firm. There were no further questions or comments.

Thereupon, Cheryl Hearn introduced two (2) interns of the City Attorney’s office in attendance today, Jonathan Bostick and Max Laumann, and both are aspiring to be attorneys. The Board welcomes the interns and thanked them for their attendance today.

Executive Directors Report

Trey McKnight reported that on July 23, 2025, he and JP Townsend will be taking John Zeanah on a tour of 5-7 PILOT properties, both good and bad. McKnight stated that Zeanah is now working with Mayor Young very closely and wants more of an understanding of what the Board does and McKnight wants to demonstrate the activities of the Board and staff.

McKnight thanked Monice Hagler and Vincent Sawyer for their attendance at the Tennessee Affordable Housing Coalition conference. McKnight stated it included between 30-45 people there and was very well attended and very well accepted. McKnight stated that he is the first Chairman of the West Tennessee Board of the Tennessee Affordable Housing Coalition, and the conference was well attended and well accepted, and the coalition has about 15 new members, and he was able to get three different news channels to talk about it. McKnight stated he would send that information out to the Board, and he has already sent a recap to the Board of the conference, and he would appreciate all Board members taking a look at that. McKnight stated the recap just explained what they were doing.

McKnight reported on the Memphis Blueprint for Wealth and Financial Empowerment. McKnight stated that staff will be working with Mayor Young and City officials to assist in shaping the empowerment initiative for Memphis and Shelby County.

Further, McKnight reported that he met with representatives from Pathway Lending on July 8, 2025, to determine how Pathway can help with gap funding. McKnight stated that the Pathway Lending representative has money to lend with liberal underwriting requirements, and is motivated to lend, and is encouraging PILOT Lessees to review their programs and apply for financing.  

Chairman Henderson offered his congratulations on a successful Tennessee Affordable Housing Coalition meeting. Sawyer agreed, stating it was a successful event indeed. There were no further questions or comments.

Operations Report

Stephanie Bryant presented the Operations Report as follows:

a.  Changes to Public Notice Requirements

Bryant stated that as Carpenter had reported earlier in the Legal Report, there have been changes to the Tennessee Open Meetings Publication requirements that went into effect July 1, 2025. Bryant stated that this change requires publication in both print and two (2) electronic formats. Bryant advised the Board that it publishes Notices of Public Meetings in The Daily News newspaper, on its website, and on the Board’s website, but now it will also be publishing electronically on the Daily Memphian website. Bryant stated that the Board is in compliance with these changes.

b. Review of Compliance Oversight for June 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.       Under Observation:

a.      No properties were placed in “Under Observation” status for the month of June 2025.

2.      Compliance Concerns:

a.      Three (3) properties were moved from “Under Observation” status to “Compliance Concerns” status during the month of June 2025:

                                                              i.      Country View apartments

                                                             ii.      Jamesbridge Apartments

                                                           iii.      Lakes at Epping Way

b.      Two (2) PILOT properties under “Compliance Concerns” had a walkthrough performed on May 28, 2025 and were given the deadline of Friday, June 6, 2025 at 3:00 pm CT to submit written construction plan and timeline for HEHFB Staff review to remedy compliance concerns for each property:

                                                              i.      Abington: PILOT Lessee did not timely submit a written construction plan and timeline. Additionally, the submissions that were submitted after the deadline were not satisfactory. HEHFB Staff will conduct a PILOT Portfolio review with this developer, as now all four (4) properties included in this developer’s portfolio have been placed in “Compliance Concerns” status (Abington, Country View, Jamesbridge, and Lakes at Epping Way)    

                                                             ii.      Mill Creek Apartments: PILOT Lessee timely submitted satisfactory timelines and HEHFB staff will continue to closely monitor until all compliance concerns are remedied.

3.      Notice of Non-Compliance:

a.      No properties were placed in “Notice of Non-Compliance” status for the month of June 2025.

4.      Legal Default:

a.      No properties were referred to “Legal Default”, nor were any properties issued a “Notice of Legal Default” by the Board’s legal counsel during the month of June 2025.

c. HEHFB Suite 1120 Preliminary Floor Plan Update

Bryant stated that she has been in communication with Henry Turley Company representatives and The Crump Firm concerning the Preliminary Floor Plan, and The Crump Firm has now completed Construction Drawings (CDs), and they are now being reviewed by Henry Turley Company for final stamped sets. Once this occurs, Henry Turley Company representatives will begin pricing the renovation with their general contractor and provide those estimates to her for review. The Crump Firm will then begin making finish selections for Bryant’s review to get pricing estimates there. Bryant will continue to work on this project and keep the Board advised of her progress. There were no other questions or comments.

Courtnee Melton Fant and Howard Eddings, Jr. left the meeting.

Finance Committee Report  

Cliff Henderson presented the financial results for the month ended May 31, 2025.  After discussion,   

Buckner Wellford moved for acceptance of the Finance Committee Report for the month ended May 31, 2025, properly seconded by Monice Hagler, and the motion passed unanimously after a proper roll call vote of the Board members.

New Business

Cliff Henderson stated, through authorization of Board Chairman Dan Reid, he will continue putting together a Strategic Planning Committee to build upon work that has been discussed with and presented to Mayor Young’s office. A Board committee will be established to proceed with the completion and implementation of the initiatives. Henderson stated the Strategic Planning Committee will consist of Dan Reid, himself (Cliff Henderson), Buckner Wellford, and Vincent Sawyer. Henderson stated that the Board should anticipate this topic being listed on the agenda at a future Board Meeting. Henderson stated that following that, there should be a separate, specific meeting to discuss in more detail.

There was no other new business.

Acting Chairman Henderson stated that the next regular meeting of the Board is scheduled for Wednesday, August 6, 2025 @ Noon. There being no further business, the meeting was adjourned by the Chairman at 01:55 p.m.