HEHFB PILOT Program
General
The Health, Educational and Housing Facility Board of the City of Memphis, Tennessee is a public nonprofit corporation and instrumentality of the City of Memphis, Tennessee (the “City of Memphis”) duly organized and validly existing under the laws of the State of Tennessee (the “HEHFB”, “Board” or “Lessor”). The HEHFB was duly organized on June 11, 1984, pursuant to and in accordance with the applicable legal provisions of Part 3 of Chapter 101 of Title 48 (Section 48-101-301 et seq.) of the Tennessee Code Annotated, as amended (the “Act”); whereby the HEHFB has been continuously organized and operating under the Act since such date and no dissolution proceedings under the Act have been approved and duly adopted by the HEHFB.
The HEHFB is a self-funding entity and does not receive any funding or related financial assistance from the City of Memphis, Shelby County, Tennessee (“Shelby County”), the State of Tennessee or any other governmental entity or agency. The HEHFB is solely funded through fees assessed in connection with its PILOT Program (as defined herein) and Bond Program. It is the intention of the HEHFB to conduct its activities consistent with its statutory and public purpose pursuant to the provisions of the Act, any and all other laws of the State of Tennessee (the “State” or “State of Tennessee”), and with the enactments of the local legislative bodies of the Council of the City (the “City Council”) applicable to the HEHFB.
Board of Directors
The Act currently provides that the HEHFB is to be governed by the board of directors (the “Board of Directors”) of not less than seven (7) directors, and not more than nine (9) directors, who are appointed by the Mayor of the City and confirmed by the City Council. The Act provides that a director is to hold office for staggered terms, wherein for the initial term, the City Council will determine if a director is to hold this office for two (2), four (4), or six (6) year terms, and that all subsequent terms of a director are to be for six (6) years.
The Act provides that if at the expiration of any term of office of any director a successor has not been appointed, then the director whose term of office has expired is to continue to hold office until the director’s successor is duly appointed.
The Act further provides that a director is to serve without compensation, except that the HEHFB may reimburse any director for actual expenses incurred in the performance of his or her duties. The incorporators, members, directors, and officers of the HEHFB are not personally liable for any costs, losses, damages, or liabilities, including payments on the bonds, notes or other obligations caused or incurred by the HEHFB in connection with any transaction.
Statutory Authority
The HEHFB is empowered by the Act, among other things, to: (i) acquire, improve, repair, extend, equip, furnish, lease, maintain and/or dispose of one or more projects pertaining to medical care and hospitals, education, and multifamily housing; including all real and personal properties which the Board of Directors may deem necessary in connection therewith; (ii) maintain, manage, and enter into certain agreements, in furtherance of the statutory and public purpose, for the maintenance, and management of any project, including a project with a public purpose to promote the health, welfare and safety of the citizens of the State of Tennessee; and (iii) borrow money, and issue and sell its revenue bonds which are payable solely from the revenues and receipts from the applicable revenues of the project, or from other sources, as security for the payment of the principal of, and premium, if any, and interest on, any bonds so issued and any agreements made in connection therewith.
Statutory and Public Purpose
The State of Tennessee, pursuant to and in accordance with the Act, has determined and declared that it is for the benefit of the people of the State, the increase of their commerce, welfare and prosperity and the improvement and maintenance of their health and living conditions. It is essential for the HEHFB to exercise its statutory authority and powers to, among other things, acquire, own, lease, dispose of, and/or provide financing for the acquisition, development, and maintenance of one or more projects pertaining to: (i) clinics and hospital institutions to ensure that people of the State, particularly the elderly residents, have access to adequate medical care and treatment; (ii) institutions for higher education and educational facilities for individuals with physical and/or intellectual disability, to ensure that the youth of the State be given the fullest opportunity to learn and develop their intellectual and mental capacities; and (iii) multifamily housing residential rental facilities to provide quality, safe, affordable, and sanitary housing for persons of low and moderate-income, elderly persons, and/or handicapped persons, in connection with a structure, facility, machinery, equipment or other property suitable for use by such multifamily housing facilities in connection with its operations or proposed operations, as set forth and more particularly described in the Act.
Additionally, under the Act “multifamily housing facility” or “multifamily housing unit”, in the case of an eligible project as defined therein, may include or consist of single-family structures, on contiguous or noncontiguous sites, for such a project located in counties in the State having a population in excess of 800,000, according to the 1990 federal census or any subsequent federal census.
MULTIFAMILY HOUSING PILOT PROGRAM
General
On May 7, 2002, the HEHFB, pursuant to its authority under the Act, implemented its Multifamily Housing Payment-In-Lieu of Ad Valorem Tax Program (the “PILOT Program”) as a further aid to facilitate the preservation, growth, and development of multifamily housing for occupation by persons of low and moderate-income, elderly persons, and/or handicapped persons.
HEHFB Legislative Authority
The HEHFB, through a delegation of authority from the City Council pursuant to and in accordance with the Act, is authorized by a City Council Resolution duly adopted on May 7, 2002, as amended and supplemented by a City Council Resolution duly adopted on August 28, 2018 (collectively, the “Resolution” and together with the Act, are hereinafter referred to as the “Controlling Law”) to negotiate with qualified lessees to enter into payment-in-lieu of ad valorem tax (“PILOT”) agreements (“PILOT Agreements”) for the primary purpose of making certain PILOT payments (“PILOT Payments”), provided that such PILOT Payments are deemed by the HEHFB to be in furtherance of its statutory and public purpose. The Controlling Law allows the HEHFB to enter into PILOT Agreements with qualified lessees.
Purpose and Function
The primary purpose and function of the PILOT Program is to prioritize, enrich and maintain the quality of life, health and wellness, and safety for persons of low and moderate-income, elderly persons, and/or handicapped persons residing in the City of Memphis. The intent of the PILOT Program is to encourage and facilitate new construction and/or acquisition and rehabilitation of multifamily housing facilities through providing qualified lessees (the “Applicant”, “PILOT Lessee(s)” or “Lessee(s)”) a tax abatement, for a designated period, on the annual ad valorem taxes assessed on all real property (the “PILOT Property”, “PILOT Properties” “Property” or “Project”) existing under the PILOT Program for the above-described purposes.
HEHFB Focus and Priorities
In connection with facilitating the PILOT Program and these Policies and Procedures, the HEHFB has placed a stronger focus and emphasis on improving various areas of its PILOT Program including, but not limited to:
(a) Enhancement of Tenant Benefits – through prioritizing affordability of monthly rents, expanding access to social services and special services and increasing overall connectivity and inclusion therewith.
(b) Enhancement of Safety Measures and Security Commitments – through working collaboratively with the Memphis Police Department and continuing its diligence with establishing a partnership for 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.
(c) Enhancement of Compliance and Monitoring – through increasing interfacing and overall communication with the PILOT Lessees and their respective on-site property management to increase efficiency and impact with ongoing compliance and monitoring.
(d) Enhancement of Administrative Compliance – through applying more stringent guidelines and oversight with required reporting and voluntary disclosure, and streamlining processes with: (i) required quarterly and annual reporting; (ii) PILOT Payments to the City of Memphis and Shelby County taxing authorities and other required payments pertaining to ongoing monitoring and compliance; (iii) expanding the annual evaluations and administrative reviews performed by the HEHFB to include Tenant Benefits and safety and security; (iv) reinstituting required annual training for all PILOT Lessees and their respective on-site property management; and (v) maintaining ongoing compliance with these Policies and Procedures, the local policies of the City of Memphis, and other applicable State and local laws.
(e) Comprehensive Oversight with Local Partners – through increasing interfacing and overall communication with the City of Memphis Government, Shelby County Government, the Shelby County Environmental Court, and the Memphis and Shelby County Code Enforcement.
PILOT APPLICATION SUBMISSION AND APPROVAL PROCESS
PILOT Application Submission
All PILOT applications for the HEHFB must be completed and timely submitted pursuant to the criteria set forth below:
All new PILOT applications, High Impact PILOT applications, PILOT term extension applications, PILOT transfer applications, and MHA PILOT applications all shall be completed and submitted a minimum of sixty (60) days prior to the HEHFB’s scheduled regular meeting of the Board of Directors at which time the applicable submitted PILOT application will be considered for approval.
All PILOT refinancing applications shall be completed and submitted a minimum of forty-five (45) days, prior to the HEHFB’s scheduled regular meeting of the Board of Directors at which time the applicable submitted PILOT application will be considered for approval.
The HEHFB generally meets on the first Wednesday of each month at 12 Noon Central Time, subject to change as needed. Public meeting notices and meeting dates can be found on the HEHFB’s website at http://www.mememphishehf.com.
All regular meetings for the Board of Directors are held both in-person at the principal office of the HEHFB located at 65 Union Avenue, Suite 1120, Memphis, Tennessee 38103, and through its virtual Zoom platform, wherein such virtual Zoom link is posted on the HEHFB’s website on a monthly basis.
To appropriately submit a PILOT application to the HEHFB, the Applicant shall: (i) email an electronic copy of the completed PILOT application in portable document format (PDF) to the HEHFB staff (listed on the following page); and (ii) pay the non-refundable application fee, which is immediately due and payable upon submission of the PILOT application.
If errors exist within the submitted PILOT application, then the HEHFB staff may, in their sole discretion, allow the Applicant up to ten (10) business days to make the necessary corrections and resubmit.
The submitted PILOT application must contain the following subject line in the email:
“HEHFB/MHA PILOT (Type of Application) (Name of Applicant) (Name of Project)”
All PILOT applications shall be collectively emailed to the individuals listed below:
Trey McKnight, Executive Director: Trey.McKnight@memphishehf.com
Stephanie Bryant, Director of Operations: Stephanie.Bryant@memphishehf.com
Charles E. Carpenter, Esquire: General Counsel: Charlesc@386beale.com
Corbin I. Carpenter, Esquire: General Counsel: Corbinc@386beale.com
All PILOT applications must be submitted in conformity and compliance with these Policies and Procedures. If the format of the submitted PILOT application does not conform with these Policies and Procedures and comply with the submission guidelines set forth herein, then the PILOT application will not be accepted or reviewed.
Upon submission of any PILOT application, all application fees associated therewith must be paid in full prior to the HEHFB staff scheduling the Submittal Conference (as hereinafter defined) and the Applicant subsequently appearing before the Board of Directors for consideration for approval.
The Applicant acknowledges and agrees that any and all PILOT application fees paid to the HEHFB are final and non-refundable, including if the Applicant voluntarily withdraws the PILOT application after submission and payment is tendered.
All PILOT applications for all properties that are participating in any current United States Department of Housing and Urban Development (“HUD”) program must include the: (i) HUD application; (ii) HUD approval notifications; and (iii) latest HUD REAC inspection report and/or other third-party related report, as applicable.
All PILOT applications must be completed and submitted to the HEHFB staff in the appropriate format, inclusive of the applicable application fee based on the Total Project Costs calculated for the Project. Total Project Costs shall mean all costs except PILOT Payments, property appraisals, market studies, environmental studies, reporting and monitoring fees, rent-up costs, project reserves or capitalized interest (“Total Project Costs”).