RESOLUTION OF THE COUNCIL OFTHE CITY OF MEMPHIS, TENNESSEE,

MODIFYING ITS DELEGATION OF AUTHORITY GRANTED TO THE HEALTH,

EDUCATIONAL AND HOUSING FACILITY BOARD OF THE CITY OF MEMPHIS TO

NEGOTIATE AND ENTER INTO AGREEMENTS IN CONNECTION WITH PAYMENTS

IN LIEU OF AD VALOREM TAXES AND APPROVING THE TERM, AND METHOD OF

VALUATION OF PAYMENTS IN LIEU OF AD VALOREM TAXES

Whereas, The City of Memphis is experiencing a crisis of losing affordable rental

housing at an alarming rate before and after the recession of 2007; and

Whereas, in 2002 the City Council of Memphis declared the Memphis Health

Educational and Housing Facility Board ("M.H.E.H.F.B.") to be performing a vital

public function in creating and incentivizing the creation of affordable housing

and authorized M.H.E.H.F.B. to enter into payments in lieu of taxes, in

furtherance of its public purpose as defined by Tennessee Code Annotated;

Whereas, M.H.E.H.F.B. issues P.IL.O.T.'s for low and moderate income housing,

serving families at 60% of the median income for a maximum period of up to 10

years, pursuant to the City Council's Resolution in 2002, and this incentive gap has

existed providing twice the incentive for high end and mixed income rental units

in the central business district than low to moderate income rental units in the

city at large; and

Whereas, in 2003, the City Council of Memphis amended and supplemented the

M.H.E.H.F.B. authority so extend P.LL.O.T.'s for Memphis Housing Authority to a

maximum term of 20 years and to exclude from the current cap any low-income

housing tax credit properties which are sponsored and promoted by Memphis

Housing Authority, but did not extend the cap for other P.LL.O.T.'s;

Whereas, the Edge Board and the Memphis Downtown Commission are

empowered to enter into 15, 20 and up to 25 year payment in lieu of taxes

agreements to incentivize market rate and high end rental housing, and these

incentives have created tremendous economic development, robust construction

activity, transforming blighted buildings and land into magnificent housing

options in downtown and midtown Memphis, creating vibrancy and positive

population growth in the Memphis Central Business District; and

Whereas, it's been estimated there are over 30,000 units of rental housing in

Memphis that need moderate to substantial renovation to cure health and safety

hazards as well as deterioration from age, which with conservative estimates

could require over 1 billion dollars in investment; and

Whereas, 2017 Tennessee Housing Development Agency research shows that

45%, almost half of Memphis renters are "cost burdened" meaning they spend

more than 35% of their income on housing, and 30% of Memphis renters pay

more than half or 50% of their income for housing; and

Whereas, a Federal Reserve bank of Atlanta study released in May of 2016

documented that after the recession (2010-2014 ), Memphis had the highest loss

of affordable and low income rental units of 8 large southeastern cities studied,

higher than Atlanta, Birmingham, Jacksonville, Miami, Nashville, Orlando and

Tampa, with a total net loss of 8,043, affordable units, of those 3,811 (-24%) were

priced under $500 a month and 4,232 (-11.1%) were priced at $500-$750 a

month, while high income rental units priced over $1500 per month grew by

2,073 units (+68%); and

Whereas, the Memphis Health, Educational and Housing Facility Board

(“M.H.E.H.F.B.") administers multi-family housing and elderly housing payment in

lieu of taxes programs (“P.I.L.O.T.") to developments with 20% of their units for

families at 50% of the median income or with 40% of their units for families at

60% of the median income, and the inner city areas are in much need or the

investment growth that has been stimulated by these other incentives in the

Center City and Central Business District;

NOW, THEREFORE, LET IT BE RESOLVED, by the Council of the City of Memphis

that the Resolution adopted n May 7, 2002 by the Council authorizing the

Memphis Health, Educational and Housing Facility Board (M.H.E.H.F.B.) to

negotiate and enter agreements with qualified Lessees in connection with

payments in lieu of ad valorem taxes be amended and supplemented as

follows:

Section 1) M.H.E.H.F.B. is authorized to enter into P.LL.O.T.s for a maximum term

of 20 years, as an incentive to develop new and renovated affordable rental

housing, and authorized to offer and enter into P.LL.O.T. agreements for

"High Impact" Developments, as defined herein, which represent a total

investment of 15 million dollars, a P.LL.O.T. of up to 25 years.

Section 2) These extended periods are available to developments that are

applying in the 2018 calendar year or later, or are have received P.LL.D.T.'s

in previous years but are still in their construction/renovation phase and

have not closed their permanent long term mortgage as of the effective

date of this Resolution. Developments must supply M.H.E.H.F.B. with

annual detailed financials and access to inspect rent rolls, or any further

documentation requested by M.H.E.H.F.B for income compliance.

M.H.E.H.F.B. is urged to continue to monitor developments through the

duration of the P.LL.O.T, underwriting to standard debt service,

maintenance and reserve requirements are met to insure the benefit is

needed and necessary. M.H.E.H.F.B will be provided if requested with all

reserve, maintenance, and capital improvement account balances and

activity for review to ensure that the Debt service ratio is not artificially

lowered by higher than affordable housing program industry standards.

Section 3) Developments who qualify for and receive an extended P.LL.O.T.

pursuant to Section 2 shall have their payments increased at the rate of no

less than 10% after the original term of the P.LL.O.T., to help these

properties transition on to the tax rolls over the life of their P.LL.O.T. The

Board has authority to set the rate and to work with the developments to

ensure that affordable units serving low to moderate income families are

preserved.

Section 4) M.H.E.H.F.B will continue monitoring developments for compliance

with rent and income restrictions, annual physical needs assessments,

compliance with code enforcement and swift resolution of violations, and

long-term maintenance and stability.

Section 5) M.H.E.H.F.B will continue requiring developments to provide a detailed

plan of tenant benefits and services to show the cost of establishing,

providing and maintaining tenant benefits in the approximate value of the

provided by participating in the P.LL.O.T program.

Section 6) No Development with a P.LL.O.T may be transferred or sold or

refinanced without approval by the M.H.E.H.F.B. and must have an

executed agreement with the board to continue the tenant benefits

agreements and long-term maintenance and investment in the property.

Section 7) "High Impact" projects should provide 24-hour security personnel on

site, or have an active Crime Prevention program incorporating the

principals of "Crime Prevention through Environmental Design" (C.P.T.E.D)

provided by a local vendor that holds a current certification in C.P.T.E.D.

provided by the National Institute of Crime Prevention.

Section 8) "High Impact" projects must provide 40% or more of their units to

families at or below 60% of the area median income, offer innovative social

service referral programs such as; serving veterans, serve large families by

offering a substantial number of 2 and 3 or higher bedroom units, accept

section 8 vouchers and veterans vouchers subject to standard background

checks and standard and acceptable screening criteria, participate in local

landlord eviction programs with local law enforcement, provide common

space for tenant activities and permanent playground equipment, after

school activities for children, provide a computer learning center with

internet access with at least 6 computers and a public designated WI-FI

hotspot area accessible to residents and have handicapped adaptable units

in compliance with the American with Disabilities Act of 1990.

Section 9) "Preservation Extension": Developments with a currently existing

P.LL.O.T. of up to 10 years or with a P.LL.O.T. that expired within the last

two years of the effective date of this Resolution, may apply for an

extension of their P.I.L.O.T. and must continue to meet to all of the regular

criteria in addition to these payment increases.

Section 10) In order to encourage the smaller housing developments, MHEHFB

shall not establish criteria of a minimum number of units ("development

size") or a minimum amount of total development costs for new

construction or the redevelopment of existing properties.

Section 11) MHEHFB is encouraged to approve incentives so as to facilitate the

development of as many units as possible to meet the tremendous

shortage of affordable housing that exists in Memphis today, work for the

innovative development of mixed income housing, Historic Preservation

and adaptive reuse of vacant buildings, and shall make a report of their

progress and policies to the Council and Mayor annually.

Section 12) All provisions of prior Resolutions adopted on May 7, 2002,

September 23, 2003, and December 4, 2007 that are not in direct conflict

with this Resolution shall remain in full force and effect.

Sponsor

Dr. Edmund Ford, Jr.