MINUTES OF REGULAR MEETING OF

THE HEALTH, EDUCATIONAL AND HOUSING FACILITY BOARD

OF THE CITY OF MEMPHIS, TENNESSEE

 

Wednesday, June 5, 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, June 5, 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                                        Buckner Wellford

                        Monice Hagler                                                   Cliff Henderson

                        Nancy Willis                                                       Dr. Manoj Jain

                        James Jalenak

                                                        

            The following Director was absent:

                        Brittney Rowe                                                                                                                                                                                     

            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.

Christopher Lamberson of Glankler Brown and Chasity Blackburn representing Bent Tree Apartments and Carl Mabry representing April Woods II 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

Monice Hagler moved for approval of the Minutes of the May 8, 2019 Regular Meeting. Nancy Willis seconded, and the motion passed unanimously.

 

Finance Committee Report

Cliff Henderson presented the financial results for the month ended April 30, 2019. A discussion of the financials was completed and

James Jalenak moved for acceptance of the Finance Committee Report for April 30, 2019, and properly seconded by Dr. Manoj Jain, the motion passed unanimously.

 

Attorney’s Report

Charles Carpenter presented the legal report, as follows:

1.     For the Board’s information, Carpenter reported two new lawsuits or claims for the period. The first is a materialman’s lien against Mason Village. Carpenter reported that both claims were just received within the previous week, so he and his firm are still performing the due diligence necessary for each claim. Carpenter’s firm has reached out to the PILOT Lessee for Mason Village and the Lessee is looking into the matter and will report back to Carpenter’s firm. Carpenter reminded the Board that it receives these types of notices because the Board is listed as title owner of all PILOT properties and the Board then leases the property back to the PILOT Lessee at the initial application of the PILOT for a property. The Board, however, 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 it’s members financially or otherwise. The second claim is a code violation on a separate property. Code enforcement supplied an address with the notice that was sent to the Board and Carpenter’s firm is still working to identify the property as well as working to confirm whether it is a property that is a participant in the Board’s PILOT program. So far, Carpenter’s firm has not been able to associate the address provided with one of the Board’s PILOT properties. Carpenter stated that his firm will continue their due diligence on each claim and report back to the Board.

2.     Carpenter reported on a current PILOT property, Sunrise Terrace Apartments. Carpenter’s firm has received notice of default and non-judicial foreclosure sale. The sale was scheduled for June 3, 2019 and after communication with the lender, the sale has been extended to July 8, 2019. Carpenter reported that during the PILOT Committee meeting, it was discussed to grant the authority to Martin Edwards, Jr., the Executive Director for the Board, to approve a refinancing that would be completed by the lessee to refinance the existing loan and avoid the foreclosure proceeding. Carpenter reported that there was a motion made in the PILOT Committee meeting, but because that was a committee meeting, it would be necessary to make a motion in the regular meeting of the Board for the record.

Buckner Wellford moved to grant Martin Edwards, Jr. the authority to approve the refinancing request of Sunrise Terrace Apartments. Monice Hagler seconded, and the motion passed unanimously.

3.     Further for informational purposes, Carpenter provided an update to the Board on the Jehl Cooperage property. Carpenter reported that his firm has received the reply from the attorneys at Burch, Porter and Johnson representing EnSafe, which included comments to the contract and the order for environmental court. Carpenter stated this his firm is currently reviewing those comments now and believes once this is completed, the process will be able to move forward to environmental court to get the order entered so that EnSafe will be able to proceed with the environmental remediation needed to determine whether the property will be able to be used for commercial development. Carpenter stated that his firm will continue to move forward with this process and continue to report to the Board. 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 remediation efforts were successful, and the property is able to be used for commercial use. If the property is not able to be used for commercial use, the grant would not be returned. Monice Hagler asked if a price for the remediation had been determined. Carpenter responded that a price has not been determined at this time, however, it had been estimated to be the amount of the grant, or not to exceed the amount of the grant provided by the Board. Buckner Wellford asked if there were any other entities that has contributed to this efforts. Carpenter responded that all other sources of funding had been exhausted prior to the grant being requested and awarded by the Board. Carpenter also responded that some environmental work had been completed, but it indicated that additional environmental work would be necessary to make a determination. Martin Edwards, Jr. added that this is a crucial piece of property to the neighborhood, as well as the properties that surround it, as they are properties that participate in the Board’s PILOT program. Buckner Wellford expressed concern about the possibility of remediation efforts exceeding the grant value. Carpenter expressed that there is a clear understanding that the Board’s grant amount would not be increased or supplemented by the Board, if exceeded.

4.     Carpenter reported that he has reviewed and approved a land use restriction agreement amendment (LURA) for Ridgecrest Apartments, which has been discussed in previous regular Board meetings, and it is now ready for Chairman Daniel Reid’s signature.

5.     Lastly, Carpenter reported that his firm is continuing to have discussions with the City of Memphis and others concerning PILOT term extensions. Carpenter stated that he, Corbin Carpenter, and Martin Edwards, Jr. have had discussions prior to today’s meeting on where the issues are arising and how to move forward from an internal administrative process. This approach specifically pertains to the question, at what point in time can a current PILOT Lessee come in for a PILOT term extension? Currently, staff has used the guideline of “current” being defined as ninety to one hundred twenty days prior to a PILOT expiration. However, new requests from PILOT Lessee’s have asked for the ability to come in with an extension request two or more years prior to the PILOT expiration. The focus is now on what the Board can do from an administrative standpoint so that the Board and staff can get comfortable with an evaluation of that type of PILOT. Carpenter stated that Martin Edwards, Jr. is moving forward with discussions with the City Council and Carpenter’s firm is moving forward with discussions with the City Attorney’s office in hopes that in the near term, there can be a meeting of the minds with a recommendation everyone can agree to for Board approval. Cliff Henderson asked if there was ever a determination made on if a PILOT Lessee requested a term extension prior to the expiration of the initial PILOT term, would the extension date begin at the time of approval, or at the time of expiration of the initial PILOT term? Carpenter responded that it is still outstanding, but his firm’s view would be that it would be applied at the time of approval, in order to receive an aggregate twenty (20) year term, so not to shorten the term. This interpretation will match the 20 year terms of the moderate income and market rate PILOTs. Edwards added that it is not clear in his mind what the Resolution intended, which is the reason behind further discussion at a City Council level. Edwards explained that the word “expired” is used throughout the Resolution, but if a property loses, for example, two years when applying prior to the expiration date of the PILOT, this will not accomplish the aggregate twenty (20) year term. Edwards went on to explain that the initiative is to encourage and retain affordable housing. Edwards also explained that from an underwriting standpoint, current information must be used to make a determination on a recommendation for approval of an extension, so this may pose an issue when attempting to underwrite a property that does not expire for two or more years. Charles Carpenter stated that at the prior month’s regular Board meeting, the Board approved a twenty (20) year term for a new PILOT. Once that PILOT is in place, the evaluation metrics used are compliance. In Carpenter’s legal view, there is no difference in approving a PILOT term extension prior to expiration that will come to an aggregate of twenty (20) years than approving a PILOT for a term of twenty (20) years initially. Carpenter went on to explain that this is why there will need to be a meeting of the minds and that compliance can be used, along with strict oversight if needed, for these PILOT properties because low income housing is so important and there is such a tremendous need for it in the city of Memphis. Edwards expressed that his concern is that an extension should not be put into place two or more years from present day based on current underwriting. The Board continued with discussions and Monice Hagler stated that the additional time awarded to a current PILOT Lessee if a term extension were approved prior to the initial PILOT expiration would be viewed as an amendment to the original PILOT term rather than being called an extension. Carpenter informed the Board that the PILOT Lease would be called an amended and restated PILOT Lease when any PILOT term extension is approved and closed from a legal standpoint. The Board ended the discussion in agreement with this and will look for formal recommendation at the next Board meeting.

The above concluded the legal report and there was a brief question and answer session with members of the Board.

Nancy Willis left the meeting.

 

PILOT COMMITTEE REPORT

Martin Edwards, Jr. reserved comment for the action items.

 

Action Items:

Christopher Lamberson and Chasity Blackburn entered the meeting.

PILOT STATUS UPDATE FOR BENT TREE APARTMENTS

Martin Edwards, Jr. began the update by providing the Board with photographs of his site visit at Bent Tree Apartments on June 4, 2019. Christopher Lamberson reported that Global Ministries Foundation (GMF) took over management of Bent Tree Apartments from third party management as of January 1, 2019. Lamberson explained that he has asked Chasity Blackburn, representing GMF as the management company of Bent Tree Apartments, to attend today’s meeting in order to discuss the changes that have been made on the property including staffing, particularly with the trash situation on site. Lamberson asked Blackburn to explain what is being done internally to get the trash situation under control. Blackburn began her report by stating the security has been doubled on site. Blackburn also stated that the trash situation became a real problem once spring occurred, and there are currently three (3) grounds keepers on site daily, as well as three (3) additional members of staff on Monday’s that pick-up trash on the property following the weekends. Monday, June 3, 2019, it was reported that more than fifty (50) bags of trash were collected, which Blackburn stated is typical, and that is why than manpower has been put into place to handle the trash situation. Blackburn also stated that the company has added an additional dumpster pick-up each week for a total of three (3) dumpster pick-ups each week. Martin Edwards, Jr. stated that the cleanliness of the property has improved tremendously over the past few months and it is very evident that that type of action is occurring on a weekly and monthly basis. Charles Carpenter asked what the current occupancy is for the property. Blackburn responded that occupancy is at eighty-six percent (86%) and the property is leased at eighty-seven-point five percent (87.5%), so occupancy is trending upward at this point, as well as evictions are also down. Monice Hagler asked if there are still units that are offline and how many are there. Blackburn responded that there are currently eleven (11) down units due to excessive water damage. Hagler asked what the plan is to gets these units back online. Blackburn responded that the property strives to re-lease natural vacancies first, and once these are accomplished to the point of ninety-three percent (93%) occupancy, rehabilitation begins on those down units, which require a more substantial investment. James Jalenak asked about the status of the flooding issues. Blackburn stated that there have been no further issues and the drainage correction has been working superbly. Blackburn also stated that there are crews assigned three times a day to go to the drainage area and clear any debris. Edwards stated that the flooding issue has been corrected, as well as paving of the parking lot has been completed. Lamberson stated that the property will continue maintenance on these items as well. Carpenter asked if the property has any internal way to communicate with residents in regard to the trash situation. Blackburn responded that the property has the ability to send out blast emails as well as trash reminders, which the property already does, however it is almost impossible to know where the trash all along the property comes from specifically. Blackburn also stated that the property has a resident crew that walks the property with trash bags in an effort to assist in a beautification plan for the property at a resident level, which has been a great effort and improvement on the property. Following further discussions of the property, Edwards made a formal recommendation to take Bent Tree Apartments off the watch list, stating that the property owner and management have complied with the Board’s requests and the capital has been expended to correct many of the issues that the property was experiencing. There being no further questions or comments,

Monice Hagler moved to remove Bent Tree Apartments from the Board’s watch list. James Jalenak seconded, and the motion passes unanimously.

Christopher Lamberson and Chasity Blackburn left the meeting.

 

AFFORDABLE MULTIFAMILY PILOT APPLICATION FOR CLEARBROOK VILLAGE

Martin Edward, Jr. began by stating that Clearbrook Village is an apartment complex located at Winchester Road and Getwell Road. Edwards stated that the property is in excellent condition and the property owners have done the work that was stated in the original PILOT application in 2018, prior to the Board running out of allocation. There will also be additional tenant improvements and the property is clean with occupancy at approximately ninety-five percent (95%). Edwards stated that the PILOT Committee recommends approval. There being no further questions or comment,

Cliff Henderson moved to approve AFFORDABLE MULTIFAMILY PILOT APPLICATION FOR CLEARBOOK VILLAGE. James Jalenak seconded, and the motion passed unanimously.

Carl Mabry entered the meeting.

AFFORDABLE MULTIFAMILY PILOT TERM EXTENSION APPLICATION FOR APRIL WOODS II

 Martin Edwards, Jr. reported that April Woods II is comprised of two properties that were built approximately ten (10) years ago. Edwards circulated to the Board photographs from a recent site visit as well as the list of current and proposed tenant benefits for the properties. Carl Mabry addressed the Board and explained that these properties are financed through tax credits and the opportunity for a PILOT term extension provides the ability for the property to continue to offer tenant benefits as well as lower rents for the community. Mabry also explained that one hundred percent (100%) of the units are provided to residents whose income is below sixty percent (60%) of the area median income.  Mabry explained that the opportunity for the PILOT Term extension would assist in the ability to continue to provide quality affordable housing for these residents. Edwards stated that the property is in excellent condition, as well as offers such quality tenant benefits, including counseling, debt management, among others. Mabry went on to explain that the properties strive to assist residents beyond affordable housing by offering assistance to the residents with budgeting, credit counseling, checking accounts, etc. Mabry explained that it is the goal of the ownership and management to have a total life approach with the residents to help with their lifestyle, not just the housing aspect. Dr. Manoj Jain asked if occupancy has always been near one hundred percent (100%). Mabry stated that occupancy has always been at this level. Monice Hagler asked if there is a waiting list at these properties. Mabry responded that there is a waiting list at both properties. Hagler stated that the property looks very good and asked if counseling is offered to residents in regard to property upkeep and maintenance. Mabry responded by stating that the residents are made aware of what is acceptable and not acceptable, but no maintenance counseling in particular is offered. Dr. Manoj Jain asked where the property management company is based. Mabry stated that the management company, Northern Real Estate Services, Inc., is a local company. Edwards stated that the PILOT Committee recommended approval. There being no further questions or comments,

James Jalenak moved to approve AFFORDABLE MULTIFAMILY PILOT TERM EXTENSION APPLICATION FOR APRIL WOODS II. Dr. Manoj Jain seconded and the motion passed unanimously.

Carl Mabry left the meeting.

 

PILOT REFINANCING APPLICATION FOR JAMESBRIDGE APARTMENTS

Cheryl Hearn left the meeting.

Martin Edwards, Jr. stated that this application was recommended for approval by the PILOT Committee. This refinancing will provide new funds that will be reinvested in the property for improvements, including a new leasing center, fitness center, etc. There being no further questions or comments,

Monice Hagler moved to approve the PILOT REFINANCING APPLICATION FOR JAMESBRIDGE APARTMENTS. Dr. Manoj Jain seconded, and the motion passed unanimously.

 

Executive Director Report

Martin Edwards, Jr. began his report by briefing the Board on a situation with the Shelby County Trustee’s office in regard to delinquent PILOT payments. Edwards stated that an email was received in late March 2019, on a Friday afternoon, in regard to the delinquent PILOT payments for properties that the Trustee’s office had as active participants in the Board’s PILOT program. Following receipt of the email from the Trustee’s office, Board staff began making calls and had collected over ninety-four thousand dollars ($94,000) in delinquent PILOT payments for the Trustee’s office from active participants in the Board’s PILOT program by Tuesday of the following week. The remaining properties included on the list provided from the Trustee’s office were properties that PILOTs were terminated and no longer active in the Board’s PILOT program. Following this collection effort, Board staff, Martin Edwards, Jr. and Stephanie Wright, met with Shelby County Trustee, Regina Morrison Newman, the Trustee’s legal counsel, and the Trustee’s director of collections in a review of the monies collected and properties that are no longer active in the Board’s PILOT program. In the days following this meeting, Edwards received an email from a representative at the Trustee’s office stating that this was the fourth attempt to reach out to representatives of our Board in regard to this list of delinquent PILOT payments and that there has been no communication or efforts made to the Trustee’s office concerning these properties. Edwards replied to this email, explaining the collective actions that had been taken, along with the meeting that had taken place, and expressed that the Board staff took great offence to this email that stated otherwise. Deborah Gates, with the Trustee’s office, issued an apology to Edwards and staff on behalf of Regina Morrison Newman and stated that the email previously received were form letters that were sent out to all Boards. The Board had a brief discussion in regard to the courtesy in assisting the Trustee’s office in the collection of PILOT payments due for properties that are currently active in our program, or for the period in which the property may have been active in the program.

 

The above concluded the Executive Director Report.

 

New Business

There was no new business.

 

Public Comment

There was no public comment.

It was announced that the next scheduled meeting of the Board will be held on Wednesday, July 10, 2019 @ Noon. There being no further business, the meeting was adjourned by the Chair at 1:11 p.m.