MINUTES OF REGULAR MEETING OF
THE HEALTH, EDUCATIONAL AND HOUSING FACILITY BOARD
OF THE CITY OF MEMPHIS, TENNESSEE
Wednesday, May 7, 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, April 30, 2025, and continuously posted on the Board’s website at: www.memphishehf.com. The published meeting time was 12:00 Noon. The meeting was held in the conference room in the Board offices, located at 65 Union Avenue, Suite 1120, Memphis, TN 38103.
The following Directors were present:
Daniel T. Reid, Chairman Monice Hagler
Buckner Wellford Cliff Henderson
Howard Eddings, Jr. Vincent Sawyer
Courtnee Melton-Fant
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; Janika White, Memphis City Council Liaison (Zoom).
Also participating in person and/or via remote Zoom virtual platform were Director Ashley Cash of City of Memphis Housing and Community Development (HCD), Louis Focoracci and Melanie Wenk of WNC, Matt Mulqueen, Esq. and Bruce McMullen, Esq. of Baker Donelson Law Firm, all representing Cavelier Court and Gospel Gardens Apartments; Tie Lasater and Nathan Chandler of KeyCity Capital and Samantha Sanders and Vivian Goshen of Multi-South Management Services, LLC representing Grahamwood Place and Pinebrook Pointe Apartments; Frank Carney, Esq. of Evans Petree Law Firm, Mendel Fischer, Shrage Marasow, and Neil Knopf all representing Bridgeport Manor Apartments; Michael Finch of MLK50; Simeon Ike of Greater Memphis Housing Justice Project; Shirley Bondon of the Black Clergy Collaborative of Memphis; Austin (A.T.) Harrison of Memphis Interfaith Coalition for Action & Hope (MICAH); Glenda Hicks of 21st Century Memphis or Bust!; Sheila Jordan Cunningham; Mike Humes; and several members of the public were also present.
With a quorum present, the regular meeting of the Board was called to order at 12:00 Noon by Daniel T. Reid, Chairman.
Chairman Reid stated that in compliance with the Open Meetings Law codified in Section 8-44-101 to 8-44-108 inclusive of the Tennessee Code Annotated, as amended, The Health, Educational and Housing Facility Board of the City of Memphis, Tennessee is holding its regular meeting on Wednesday, May 7, 2025 @ Noon as an open public meeting in its conference room located at 65 Union Avenue, Suite 1120, Memphis, Tennessee 38103.
Chairman Reid stated supplemental Board meeting materials could be accessed on the Board’s website: www.memphishehf.com and reminded all attendees participating via remote access to enter their name and affiliated entities into the Zoom platform for record keeping purposes.
Public Comment
Chairman Daniel Reid opened the floor for public comment and advised that all comments should be limited to two (2) minutes per speaker.
There was no public comment.
Approval of Minutes
Cliff Henderson moved for approval of the Minutes of the March 24, 2025 Mandatory PILOT Lessee Training Workshop, which was seconded by Howard Eddings, Jr. and the motion passed unanimously after proper roll call vote of the Board members.
Cliff Henderson moved for approval of the Minutes of the April 2, 2025 Regular Meeting, which was seconded by Buckner Wellford and the motion passed unanimously after proper roll call vote of the Board members.
Attorney’s Report
Charles Carpenter presented the legal report, as follows:
1. Carpenter reported that his firm is currently working with independent auditors Banks, Finley, White & Company in completing the corporation’s audit for the period ending December 31, 2024. Carpenter reported that his firm will be releasing its legal response later this week.
2. Carpenter reported to the Board that he, Corbin Carpenter, and Executive Director Trey McKnight appeared by invitation to the Shelby County Ad Hoc Pilot Committee on May 2, 2025 to oppose the proposed 6-month moratorium on the issuance of PILOTs. Carpenter stated that a presentation was made, attendees addressed the committee and answered questions. Carpenter reported that his Firm does not know what the next steps will be for that, but did indicate to the committee that this is an area of first impression and agreed to participate and be a part of the crafting, not only on the factual basis and understanding of PILOTs in Shelby County but throughout the state of Tennessee. Carpenter stated that one of the issues mentioned is that Shelby County has more PILOTs than any other city in the state of Tennessee. Carpenter advised the Committee that the reasons for that are twofold: (i) Memphis and Shelby County have the highest tax rate in the state by far and (ii) Memphis and Shelby County have one of the lowest area median incomes for the state of Tennessee. Carpenter referenced Metro Nashville and a recent 26% proposed increase in tax rate, which would be the second increase that Metro Nashville has had over the last two years, and Memphis and Shelby County taxes are still twice as high as the proposed 26%. Carpenter mentioned that Memphis also has fewer experienced developers than other areas in the state.
Carpenter stated that the Board has been criticized and there have been statements made
that the Board's website does not have all the PILOT agreements on the website easily
accessible. Carpenter shared with the Shelby County Pilot Ad Hoc Committee and others that Board’s Executive Director is working on the website, but that all PILOT documents are already available public records. Carpenter explained the way the PILOT process works is that the property is transferred via a Quit Claim Deed to the Board. Contemporaneously with that the Board enters into a PILOT agreement and a PILOT lease agreement, and all three of those documents are filed of public record with the Shelby County Register of Deeds, which office is managed by Willie F. Brooks, Jr., duly elected County Register. The Shelby County Register of Deeds website has different ways to search including by address, by owner's name, by the parcel number, as well as by a tax map. Carpenter stated that there is no reason to say the Board is not being transparent, as this information is publicly available from the commencement of the PILOT process.
Carpenter stated his Firm has preliminarily determined that this is an educational process, in that the multifamily housing PILOTs are different than other PILOTs issued by Industrial Development Boards, and the statutory authority that the Shelby County Pilot Ad Hoc Committee has been looking at applies to Industrial Development Boards and not this Board. Carpenter stated that his Firm looks forward to working with the Shelby County PILOT Ad Hoc Committee to give them information that they need and help structure their review because they appear to have legitimate concerns. Based on the number of PILOTs, Carpenter stated that the Shelby County PILOT Ad Hoc Committee is focused on looking at missed tax revenues, but that is an oversimplification, and each PILOT program must be analyzed individually to determine its effectiveness.
3. Carpenter reminded the Board regarding PILOT claims for maintenance liens or notice of non-payment on PILOT properties in the Board’s program that there is no legal liability or financial exposure to the Board in these matters, but the Board does receive formal notice and service of process because it holds legal title in its role of providing a public function to the PILOT properties, and his Firm provides oversight and ensures these types of claims are monitored and adjudicated properly. Carpenter stated that these claims sometimes are an indication that the property might be in trouble or beginning to trend in the wrong direction and these types of notices are used as an additional indicator of possible compliance concerns arising. Carpenter stated that his Firm will continue to monitor claims and advise Board staff of any patterns or trends so that property inspections can be performed to ensure the claims are not indicative of a bigger issue.
4. Finally, Carpenter reported that he and Corbin Carpenter, several Board members, and staff were able to attend the Tennessee Housing Development Agency (THDA) Tennessee Housing Conference in Nashville, TN in April 2025. THDA's Executive Director Ralph Perry stated this was the largest attendance they have had at this annual conference. Carpenter stated the reason for this seems to be that statewide, there are so many issues with housing and professionals wanting to know what the current thinking is and what the 2025 Qualified Allocation Plan (QAP) will mean for the part of the state that they are located. Carpenter stated there were many good sessions. Carpenter mentioned that his primary concern was with the 4% tax allocation that will be released anytime now, which will impact three of the projects that the Board has induced bonds and approved PILOTs for with Alco Management, Inc. Carpenter stated that once the allocations are released, Alco will be able to move forward promptly with the bond and PILOT closings. Carpenter reminded the Board that allocations are granted on a year-by-year basis, and although it is the month of May, the allocation must be closed in full before the end of the year, or the allocation is lost.
Buckner Wellford asked if the Board is working on Posting information on its website about the active PILOTs at some level to provide the public with an overview of the PILOTs and bond issuances of the Board. Trey McKnight stated that he is currently working on this and taking quotes for a new website and hopes to have something to present to Cliff Henderson and the Board for a new website next month. McKnight stated that the new website is anticipated to have a database in regard to the Board's input throughout the City of Memphis. Henderson stated that some of the economic data presented at the THDA Tennessee Housing Annual Conference would supplement some of the things Carpenter stated earlier in the meeting about some of the needs in Shelby County versus the rest of the state that support the Board's mission as it moves forward. McKnight stated that the Board's new website will have all that information, and he hopes to have the website presented to Cliff Henderson and to the Board next month regarding what it is going to do and how it's going to do it. Wellford stated that although he was unable to attend the Board’s PILOT Lessee Training Workshop held on March 24, 2025, the information that was provided is very substantive information and very helpful context and facts. McKnight again stated he hopes to have something regarding a new website quote in front of Cliff Henderson and the Board next month. Stephanie Bryant stated that the Board’s current website does have posted everything that was presented at the 2025 PILOT Lessee Training Workshop, including the entire PowerPoint presentation, and was posted within a week of the event taking place.
Howard Eddings, Jr. asked if the Shelby County PILOT Ad Hoc Committee is having conversations about alternatives to the originally proposed six-month moratorium. Eddings asked if the members of the committee understand the value of the housing PILOTs and the fact that these PILOTs provide safe, quality and affordable housing in theory, and asked who is on this committee. Carpenter stated that Shelby County PILOT Ad Hoc Committee is chaired by Commissioner Henri E. Brooks, but he does not have a complete list of all the members of the committee available now, but other members include Shelby County Trustee Regina Morrison Newman, Javier Bailey with the Shelby County Assessor’s Office, and other community members. Carpenter stated it is unclear if the committee understands the impact that housing PILOTs have to the community and the focus seems to be at a very early stage, which is why his Firm wants to be more involved with them to help with their understanding.
Carpenter stated that at the THDA Tennessee Housing Conference, it was shared that there is a shortage of affordable housing units around the state, with Memphis and Shelby County at approximately 44,000 units short. Carpenter stated that even the best developers can only develop 1000 to 1200 units per year, so it will take a long time to whittle down the 44,000-unit need and that will continue to grow every year, particularly with the cuts that are being made at the federal level and state level, so this is a crisis situation. Carpenter stated that his Firm would encourage advocacy on behalf of the Board members to get involved, to talk to others, and to make sure that everyone understands the critical period the city is going through right now.
Community member Austin (A.T.) Harrison interrupted the meeting at this time by speaking out of turn. Harrison commented that as a community member of the Shelby County PILOT Ad Hoc Committee, he has met with many members of the Board and has tried to meet with the staff, stating that he cannot speak for everyone on the committee, but he is open and has been so critical of HEHF because he sees the importance and because he sees the crisis. Harrison stated that he has been coming to Board meetings, along with many other advocates, for over eighteen (18) months, and as was mentioned during the Shelby County PILOT Ad Hoc Committee meeting on May 2, 2025, everyone is on the same side trying to work together. Harrison stated that he would love to talk to others, as he has spoken with Vincent Sawyer, Chairman Reid, City Council members, and is happy to talk to others, because he believes many people on the Shelby County PILOT Ad Hoc Committee care about these PILOTs, not because they want them to go away, but because they want them to work better, and they share a lot of the same goals that the Board shares. Harrison stated that he cannot speak on the whole community but on behalf of himself, and he would be more than willing to talk to anyone to work together.
McKnight stated that Charles Carpenter and Corbin Carpenter did an excellent job of explaining the Board’s programs and the value to the community during the Shelby County PILOT Ad Hoc Committee meeting on May 2, 2025, although he is unsure of how well it was accepted. Eddings stated that he is more concerned with the alternative if the PILOTs went away and what drives this kind of action or decision or effort to put a moratorium against the opportunity. Eddings stated that it is the responsibility of the Board to hold PILOT lessees accountable to the standards that the Board has set forth, which makes the Board’s job harder, but also more important. Eddings stated there is no reason in his mind why the Shelby County PILOT Ad Hoc Committee should be discussing why PILOTs should be taken off the table, which they may not be discussing at this time. Eddings stated it appears the committee is asking for a pause to restructure or rethink or take a different perspective on what PILOTs provide.
Wellford asked for confirmation that the Shelby County PILOT Ad Hoc Committee can only place a moratorium on the Shelby County portion of taxes abated under the Board’s PILOT program, which would not be good, but they would not have the authority to place a moratorium on the City of Memphis taxes abated, to which Carpenter confirmed. McKnight stated that this is only being considered by the Shelby County PILOT Ad Hoc Committee and has not gone in front of the full Shelby County Board of Commissioners, and the committee would only suggest to the full Shelby County Board of Commissioners and then there would be a full vote. McKnight stated that he is doing his due diligence to give them as much information as possible and to arm them with as much information as possible so that they feel informed, and it is his and Carpenter’s opinion that the committee is lumping this Board together with the entire group and the Carpenters did a good job of showing how this Board is different from other Boards and that this Board is not an Industrial Development Board (IDB). Carpenter stated that he would send out a link to the Board of the entire presentation for the Board’s review. There being no further questions or comments, the Legal Report was concluded.
Action Items-
1. PILOT Status Update from Director Ashley Cash of Housing and Community Development (HCD) for (i) Cavelier Courts Apartments and (ii) Gospel Gardens Apartments; recommendations from City of Memphis administration advising of City’s proposed future oversight actions and responsibilities
Director Ashley Cash began by thanking the Board for the opportunity to attend today’s meeting and stated she is representing the City Administration in this matter. Cash stated that there are representatives from WNC, the properties ownership, present at today’s meeting as well. Cash reviewed the recent history of these two (2) properties, stating that the City of Memphis appeared at the Board’s December 4, 2024 Board Meeting and requested the Board delay the acceptance of its October 2, 2024 Meeting Minutes, which would affectively cause the termination of the PILOT for Cavelier Court Apartments and Gospel Gardens Apartments. Cash stated that the City of Memphis understands that the HEHFB has the authority and autonomy related to issuing these PILOTs, and the City Administration appreciates the Board’s consideration and review as the City Administration has been trying to preserve affordable housing in this city. Cash reported that the City of Memphis effectively took over the compliance oversight portion of Cavelier Court and Gospel Gardens to provide ownership with additional time to address the issues identified by the Board that led to both properties being placed in legal default. Cash reported that the City Administration shared with the Board prior to taking over compliance oversight that the City Administration anticipated being involved around six months. At that time, from the City's perspective the main issues leading to the termination were the longstanding health and safety violation issues impacting units, security at the site, and low occupancy. Cash stated that the Board's legal counsel, Carpenter Law, had previously provided property ownership with legal default notices that outlined the Board's expectations. Cash stated that in January 2025, HCD had a great meeting with the City Administration, her team, WNC, and the new property management company, Winn Companies, to talk through the City's expectations, the timeline on repairs to address those issues, and security. Cash reported that all parties walked both sites and progress had been made on the cleanliness of the sites and updating the waiting list, but no sewer work had begun at that time, to her knowledge. Cash reported that since that time, the City Administration has been receiving monthly reports from WNC leadership on status of Code Enforcement violations, status of sewage leaks, occupancy, and funds spend on the projects. Cash stated that these reports were initially forwarded to the Board's Executive Director, and then she began attending Board meetings in March 2025 on a monthly basis.
Cash stated that the City Administration’s compliance inspector has gone out on regular intervals and provided images to inspect and monitor the repairs and unit turns, and to note any other issues as they arose. Cash stated that the majority of the code violations had been addressed, security was present, the sites were cleaner, and work was being done. However, Cash reported that now there are some concerns of environmental issues not being closed out, new code violations up to the last month, and stagnant occupancy, even though the reports from WNC leadership show unit turns and approved leases. Cash reported that the City Administration met with WNC leadership in mid-April 2025 to discuss these concerns. Cash stated that the City Administration initially sent an email detailing what the concerns had been, discussing the status of the work and the time frame that they are addressed. Cash reported that WNC leadership provided responses as to why these barriers still exist. While the City Administration understands those concerns, WNC leadership also needed to show urgent progress at these sites. Cash stated that a meeting was scheduled between City Administration, WNC leadership, and Board staff and legal counsel prior to today’s Board meeting, but due to issues beyond everyone’s control, that meeting had to be cancelled, and it was agreed that reports and comments would be shared at today's Board meeting.
Cash stated that the City Administration has done its due diligence in monitoring these two sites. Cash stated that at this point, the City Administration is one month out from the six-month timeframe. Cash reported occupancy at Gospel Gardens has stayed the same at approximately fifty-six percent (56%) occupied, and Cavelier Court occupancy is at approximately seventy percent (70%) occupied. Cash reported that there are Code Enforcement violations that had been cleared initially but additional Code Enforcement violations have been issued with the most recent one being issued in the last month. Cash reported that sewer work was to be completed at Gospel Gardens around February 2025, however, work continues to be pushed out and is still ongoing and sewer work at Cavelier Court has also been postponed again and is due to begin later in the month of May 2025. Cash stated that she appreciates the Board allowing the City Administration to try to preserve affordable housing as it is a challenge in our community, as was discussed earlier in this meeting by the Board, and we all have to work together to navigate these challenges, but also we have to make sure we are being responsive to our residents and doing the things that the City Administration said it would.
Cash stated that it is up to the Board whether to allow WNC leadership that is present today to provide comments at this time, but the City Administration recommends transferring compliance oversight back to the Board and the Board acting as it sees fit. Carpenter asked when this recommendation would be effective, to which Cash responded that compliance oversight would be transferred back under Board oversight effective today, May 7, 2025. The Board accepted the return of the responsibilities for the two (2) PILOT properties.
Matthew Mulqueen of Baker Donelson Law Firm stated that he and his partner Bruce McMullen are both present and if the Board would entertain a report from WNC, they would be more than happy to provide some additional context and information if the Board is willing to hear. Carpenter thanked representatives for their attendance and stated that the Board's agenda was not set up today to have a report from WNC presented because these two (2) PILOT properties were still under the City Administration’s oversight and control. Carpenter recommended that there be a meeting of the attorneys so that this presentation can be set up for the Board’s June 4, 2025 Board meeting. Carpenter stated at this point that the Board has received the monthly surveillance reports provided as to the current matters that have been ongoing, and it is more of the same that the Board staff had been seeing for the months that this Board had the direct oversight over those reports and over these two (2) properties, and if there are still outstanding issues of that type, there will not be much more to hear. Carpenter stated that the Board will not entertain a report or presentation today but will communicate following today’s meeting to discuss preparations of a presentation to the Board at the June 4, 2025 Board meeting, and representatives will have the opportunity to present all of the information that would be helpful to the Board to make a final decision at that time.
Mulqueen stated that his client appreciates Director Cash and the City Administration during this interim period and he looks forward to meeting with Carpenter and anyone from the Board prior to the June meeting. Mulqueen stated that as WNC submitted before today’s meeting, that his client is more than happy to address all of the health, safety, and operating funding issues that have been in progress for the last several months and are ongoing, and he believes that ultimately when representatives are able to talk in detail, that the Board will be satisfied because substantial progress has been made. There were no further questions or comments.
Ashley Cash, Louis Focoracci, Melanie Wenk, Matt Mulqueen, and Bruce McMullen left the meeting.
Tie Lasater, Nathan Chandler, Samantha Sanders and Vivian Goshen entered the meeting.
2. PILOT Status Update for Grahamwood Place
Charles Carpenter introduced this agenda item, stating that agenda items two and three are both with the same owner and can be discussed together, but voted on separately. Carpenter stated that both Grahamwood Place and Pinebrook Pointe have been out of compliance for quite a while and every effort has been made to work with the developer to rehabilitate these properties and keep them in the PILOT program. Carpenter stated there have been issues regarding occupancy levels, other repairs and so forth. Carpenter stated these PILOT properties are on the Board’s agenda today to provide a current status of these two properties and turned the meeting over to the Tie Lasater, ownership representative of the properties, to provide the status updates.
Lasater began reporting on Grahamwood Place Apartments, stating that there were Code Enforcement violations for the property when he was present for the last update to the Board at the April 2, 2025 Board meeting, but all of those violations have now been cleared. Lasater stated that the big thing ownership is working on now is the parking lot at the back of the property and the retaining wall. Lasater stated that ownership does have a quote on that now and is working to finalize the negotiations on how much rebar is going to be used. Lasater stated that the quote has come in at approximately $25,000 and ownership is in the process of getting that started. Lassiter stated that a big rain came through, so there was some more damage that had been done to it but it did not change the quotes all that much so that is still moving forward. Lasater stated that ownership got the Property Condition Assessments (PCAs) back from the lender. Lasater stated that ownership has made it through all the PCA's at Grahamwood and everything has been completed and done there, but there are still exterior items ownership is working on at Grahamwood, specifically the gate repair that has not yet been done. Lasater stated that ownership has received quotes for the security gate at the front of the property and is working with Multi-South Management on getting that lined up and completed. Lasater stated he has representatives from Multi-South Management present at today's meeting to give an update on that, but ownership has been discussing back and forth with Multi-South Management concerning the security on site and putting on site security in place along with functioning gates at this point. Lasater reported that there has been an issue with some of the materials being stolen from the property a couple of weeks ago, so ownership is looking into having on site security moving forward for some time.
Carpenter stated that the Board would like to discuss these properties individually and asked for clarification on the property condition assessments (PCAs). Lasater stated that PCA's are condition assessment overviews of the properties, and PCAs stands for Property Condition Assessment. Lasater stated that the lender walks each property with a third party and the third party comes back and assesses the items that they want done. Lasater stated that the largest item to be addressed, which was addressed when ownership purchased the property, but ownership do not have a solution yet, and that is for the roofs. Lasater stated that he has a meeting this week with the owner of Heritage Construction who did the roofs but there are current active roof leaks on a roof that has a 10 year warranty and the roof is only in year 3 of that 10 year warrantied product, but there are currently active roof leaks and there has not been a final resolution there. Lasater stated that tenants have been displaced from some of the units that were affected that were affected and ownership is addressing that.
Carpenter reminded the Board that he reported at the March 5, 2025 Board Meeting that the Board received Notice of a Non-Judicial Foreclosure Sale for both Grahamwood Place and Pinebrook Pointe that was stopped. Carpenter asked Lasater to provide the Board with an update on the current status of that with the lender. Lasater stated that the Non-Judicial Foreclosure sale was stopped and there is no status on that, ownership has negotiated a forbearance and renegotiated the loan so there is no update on that other than there is no foreclosure. Carpenter asked for confirmation that the loan has been reinstated to which Lasater responded yes. Lasater stated that the lender wanted to pay the lender wanted ownership to pay down approximately $8 million of principal balance and that was based on a yield maintenance calculation, how much the property covered debt service by. Laster reported that following a lengthy negotiation with the lender, ownership negotiated the $8 million down to $5 million, but not all payable at one time, so that is being paid out through the end of the Summer 2025 and ownership has already started on that process and begun doing so. Carpenter asked for confirmation that the debt service coverage ratios are being adjusted and now the loan is in good standing, to which Lasater responded that is correct. Lasater stated that the loan is a blanket loan across all six of the properties in ownership’s Memphis portfolio. Lasater confirmed that all six (6) properties are collateralized under the loan, and each property has its own individual amount, So if ownership were to sell an asset or refinance an asset, it could be done, but there would be a 120% pay down on that individual loan up until ownership got to the sixth asset. Lasater also confirmed that Grahamwood Place and Pinebrook Pointe are the only properties in this portfolio of six (6) that are included in the Board’s PILOT program.
Carpenter asked the Board’s internal monitors to provide a report on Grahamwood Place. JP Townsend began by stating that he and Nikki Abraham performed a Tenant Benefit Review of the property on April 28, 2025 and were able to walk the property with maintenance and management representatives. Townsend confirmed Lasater’s comments concerning the ongoing issues with the drainage ditch at the rear of the property. Townsend reported that there were a few potholes that have been recent and there are some water pipe repairs that will still need resurfacing. Townsend reported that both maintenance and management representatives expressed great concern about the conditions of the roofs and the numerous roof leaks, with maintenance personnel stating to Board staff that “it is really bad”. Townsend reported that there is a homeless encampment directly next to the property and people have busted holes in the fencing. Townsend reported there are several areas where people can get on to the property and the security gates are nonfunctional at the property, so there are safety concerns. Townsend stated that physically, structurally, and with the safety concerns present, the property is not in compliance with Board standards.
Carpenter asked if there is an update on the current occupancy at the property. Vivian Goshen responded that occupancy is currently at 53%. Carpenter stated that the occupancy rate is substantially lower than what had been previously reported. Chairman Reid stated that at the Board’s April 2, 2025 Board meeting, occupancy was reported to be at 73% occupied. Lasater stated that one property was 72% occupied and one property was 69% occupied, but he is unsure of which occupancy rate was for which property, and there has also been a substantial amount of moveouts. Reid asked how large the maintenance staff is at Grahamwood Place, to which Goshen responded there are three (3) maintenance staff personnel. Carpenter asked Goshen to introduce herself to the Board for the record. Goshen introduced herself as the Director of Operations for Multi-South Management. Lasater introduced Samantha Sanders with Multi-South Management, who was also present.
Howard Eddings, Jr. asked if the issues centered around the roofs is who is responsible for the repair. Lasater stated that ownership knows who is responsible and the contractor knows they are responsible as well. Eddings stated that Lasater mentioned the roof issues at the Board’s April 2, 2025 Board meeting during his status update. Lasater stated that the contractor wants to come in and put in new drip edge and peel back roof along the edge and they think that will fix the issues, but Lasater stated ownership and the third-party inspectors brought in by ownership do not believe that will fix the issues because even the shingles are failing, so full new reroof is what ownership wants and there are substantial workmanship issues that ownership is dealing with that is affecting both Grahamwood Place and Pinebrook Pointe as well as a third property in ownership's portfolio.
Stephanie Bryant reported to the Board that lender requirements that were committed to being provided to the Board for review by Lasater in December 2025 have still not been provided. Lasater stated he does not understand what lender requirements are being referenced. Bryant stated that Lasater committed to providing lender requirements that were part of the loan negotiations when ownership had intentions of refinancing the portfolio in September 2024 but decided to renegotiate the loan which resulted in an extension of the then current loan rather than a refinancing. Bryant stated that Lasater has now stated today on the record that the lender has completed PCA’s, which should be provided to the Board for both Grahamwood Place and Pinebrook Pointe, as these are reports of what the bank is requiring of ownership. Bryant stated that monthly reports have been asked to be provided to the Board staff for distribution to the Board no less than one (1) week prior to each Board meeting, of which no reports and been provided in recent months, and this month’s report was provided on May 4, 2025.
Bryant reported that monthly rent rolls have not been provided, as was committed to by Lasater. Bryant reported that a rent roll was obtained only through Board staff requesting one while on each site during the Tenant Benefit Review and PILOT Lease File Audits performed in April 2025. Bryant reported that there was a transfer of ownership to current ownership under the PILOT in September 2021, and since that transfer of ownership, the property has not had an occupancy level above the Board’s 75% minimum occupancy requirement since quarter one of 2022, and the property is now on its third management company under its ownership. Lasater stated that ownership has also completed a 100% replacement and renovation of units. Bryant stated to Lasater that this is not a back-and-forth and she is only reporting to the Board what its records indicate and what has been observed up to this point. Bryant continued, reporting that although Lasater has stated to the Board that there has been a substantial amount of moveouts, the number of moveouts shared with Board staff during the Tenant Benefit Review and PILOT Lease File Audit performed on April 28, 2025 do not match the decline in occupancy rates being reported today, so there is some concern as to the validity of past rent rolls submitted to Board staff and occupancy rates that have been reported to the Board. Bryant reported that the rent roll obtained from Multi-South Management while onsite shows an occupancy rate of 52% occupied.
Bryant turned the meeting over to Abraham for her to report on her findings during the PILOT Lease File Audits conducted at Grahamwood Place. Abraham reported that a PILOT Lease File Audit was conducted on June 13, 2024, and the audit revealed that the property was noncompliant for the year 2024 due to the discrepancies between tenant income amounts documented in the lease files and those reported in the quarterly occupancy reports to the Board. Additionally, the number of tenants per unit did not align with the reported data. Abraham reported that a PILOT Lease File Audit was conducted on April 28, 2025, and the audit revealed that the property’s files are not in compliance for the year 2025. Many files contained outdated leases originating from 2023. The auditor asked management about the outdated leases. The management replied that the leases were not updated because the previous management team never increased rent rates for tenants. There was also an alarming discrepancy in the quarter one 2025 occupancy report submitted to the board. A tenant listed on quarter one 2025 occupancy report was found to have passed away in 2020. However, the deceased tenant's roommates had a lease from 2022-2023 without supporting documentation located in the deceased tenant’s file, and roommates continued to reside in the unit.
Abraham reported that upon Multi-South Management taking over management of this property, it was revealed that the occupancy numbers had been inflated. Lasater asked how occupancy had been inflated. Abraham reported that management stated to Board staff that prior property managers were instructed to keep past tenants on the rent rolls to maintain the appearance of a higher occupancy rate. Lasater stated that it has never been brought to his attention. Carpenter asked Lasater what his explanation is for the occupancy rate to have reduced from 73% to 52% within a 30-day period. Lasater stated that it was a result of two things, the first being a lack of walking units and knowing who was in each unit, when it was occupied, and when it was unoccupied. Lasater stated that there have been a ton of skips, which is ultimately why ownership fired its internal managers, as the properties were being self-managed, and brought in a third-party management company. Lasater stated that the second reason for the decrease in occupancy is active roof leaks. Lasater stated he was onsite at Grahamwood prior to today’s meeting and there are two (2) more tenants that are being moved out of units that are being leaked in, so one tenant is being moved to another unit and the other tenant does not want to be moved into another unit, so they will be moving to another property.
Cliff Henderson stated that given the data provided, there is something systemic happening at both of these properties. Henderson stated that he sees ongoing issues on both properties and if this was one property with roof leaks, he could understand that ownership is going through the process to deal with that but there are a number of different issues going on. Henderson stated that he understands why ownership decided to make a change with the property manager and he hopes that ownership has a sense of urgency to deal with this because the data is showing the same issues across 2 properties, which does substantiate what the board's compliance inspectors and auditors are coming back to. Henderson stated that he hopes the new management will reset and recalibrate to go forward with more integrity. Lasater stated that he has had lengthy conversations with David Shores of Multi-South Management and these issues are being experienced across multifamily living in Memphis right now, and there is a significant issue with collections across all of Memphis. Lasater stated these issues are not only with Grahamwood Place and Pinebrook Pointe, but across all Multi-South Management’s portfolio, KeyCity Capital’s Memphis portfolio, and other operators in Memphis. Lasater stated that the issues are being addressed as quickly as possible and obviously living conditions help that and it is an aspect of helping that, along with cost of living.
Eddings asked is Lasater is suggesting that there is a correlation between Lasater’s properties being in disrepair and the condition they are in to tenants skipping out. Lasater stated that tenants skipping out was not a result of the units being in disrepair, as those units are the same as other units, but was because the tenants just could not afford rent and instead of paying, they lived there for as long as they could and then skipped out. Lasater stated that the biggest issue with Key City Capital’s internal management was that the staff was not implementing evictions when they should have been and would allow a balance to run up four or five months and once the collections process was initiated, the tenant would skip out. And management staff would not walk the units and immediately notate those skips. Vincent Sawyer stated that it seems to be consistent with what Board staff expressed that past tenants were being maintained on rent rolls. Sawyer asked when Multi-South Management took over management of these properties, to which Lasater responded approximately April 1, 2025. Carpenter stated that the Board deals with a lot of property management companies and the Board has not seen a property management company allowing a tenant to go four or five months without paying rent without taking legal action. Carpenter stated that typically if a tenant has not paid within a month that a process is initiated let alone several months.
Carpenter recommended moving on to the status update for Pinebrook Pointe. Chairman Reid asked what the current occupancy rate for Pinebrook Pointe is, to which Goshen responded that the property is 52% occupied. Lasater stated this status update is very similar. Lasater stated there were six code violations during the last status update at the Board's April 2, 2025 Board meeting, with two of those were finalized a couple of weeks ago and the last four were completed at the end of last week. Laster stated that the grill has been replaced again, and ownership is sourcing security gate solutions there as well. Lasater stated that this will be a bit larger of an overhaul as there is no area for a retracting gate and it will have to be an open swinging gate in a tight area, which has had numerous issues in the past, but ownership is working on solutions. Lasater stated that ownership is working on a new sign. Lasater stated that one issue brought up at the Board’s April 2, 2025 Board meeting was that some of the LED lights that ownership had replaced shortly after purchasing the property were not functioning in the common areas, and that is being addressed. Lasater stated that there are three (3) broken glass windows as of this morning and three to four (3-4) windows are having the glass replaced at the end of this week and no later than Monday, May 12, 2025, but this will not address the three broken glass windows observed this morning by Lasater, so he stated he has asked management to order those as well. Chairman Reid asked how many maintenance personnel are onsite at Pinebrook Pointe, to which Goshen responded there are two maintenance personnel and management is in the process of hiring a third maintenance person.
Chairman Reid turned the meeting over to Townsend for a report of observations of Pinebrook Pointe. Townsend stated that he and Abraham also performed a Tenant Benefit Review and PILOT Lease File Audit on Pinebrook Pointe on April 29, 2025. Townsend reported that Board staff walked the property with management, who stated there was only one (1) maintenance employee for the property at that time. Goshen stated that the second maintenance employee started at Pinebrook Pointe this week. Townsend continued, reporting that he has previously reported to the Board that work is being done on a third burnt out building, and that construction looks to be pretty much complete and some of the units occupied. Townsend that he has also observed AC units have been changed on some of the roofs. Townsend reported two concerns following the Tenant Benefit Review, one being that one of the tenant benefits, a computer lab that was in the office, has been removed. Lasater stated that he remembers discussing that previously with Board staff and he ordered a computer to be put into place. Townsend stated that it was put into place at one point and he has pictures of it being in place many months ago, but it has now been removed. Townsend reported that the grill has been replaced. Townsend reported that the biggest safety concerned observed and onsite property management agreed and stated that the hallways in these buildings leading to units have no working lights in the hallways. Townsend reported that there are other lighting issues that have been observed throughout the property, and the property has had serious trespassing issues. Townsend reported that Lasater has stated previously that with the pool area that people are coming onto the property that are not supposed to be there. Townsend reported that management confirmed this is still happening and the pool is being repaired right now, likely from previous vandalism. Townsend reported broken windows throughout the property. Townsend stated that with the safety concerns, he could not imagine trying to enter those units as a tenant in the evenings. Goshen stated that Go Green Electric company was onsite yesterday doing an assessment of the lights for the property so as soon as a bid is received and approved, that it will be able to go ahead as well. Townsend stated that still during the property inspection on April 29, 2025 and currently, there are still no lights, which is a safety concern. This coupled with the removal of a tenant benefit, Townsend reported that these items can only result in a status of non-compliance.
Cliff Henderson asked what the next steps are and if this is going to be escalated at some point. Bryant reminded the Board that it voted at the Board’s April 2, 2025 Board meeting to place both properties into a Non-Compliance status, and Board staff recommends that both properties be placed in legal default as a result of the most recent observations and lack of acceptable progress. Chairman Reid stated that a legal default would result in a thirty (30) day cure period. Buckner Wellford stated that he is unsure of the status of any lingering legal issues or legal action between the ownership and the lender, which was being handled by Wellford’s colleague, Spencer Clift of Baker Donelson Law Firm. Chairman Reid asked Lasater to explain the terms of the forbearance agreement and stated that a forbearance agreement is typically put into place when someone is unable to make the loan payment after either ninety (90) or one hundred twenty (120) days past due and is typically for assets that the bank has that are no longer performing and that are put on nonaccrual which means that they are not being charged interest and are not being charged a payment until something can be worked out. Wellford stated that he is unsure of the details and whether ownership is still under water in terms of what the loan servicing requires so he will remain recused for the time being, but if this goes to another meeting, he will inquire into it further, as he may not need to continue to recuse himself moving forward. Chairman Reid asked Lasater to explain the terms of the forbearance agreement for these two properties. Lasater stated that this was purely a principal pay down and there is no forbearance agreement executed, and ownership negotiated on whether it was going to pay down principal and how much of that principal was going to pay down.
Reid stated that Lasater earlier reported that there was a forbearance agreement, but now Lasater is stating that there is not a forbearance agreement. Lasater stated that there is not a formal, binding forbearance agreement and the lender was going to use the covenants of the loan using debt service ratio to foreclose based on ownership negotiating how much principal pay down there was going to be. Lasater stated that when the lender came to ownership in September 2024 at the date of the extension of the loan the lender wanted ownership to pay down the portfolio loan which was roughly an $85 million loan by $8 million for an extension to be put in place. Lasater stated that the lender gave ownership forbearance until that was negotiated out on what the extension was going to be, and ownership got the extension completed around the end of the year 2024. Lasater stated that basically ownership went four (4) months without a loan in place and the principal pay down ended up being reduced from $8 million to just under $5 million, then the lender gave ownership a timeline in order to pay the principal payment down.
Carpenter stated that the Board staff has given more of a history of the Board’s Compliance Step program and these two properties have always been on the bubble, particularly with the code violations, occupancy levels, and so forth. Carpenter stated that now that the Board has a clear picture, and as opposed to these properties being on the bubble, these occupancy levels are way below the Board's 75% minimum occupancy requirement, and lower than anyone had anticipated them being, and the explanation provided to the Board today is not satisfactory. Carpenter reminded the Board that staff has recommended that both properties be placed into Legal Default status. Carpenter stated that if there is a motion and a second from the Board, at that point, the legal default would be issued in writing and the developer would have 30 days to respond to that, and then at the end of the 30-day period, the board would make determination if that cure is sufficient. If the cure is sufficient, then the board will set forth a timeline for the cure. If the cure is not sufficient, Carpenter stated then the Board would have the option to terminate each PILOT at that time. There being no further questions or comments,
Cliff Henderson made a motion to move Grahamwood Place into Legal Default Status and have representatives report back to the Board to provide a PILOT Status Update at the June 4, 2025 Board Meeting. Courtnee Melton-Fant seconded, and the motion passed unanimously after proper roll call vote of the Board members.
Let the record reflect that Buckner Wellford was recused from this vote.
3. PILOT Status Update for Pinebrook Pointe
There being no further questions or comments,
Cliff Henderson made a motion to move Pinebrook Pointe into Legal Default Status and have representatives report back to the Board to provide a PILOT Status Update at the June 4, 2025 Board Meeting. Courtnee Melton-Fant seconded, and the motion passed unanimously after proper roll call vote of the Board members.
Let the record reflect that Buckner Wellford was recused from this vote.
Tie Lasater, Nathan Chandler, Samantha Sanders and Vivian Goshen left the meeting.
Frank Carney, Mendel Fischer, Shrage Marasow, and Neil Knopf entered the meeting.
4. Bridgeport Manor PILOT Refinancing Application: Request for variance to allow refinancing application to be considered by the Board while certain properties in the developer’s portfolio are in non-compliance status
Charles Carpenter introduced this agenda item, stating that this is a request for a variance to allow a refinancing application to be considered by the Board while certain properties in the developer’s portfolio are in non-compliance status. Carpenter stated that the Board modified its policy to review a developer portfolio at the time of any application brought before the Board for consideration. Carpenter stated that means that if there is more than one property in the PILOT program and there is a default or some compliance issues with one property, then no other incentives or adjustments would be made for other properties in the portfolio. In this case, Carpenter stated that this developer has seven (7) properties in the Board’s PILOT program and all of them have been referred to legal default.
Carpenter stated that Bridgeport Manor Apartments ownership has applied for a refinancing of the property, and it is his understanding that the bulk of the proceeds from the refinancing would be used to rehabilitate the property and bring it into compliance, which is why the applicant has come before the Board today to seek a variance from the standard policy that if a property is in default, then no consideration will be given for additional incentive or relief by the Board. Carpenter turned the meeting over to Frank Carney, legal counsel to the developer. Carney thanked the Board for allowing the applicant to appear before the Board today and introduced other representatives in attendance: Mendel Fischer, Shrage Marasow, and Neil Knopf. Carney continued, reminding the Board that Bridgeport Manor is a 636-unit development that is now being renovated in two phases, with the first phase consisting of 432 units and that phase is complete. Carney stated that ownership received a Notice of Non-compliance in February 2025 and has been addressing those issues. Carney stated that occupancy is up to where the Board would like it to be in a refinancing situation and ownership has addressed a lot of the issues that were in the non-compliance report. Carney stated that a response has been filed to the Notice of Non-Compliance, and he filed another response this morning on further work that is going on at the property. Carney stated that the refinancing is actually for Phase Two which consists of 204 units and has not been completed yet and are under this new refinancing request to complete those while they continue to address the issues that the Board has brought forth on the remaining properties.
Carney stated that the responses filed following the Notices of Non-Compliance issued in February, as well as the response this morning covers all properties, not just Bridgeport Manor, but Bridgeport Manor is the property that is before the Board this morning. Carney stated that occupancy is up and the challenge with increasing occupancy is that ownership must get the right tenants in place that are not going to vandalize the property and then leave or bring in those criminal elements or gang elements so there is a lot of work done on tenants. Carney stated that when he was on site yesterday there was a security vehicle traveling around with lights flashing, so there is security on the property that has helped a considerable amount. Carney stated that ownership has approximately 2100 units in the Memphis area for low and moderate-income housing and has invested over $50 million thus far in housing and is certainly in tune with the Board on trying to increase housing for low and moderate tenants and provide a safe place for low and moderate tenants to live. Carney stated that the ability to continue and complete Bridgeport Manor is why ownership is here before the Board today for the 204 units that are not completed but will be completed as a part of the refinancing.
Carpenter asked Carney to advise the Board of the terms of the refinancing and the use of those proceeds. Carney stated that those terms were filed as part of the application and turned the meeting over to Fischer for further comment on the details of the refinancing request. Fischer stated that the project is divided into two (2) parcels, earlier referred to as phases. Fischer stated that the terms of the refinancing are first to take out the bridge loan on the first parcel, on which construction has been completed. Fischer stated that part of the refinancing is conventional lending, stating that today, ownership is paying 12% which is a hardship on the property and the refinancing will reduce that to 6 1/2%. Fischer stated this is not the first time he has come before the Board with a refinancing application for this property, but in 2024, closing the refinancing was not feasible with the challenges with banks. Fischer was referencing the PILOT Refinancing Application that was approved by the Board on June 7, 2023, stating that the application was approved, and several closing extensions were requested, but unfortunately the transaction was not able to be closed. Fischer stated that ownership has a good bank that has visited the property, issued a term sheet, and ownership anticipates all inspections to be completed and closing to be able to take place at the end of June 2025. Fischer state of the main goal is lowering the debt cost and getting enough proceeds to finish out the property.
Carpenter asked what amount of proceeds would be available for the property to be completed, to which Fischer responded approximately $6 million. Carpenter stated that as mentioned by Fischer, ownership has been previously approved by this Board for refinancings of other properties in the PILOT program and asked what the current occupancy is of Bridgeport Manor. Fischer stated that Phase One of the project is over 75% occupied. Stephanie Bryant reminded the Board that according to its policies and procedures, occupancy is not calculated by phases of a project but is calculated based on the total number of units of the project. Bryant reported that the current occupancy rate reflected on a rent roll submission from April 7, 2025 reflects an occupancy rate of 51% occupied. Bryant also reported that its external monitors reported speaking to a member of onsite management during an inspection on April 7, 2025, and the onsite management personnel stated that the property had 207 occupied units, which would indicate an occupancy level of 33% occupied, which is inconsistent with the recent rent roll submission.
Trey McKnight stated to the Board that all properties included in this developer’s portfolio are in non-compliance. Bryant reported that all properties included in this developer’s portfolio have been referred to legal default. McKnight stated that ownership is asking for a variance from the Board’s policies and procedures. Buckner Wellford asked if the Board meeting materials include the details from the refinancing application. Bryant stated that the Board staff has not reviewed the refinancing application due to the property being in a status of legal default, and current policies and procedures state that if a developer has a property or properties included in any level of additional compliance oversight, that no applications will be able to be reviewed or considered without consent of the Board. Bryant advised the Board that the information included in the Board meeting materials if from the original PILOT application approved by the Board on November 3, 2021 and the PILOT was applied to the property on January 1, 2023. Bryant stated that if the Board allows the variance today, the refinancing application would then be reviewed by staff and presented at the Board’s June 4, 2025 Board meeting. Wellford asked representatives if the refinancing would repay any owner equity in the project, to which Fischer responded no.
Monice Hagler asked if all outstanding PILOT payments had been made. Carney stated that all outstanding PILOT payments have been made, and he has received paid receipts from the City Treasurer this morning, which he will forward to the Board staff. Bryant asked what the total amount paid was for outstanding PILOT payments. Carney stated there are two amounts that were paid. Bryant stated that as of this morning, the City Treasurer’s website still reflected a past due balance for 2023 and 2024 PILOT payments due for Bridgeport Manor in the total amount of $151,941.17. Carney stated they were just paid this morning, so the City Treasurer website may not have that payment reflected yet. Fischer stated that in his defense, he owns three (3) other properties that PILOT payments were made during participation in the PILOT program, and the properties were approximately two (2) years into the PILOT program, and they are now trying to get their money back from the City Treasurer, which is almost impossible, and this incorrect billing resulted in an overpayment of almost $200,000 because the PILOT was not being reflected and full taxes were being charged. Fischer stated that it is easier to work with the Shelby County Trustee and that Carney’s firm is working to get those funds returned form the City, but he is more cautious about making payments to the City Treasurer because it is almost impossible to get it back. Carney stated that the City Treasurer did not record the PILOT for the property, resulting in ownership being charged regular taxes for a period of time which were paid by ownership, and his firm has applied for a refund of the difference between what the regular taxes that were collected and the PILOT payments that were to be paid, and that is an ongoing application with the City.
Carney stated that Neil Knopf can better explain, but the occupancy can be confusing because there are 204 units that are not completed yet, so when those are included in as a 0% occupancy when added to the 432 completed units, the occupancy rate can be confusing. Knopf stated that he is unsure what member of management that the Board’s external monitor spoke with onsite that it would have reported that only 207 units are occupied (which would be a 33% occupancy rate) and it could have been anyone, and that person may have also gotten confused between phase one and phase two units. Fischer stated that something he would like to mention is that his group owns quite a few units in Memphis and started working in the Memphis market in 2018 and early 2019, and then COVID-19 hit, and one of the incentives for pumping in all this money into renovating properties is the PILOT program and the freezing of the taxes because ownership can know how its cash flows will go. Fischer stated that all properties under his ownership in Memphis were down properties, not in operation, and it is not like they were operating at 5% or 10%, but were all down properties that ownership purchased, renovated, gutted them out and put in kitchens, floors, windows, roofs, and just building new communities and safe communities. Fischer stated that all his properties have security, some with 24-hour security, gated, and the money that has been pumped into these properties way surpasses initial estimates. Fischer stated that he understands the City is going through some hurdles with the City deficit and he has just paid sales taxes on renovations, which was approximately $5 million, just in sales tax to vendors, which does not include paying the employees that work throughout these projects to get these projects up and running, which are employees he has on these properties today. Fischer stated that the benefit the City has are there are many properties located in the number of areas, and really raising the various areas up is just a tremendous benefit to the City. Fischer stated he does not understand why the City has an issue with PILOTs, but that was the biggest driver in that many units going up in the last several years into the Memphis area and was a very big attraction.
Carpenter stated this Board always tries to keep a balance and certainly appreciates anyone that is trying to help the Board carry out its mission in affordable housing, but at the same time, there is a timeframe involved. With Bridgeport Manor, Carpenter stated that the PILOT was applied in January 2023, which is more than two (2) years ago, and the original plan was that it would be completed long before now. Without trying to get into too much detail, or back and forth, the property is not in compliance with the Board’s policies and procedures. Carpenter stated the issue is not that the Board is frowning upon good intentions, but this Board has a mandate to make sure that the policies and procedures are followed, and in this particular case, as well as with other properties under Fischer’s ownership, they are not in compliance and that is why we are here today. Carpenter asked under those circumstances of the property being under non-compliance, why should the Board agree to allow a refinancing of this particular property.
Fischer stated that in going through the Notice of Non-Compliance list, it is an issue of timing and in 2023 and 2024, the reality is the real estate market with the finances available and interest rate increases took a dip, and these properties were purchased in 2019 and 2020 when interest rates were between 3% and 5% and the bridge loan was 6%-7%, and was turned into 12%, putting a certain constraint on the property in that lenders would only advance what they envisioned to advance for two years. Fischer stated that the compliance issues references by the Board other than occupancy, that the majority of his properties are in compliance, besides this property because that is the way that the ratio really works. In going through the noncompliance items, such as excessive trash around a bin, it is not like the properties do not have security in place or the property is deteriorated or the place is a mess up, or the properties are scary. Fischer stated these issues notes can be housekeeping items that shows to be very much addressed. Knopf stated there were very specific items that were brought to ownership’s attention, for example, the playground being hazardous, and it was repaired. Knopf referenced garbage, stating that they have someone with a truck and trailer that picks up bulk garbage once a week, and that is now increased to twice a week. Knopf stated that if an inspector visits the site on Monday morning, it is very possible that someone moved out over Sunday and threw out their mattress, and that is going to take a day or so before it is picked up, but nothing is left sitting and is constantly being upkept and there is no garbage thrown all over the place. Knopf stated that because of the market that these properties are in, many tenants make a mess and will open the car door, a coke bottle will fall out, and they leave it and continue on to their apartment, but management does its best to constantly clean up after the things that have been brought to their attention. Knopf references other issues listed, including soffit and fascia damage and playground, and others, and stated that the repairs have been done to be a good partner.
Wellford asked what is going on with the Shelby County PILOT payments that were delinquent, and as the Board faces the additional pressures of possible moratoriums going on at the county level, and he can see representatives seizing on these unpaid PILOT payments that are part of the Board’s program that it is administering right now. Wellford asked why these PILOT payments have not been paid. Carney stated that the Shelby County Trustee PILOT payments were not unpaid, and the dispute was with the PILOT payments due to the City Treasurer. Wellford asked if Carney was stating earlier that the property was paying full property taxes while being a participant in the Board’s PILOT program. Carney stated that this was true on another property, Eden Pointe Apartments, and that there has been no refusal to refund those overpaid funds from the City Treasurer, but there is a process and that the Shelby County Trustee PILOT payments have not been in default.
Bryant stated to the Board that Board staff receives a listing of all delinquent PILOT payments following their due date each year and all properties included in this developer’s PILOT portfolio were listed as delinquent, and although the Shelby County Trustee PILOT payments have been made as of today, they were most certainly delinquent in making those payments in a timely manner. Wellford asked when these PILOT payments were made. Carney stated that City Treasurer PILOT payments for Bridgeport Manor were paid today, but he did not receive delinquent notices on any delinquent Shelby County PILOT payments. Fischer stated that the majority of his taxes are paid through banks, and one of the things his ownership group has learned is that banks escrow money for taxes and then makes the payment for those taxes. Fischer stated it came to the banks attention that PILOT payments are not taxes, and that it is something in lieu, so Fischer had to convince the banks to make the payments because they were escrowing the money. Fischer stated that Scenic Hills, Eden Pointe, and Gowan Pines PILOT payments were paid in December 2024 or January 2025 by the bank, saying they would do it this time, but next year the banks would have to do an adjustment and change it up because the bank is not allowed to pay the PILOT payments because they are not taxes. Fischer stated that banks can take insurance money and tax money, but PILOTs, the bank cannot pay. Wellford asked if Fischer was not aware that 2023 and 2024 PILOT payments were delinquent until recently. Fischer stated that the only delinquent payments were for the City Treasurer PILOT payments, not the Shelby County Trustee PILOT payments. Vincent Sawyer asked specifically when Shelby County Trustee PILOT payments were made. Fischer stated for Bridgeport Manor, he cannot report to the Board an exact date and would have to check on that, but all have been paid.
Wellford stated that as Carpenter previously stated that no competent management company would let tenant go two months without paying rent, and this is the equivalent to the Board to not paying your rent is not making the PILOT payment timely, and the burden should be on the owner to figure that out, and not provide excuses that it has not happened and it had something to do with the loans and financing, and this is now two years of both City and County past due payments, which is concerning. Wellford stated that he understands the payments have been paid, but this is still a concern. Sawyer asked if the Board can be assured that the Shelby County Trustee taxes have been paid, but just not when they were paid. Fischer stated that payments were made way before. Bryant stated that 2024 Shelby County PILOT payments were not reflected as paid as of April 30, 2025, when Board meeting materials were distributed in preparation for today’s meeting. Bryant stated that payment was made within the past week to the Shelby County Trustee for 2024 PILOT payment due for Bridgeport Manor. Bryant stated that as of this morning, May 7, 2025, the City Treasurer’s website still reflected outstanding PILOT payments for 2023 and 2024 for Bridgeport Manor for a total of $151,941.17, but representatives are reporting today that those payments were made this morning. Wellford asked if there are other properties in this developer’s PILOT property portfolio that are still reflecting outstanding PILOT payments. Bryant stated yes, and as of this morning there are outstanding PILOT payments due to the City Treasurer as follows: (i) Coronado Manor (f/k/a Willow Oaks) with an outstanding PILOT payment balance of $31,623.34; (ii) Eden Pointe with an outstanding PILOT payment balance of $19,861.69; and (iii) Scenic Hills (f/k/a Hunters Ridge/Hightop Ridge) with an outstanding PILOT payment balance of $0.79. Bryant reported that as of this morning, all Shelby County Trustee PILOT payments for this developer are reflected as paid. McKnight stated that when Board staff receives notice that there are delinquent PILOT payments from the Shelby County Trustee or the City Treasurer, that Board staff sends notice out directly to the PILOT Lessee to let them know that, so that would be the reason he assumes those payments have been made. Sawyer stated that both the City and County websites can take a couple of days to reflect payment, to which Bryant agreed. Fischer stated that he is surprised because the bank for Scenic Hills and Eden Pointe is the same bank that he has had a problem with them making the PILOT payments and they said those have been taken care of so he will have to investigate that. Sawyer asked for confirmation again that all Shelby County Trustee PILOT payments have been made, to which Bryant stated according to Board records, that delinquent Shelby County Trustee payments were made for Bridgeport Manor within the last week, and the PILOT Lessee has no outstanding PILOT payments with the Shelby County Trustee, but does with the City Treasurer.
Sawyer asked for clarification on the compliance status of this developer’s PILOT portfolio, confirming that all properties included in the developer’s PILOT portfolio are in noncompliance. Carpenter stated that it is correct, but this property, Bridgeport Manor, has been issued a Notice of Legal Default. Henderson asked for confirmation that all properties included in this developer’s PILOT portfolio have compliance issues, to which Bryant stated all properties have been referred to legal counsel to be placed into Legal Default status. Fischer stated he has only received two (2) Notices of Legal Default, one for Bridgeport Manor and one for Coronado Manor (f/k/a Willow Oaks. Bryant advised that legal counsel is in the process of issuing the remaining notices. Carpenter confirmed, stating that the remaining notices will be issued shortly. Fischer asked if the forthcoming Notices of Legal Default would include the same mess referenced such as trash and fascia and nothing of any real substance. Monice Hagler stated that nonpayment of PILOT payments is substantial. Carpenter stated from the Board’s standpoint that the Board is looking at its policies and procedures, and the PILOT Lessee is looking at its own policies and procedures, and tenant benefits are going to be one of the major concerns. Carpenter stated that the other issues including trash, fascia, and soffit damage are considered operational pieces and are not tenant benefits, and the timing of all of this with the occupancy. Carpenter stated that with Bridgeport Manor, the PILOT was applied more than two (2) years ago, and although ownership has stated they are getting to it, from a policy and procedure standpoint, the PILOT Lessee has run out of runway to get this project to take off, and this is not a matter of ownership’s intentions, and everyone has to have policies and procedures to adhere to, and if you do, you get the benefit, but if you do not, the benefit is not available, and that is where things are.
Carpenter stated that he would recommend the Board give the PILOT Lessee one last opportunity to ask the Board for this variance and asked representatives to explain what happens if the refinancing for Bridgeport Manor does not occur and to give the Board a full purview of why this variance should be afforded at this time. Fischer stated that this variance should be awarded for the amount of money that ownership has put into Memphis, the number of communities that it has created in this city, and all the good they have done. Fischer stated that for the directors that do visit his properties regularly, it is a clear sign. Fischer stated that when his group came in with applications, one of the things that his group has always been awarded for, and he believes still is, is really the upkeep of their properties. Fischer stated that his properties have very good tenants, ownership provides a lot of tenant benefits, provides nice projects and nice places to live, and they have no Code Enforcement issues throughout, and that can really show the integrity of the place and the way it is being run and the tenants being happy because things are being addressed. Fischer stated their management is onsite on every site and is very hands on and the Board’s inspectors see Knopf onsite regularly during their visits. Fischer stated that until recently, there hasn’t been an issue, and further stated that he is not saying that his properties do not have to improve, and if there is an issue, they are the first ones to address it. Fischer stated that a lot of the things that Carney sent to the Board, ownership actually expanded on and whenever information has been sent to him, there has been a response provided and they also received a response from the Board staff, but when you look at what ownership is really giving to the people over and over, and not just at one location, it is security and stability and a good, nice place to live.
Carpenter asked Townsend for any further comment he would like to make concerning Bridgeport Manor. Townsend stated that Bridgeport Manor is well secured in that there is always a security officer patrolling the property. Townsend stated that this property does not have functioning security gates and there are periods that the gates are not being manned, but there is usually a security officer somewhere on the property. Townsend stated that there are more than nineteen (19) buildings at this property that are still unoccupied and at different stages of renovation internally. Overall, Townsend stated that there are still a few areas of siding and fascia on those buildings and others that need repair, and there is some decorative brickwork in some areas that need repair. Townsend stated that some safety concerns with the playground have been addressed by management completely removing the slides from the playground and reorganizing the bars so that the slide areas were blocked off to prevent falling, but there was not a replacement of the equipment, just more of a move-around of that equipment to get rid of the safety concern. Townsend stated that he has still observed the bottom brackets from where the slide was are still in place and are pieces of metal and some hard plastic sticking up out of the ground that were still present during his last inspection, which would still pose a safety hazard. Townsend stated that with no functioning security gate and the slide brackets still in place at the playground, there are still safety concerns at this property. As to tenant benefits, Townsend stated that there is playground equipment in place, but there is also a pool and pool area onsite that Townsend has been told by management multiple times that ownership has no interest in renovating or fixing, so there are tenant benefit areas that are not being utilized. Townsend stated that because ownership has placed special emphasis on tenant benefits today, he would like to state that with the playground equipment, when a safety issue was stated concerning the slide, ownership did not address the issue by replacing the hazardous equipment, but rather just removed the slide and moved the remaining equipment around. Knopf stated that Carney sent in photos this morning of the property and one of the slides has now been replaced, and if there are safety concerns, they want to address those. Townsend confirmed that he stated his report is as of his last inspection in late April 2025, and the safety concerns with the slides was addressed by the slides being removed and bars put in place to prevent falling, but those ground brackets where the slide was before the slide was removed still were present, causing a safety hazard.
Carpenter stated that one of the more serious problems that the Board has when there is a legal default is the morning of the meeting, the Board receives photographs and reports that all items have been taken care of as of that may have been outstanding for a couple of years. Carpenter stated the health and safety issues might have been outstanding for a couple of months or longer, like the playground equipment, but when the time arrives for the Board meeting, it is suddenly reported that it is all done and that is the most aggravating thing that the Board has, and the Board has no way of confirming that within the meeting, not to say the photos submitted this morning from legal counsel are not accurate, but that is not the way this Board does business. Carpenter stated that it is listening to everything, the Board’s job is not to shut off PILOTs or shut off affordable development.
Carpenter stated that since the Board is not considering the refinancing application today this property has already received a Notice of Legal Default, which must be responded to in writing, the Board will have two options: (i) the Board can allow the variance, allow the staff to do the underwriting on the refinancing request, allow the PILOT Lessee to submit the written response to the Notice of Legal Default, and consider it at the next Board meeting; or (ii) the Board could deny the variance today and at the Board’s next meeting the Board will have the same developer back to address the Notice of Legal Default and make a determination as to whether or not the PILOT should continue. Carpenter stated that the only reason he makes these suggestions is that if the Board understands that the bulk of the proceeds from the refinancing, $6 million was the number referenced earlier, would be put into the property, the Lessee maybe should be given an opportunity to do that, but the Board would not have to make that hard decision today, but could allow the variance in order to allow staff and his firm to review the application and do the underwriting on the refinancing application that has been submitted and the Board would have more information at its disposal to make the decision that is in the best interest of all parties at the next Board meeting. Henderson stated he appreciated Carpenter bringing the Board back to center, as the conversation did wave off from what the initial intent of this agenda item was.
Henderson stated he agrees with Carpenter’s recommendation, as long as the Board knows that the proceeds from the refinancing do not go to paying off any other equity and going back into owner’s pockets, but going back into the property, he would be supportive of that. Henderson stated that the Board has a separate issue with the other items discussed today, but if the Board can separate this refinancing variance request from the other issues, he would be supportive because the bank is going to be looking at compliance as well, given what he understands from the financial situation, so the PILOT Lessee has bigger issues with the Board from that perspective, but it does not take away that the owner’s PILOT portfolio itself is in trouble, and the Board must continue to strictly monitor these properties. There being no further questions or comments,
Cliff Henderson moved to grant the variance to allow the refinancing application to be considered by the Board while certain properties in the developer's portfolio are in non-compliance status. Buckner Wellford seconded, and the motion failed by majority vote after proper roll call vote of the Board members and the variance was not approved.
For the record:
Daniel Reid, Monice Hagler, Vincent Sawyer and Courtnee Melton-Fant voted not to grant the variance to allow the refinancing application to be considered by the Board while certain properties in the developer's portfolio are in non-compliance status.
Cliff Henderson, Buckner Wellford, and Howard Eddings, Jr. voted to grant the variance to allow the refinancing application to be considered by the Board while certain properties in the developer's portfolio are in non-compliance status.
Following the vote, Carpenter stated that the PILOT Lessee will be required to appear at the Board’s June 4, 2025 Board Meeting in order to address the Notice of Legal Default, but the refinancing request would not be considered. Wellford suggested that the Board may consider a revision of its policy to allow staff to at least do the review and underwriting work on a refinancing application in circumstances like these so that the Board does have the information in front of them to know exactly what is being dealt with from the refinancing request. Wellford stated that he does understand the vote, but going forward, he believes the one area a variance may make sense in what the Board is trying to accomplish would be only refinancing requests that only benefit the PILOT property and not the owner, but that is for another day.
Carney stated that the term sheet was submitted as part of the refinancing request. Wellford stated that the challenge is that staff and the Board were unable to review the information unless this variance was granted, which has now been voted on and is done. Carney stated that Carpenter asked what would happen if this refinancing variance was not granted and the refinancing was not approved, and Carney stated the refinancing would of course be lost. Sawyer stated that while he did not vote in favor of the variance today, it appears that the PILOT Lessee is working toward compliance and asked if the Board’s current policies and procedures prohibit the PILOT Lessee from reapplying for a refinancing if the property is brought back into compliance in the future. Bryant reported that this is the second refinancing request that has been made by this PILOT Lessee. Bryant reminded the Board that a refinancing request was approved on June 7, 2023, but the refinancing transaction was never closed by the PILOT Lessee, and the application is now void, which is why the PILOT Lessee has resubmitted as this time. Bryant stated that staff is unable to review the application that was submitted as part of this variance request because the Board’s current policies and procedures do not allow for review of the application because of where this property is with its compliance status. Henderson stated that he believes reconsideration of this Board policy should be considered as an action item at a later meeting. Reid stated that for today, the variance has not been approved and asked if there was any additional comment. Carpenter advised Carney that further information will be provided regarding the remaining Notices of Legal default, and he will further discuss those items with Carney, the PILOT Lessee’s legal counsel, as the two (2) Notices of Legal Default that have already been issued will require the PILOT Lessee to report back at the Board’s June 4, 2025 Board meeting. There were no other questions or comments.
Frank Carney, Mendel Fischer, Shrage Marasow, and Neil Knopf left the meeting.
Operations Report
Stephanie Bryant presented the Operations Report as follows:
a. Review of Compliance Oversight for April 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. Two (2) PILOT properties moved UP from regular monitoring to “Under Observation”:
i. Country View Apartments
ii. Jamesbridge Apartments
b. Two (2) PILOT properties moved DOWN from “Compliance Concerns” to “Under Observation:
i. Lakes at Epping Way
ii. Villages at Harrison Creek
2. Compliance Concerns:
a. Two (2) PILOT properties moved UP from “Under Observation” to “Compliance Concerns:
i. Abington
ii. Mill Creek Apartments
Bryant reported to the Board that walkthroughs will be scheduled with these two properties in the upcoming month.
3. Notice of Non-Compliance:
a. Two (2) properties moved UP from “Compliance Concerns” to “Notice of Non-Compliance”
i. Grahamwood Place
ii. Pinebrook Pointe
4. Legal Default:
a. Eight (8) PILOT properties moved UP from “Notice of Non-Compliance” and were referred to Board’s general counsel to be placed into “Legal Default”
i. Sunrise Villas
ii. All seven (7) properties included in developer Mendel Fischer and Shrage Marasow PILOT Property Portfolio:
1. Bridgeport Manor
2. Coronado Manor (f/k/a Willow Oaks)
3. Eden Pointe
4. Grainge Hill
5. Scenic Hills (f/k/a Hunters Ridge/Hightop Ridge)
6. Timber Pines (f/k/s Gowan Pines)
7. Watkins Manor
Henderson asked how long the Mendel Fischer and Shrage Marasow PILOT Property Portfolio has been under compliance oversight. Bryant stated that these properties have been reviewed under additional compliance oversight for over one (1) year. Bryant reported that Board staff and legal counsel have also held several meetings with the PILOT Lessee over compliance concerns and construction delays. Bryant reminded the Board that each of the PILOT properties entered the PILOT program between 2021 and 2023, and the biggest concern throughout the portfolio has been construction completion, as many construction completion dates have been modified to extend out anywhere from six (6) months to even eighteen (18) months in some cases past the original completion date referenced at the time of application and closing of the PILOT.
Bryant stated that even with the extension of construction completion, some projects are still not completed on time. Bryant reported that occupancy levels at some of the properties included in this portfolio have increased above the Board’s minimum occupancy requirement of 75% occupancy rate, but there is one property in particular, Watkins Manor, that has remained at 0% occupancy since entering the program in 2021. Bryant reported that Watkins Manor was in Environmental Court when it was purchased by current ownership, so additional time was given to allow that to be resolved, but the property remains in Environmental Court, as well as stop-work orders have been posted at other properties still under construction, so there are a plethora of issues with each individual property. Henderson asked if the Board moved slow in bringing these properties from compliance to noncompliance, and then fast from non-compliance to legal default. Bryant stated that these properties were in noncompliance status for approximately sixty (60) days. Henderson asked about the timeline of how long someone should be in each tier because the Board is going through this new process, and he wants to have something where the Board is consistent in how it views this and not open the door for variances in the Board’s process.
Bryant stated that she understands and agrees with Henderson, stating that Board staff tries to ensure that no property sits at one level for more than ninety (90) days, but there will always be case-by-case consideration due to severity of some issues instigating a step-up more quickly, such as nonpayment of PILOT payments or safety and security concerns. Bryant stated that in those types of cases, there are circumstances when a PILOT property may be moved up more quickly, but staff tries to ensure that a property does not linger in one level of the step-up process for more than ninety (90) days without making contact with ownership and giving them every opportunity to work through the issues, such as a construction schedule, and at that point, we do not move the property up unless we begin to see no progress.
Wellford asked from a procedural standpoint why the Board voted to place Grahamwood Place and Pinebrook Pointe in noncompliance status at the last meeting and legal default during this meeting. Bryant stated those two properties are a variance from normal course because both properties were previously in legal default status within the last two years, but typically Board staff would refer a property to legal default, the PILOT Lessee is allowed a thirty (30) day cure period, and that would initiate reports to the Board at that time. Prior to the revised PILOT Policies and Procedures, Bryant stated that at such time an application for the property is brought before the Board for consideration would have initiated a status update of a PILOT property, but under new PILOT Policies and Procedures, the Board would not typically receive reports from PILOT Lessees under this new step-up process until being placed in legal default, because at that point, that staff has used all tools at its disposal to bring the PILOT property into compliance without success.
Bryant stated that the compliance step process was developed as a result of seeing properties come before the Board too early while staff was working through the issues, but properties were brought before the Board for more oversight, which resulted in some properties appearing before the Board for over two (2) years in some cases. This system was developed to try to alleviate some of that and let the Board know that once a property gets to the level of reporting to the Board under Notice of Legal default status, that the property has gone through the entire compliance step process, staff has used all tools at its disposal to bring the PILOT property into compliance without success, and the situation is very serious at that point. Wellford stated that the Compliance Oversight Report provided to members of the Board over the last several months would be perfect to be put on the Board's website and could be one way to put pressure on the ownership of some of these properties so that they know what the Board is doing and is a visual that could be updated. Bryant reported that she has received feedback from others that are involved in Environmental Court attendance and local advocacy that stated they have reviewed the Board's meeting minutes on its website, which included other compliance oversight reports since February 2025, and it has been very helpful to have that additional information available. Wellford stated that in terms of when Memphis City Council or others question what the Board is doing, this information should be publicized and is a good way to show that the Board is on top of things.
b. Review of HEHFB Suite 1120 Preliminary Floor Plan
Bryant reviewed the Preliminary Floor Plan of the HEHFB Board office renovation concept. Bryant stated that this proposed renovation would extend to the current Board Room by length and width and would also allow for specific public seating for meeting attendees both in the lobby area and inside the Board room. Carpenter asked how this proposed renovation would impact the current lease for this office space. Bryant stated those specifics have not been discussed. Chairman Reid stated that typically the company would fund the renovation, but the plans would be submitted to the building owner for consideration, and asked Bryant if this has been discussed with Henry Turley Company. Bryant stated that Henry Turley Company has been made aware of the proposed renovations and has been integral in setting Board staff up with The Crump Firm to initiate this Preliminary Floor Plan being reviewed today, but no other discussion or further steps have been taken. Bryant stated it is important that the Board see this preliminary concept and consider it before she moves forward with additional diligence on this proposal. Carpenter asked if there is a construction budget, to which Bryant stated there is not, and that is the reason for presenting this to the Board today to ensure the Board’s desire is to proceed with this concept and put numbers to it for further consideration. Reid stated that today, this would be consideration of this conceptual plan and that Bryant would go back to with The Crump Firm and Henry Turley Company to review this, and Henry Turley Company would come back with any changes to rental rates or otherwise, and that information would then be presented to the Board for consideration.
Howard Eddings asked if a physical move is an option or if the Board is under a lease for an extended period, to which Bryant stated that the Board is under an extended lease. Reid stated that if the Board were to vacate, it would have to buy out the lease. There was discussion on specifics of what would be lost in the expansion of the Board Room. Bryant explained that there is some unused space in the back of the suite that would allow transition of offices back and allow for the expansion of the Board Room, which would be a much better use of the space available. Eddings stated that he knows the Board has received a complaint about the accessibility and crowding of the Board Room and asked if this would address some of those concerns. Bryant stated that while the suite and the building are ADA compliant now, this proposed renovation of this suite would add more space in the event there is an agenda item that attracts more participation than is typical, because the Board did experience a period of time recently when the Board Room was crowded for certain agenda items being discussed and considered, and this renovation would provide more public seating inside the Board Room and provide better flow. There being no further questions or comments,
Cliff Henderson made a motion for Board staff to move forward in the process of receiving estimates for the proposed renovation of the HEHFB Suite 1120, properly seconded by Vincent Sawyer, and the motion passed unanimously after a proper roll call vote of the Board members.
c. Upcoming 2025 NALHFA Conference in Minneapolis, MN; May 12-14, 2025
Bryant reported the upcoming 20525 NALHFA Conference in Minneapolis, MN taking place May 12-14, 2025, stating that several Board members and staff plan to attend.
d. FYE2024 Audit
Bryant reported that Annual Audit for Fiscal Year Ending December 31, 2024 is in process and advised she anticipated that coming to a close and independent auditors will be making a presentation to the Board of their findings in the coming months.
There were no other questions or comments.
Finance Committee Report
Cliff Henderson presented the financial results for the month ended March 31, 2025. After discussion,
Monice Hagler moved for acceptance of the Finance Committee Report for the month ended March 31, 2025, properly seconded by Vincent Sawyer, and the motion passed unanimously after a proper roll call vote of the Board members.
New Business
There was no new business.
Chairman Reid stated that the next regular meeting of the Board is scheduled for Wednesday, June 4, 2024 @ Noon. There being no further business, the meeting was adjourned by the Chairman at 02:03 p.m.