The Health, Educational and Housing Facility Board

 MINUTES OF REGULAR MEETING OF

THE HEALTH, EDUCATIONAL AND HOUSING FACILITY BOARD

OF THE CITY OF MEMPHIS, TENNESSEE

Wednesday, November 1, 2023

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, October 25, 2023, and 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 offices of the Board, located at 65 Union Avenue, Suite 1120, Memphis, TN 38103.

 The following Directors were present:

Daniel T. Reid, Chairman                              Monice Hagler, Secretary

James Jalenak (Zoom)                                    Cliff Henderson

Katie Shotts (Zoom)                                       Howard Eddings (Zoom)

The following Director was absent:

Buckner Wellford

Staff and others attending: Stephanie Bryant, Bryce Miller and JP Townsend; Charles E. Carpenter and Corbin I. Carpenter, General Counsel; Katrina Shephard (Zoom), legal assistant to General Counsel; Cheryl Hearn, Deputy City Attorney.

Also participating in person and/or via remote Zoom virtual platform were Joyce Warren, Norris Cansler, James McNabb, Andrea Smith, John Tenort and William Tuggle, residents of Memphis Towers; Keisha Small, resident of Hope Heights; Alex Uhlmann and Caroline Francisco of the Memphis Tenants Union; Arthur Krauer, Tom Mignogna, and Renee Weiss of Millennia Housing Development, Ltd representing the Memphis Towers, Cavalier Court, Gospel Gardens, and Hope Heights; Frank Stockdale Carney of Evans Petree, PC and Walter Frank and Lewis Clarke representing Broadmoor Apartments and Woodland Apartments; Philip Balderston, Tameca Parker, Brett Goldenhorn, Pauline Olden, and Stephanie Reed with Odin Properties representing Creekside Meadows (Bent Tree) and Mill Creek Apartments; Mark Jobe with Glankler Brown, PLLC representing New Horizon Apartments; Frank Stockdale Carney of Evand Petree, PC and Simon Weinberger representing Sunrise Villas; Jacob Steimer of MLK50; Zaneta Lowe Tyler K. Chow of WREG News Channel 3; Kate Bieri of Fox 13 News; Shirley Bondon of Black Clergy Collaborative of Memphis; Sheila Jordan Cunningham, Jamie Johnson; 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, November 1, 2023 @ 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.

Approval of Minutes

Cliff Henderson moved for approval of the Minutes of the October 4, 2023 Regular Meeting, which was seconded by James Jalenak and the motion passed unanimously after proper roll call vote of the Board members.

Finance Committee Report

Cliff Henderson presented the financial results for the month ended September 30, 2023.  After discussion,   

James Jalenak moved for acceptance of the Finance Committee Report for the month ended September 30, 2023, properly seconded by Katie Shotts, and the motion passed unanimously after a proper roll call vote of the Board members.

Attorney’s Report

Charles Carpenter presented the legal report, as follows:

1.    Carpenter reported two (2) material Notices of Default have been filed for the following PILOT properties:

a.    Pinebrook Pointe: Notice of Default was issued on October 10, 2023

b.    Grahamwood Place: Notice of Default was issued on October 27, 2023

Carpenter stated that each PILOT Lessee is given a thirty (30) day period to respond in writing as to a cure plan for the deficiencies noted. Carpenter reminded the Board that prior to the Legal Notice of Default being sent out to a PILOT Lessee, there is a Notice of Non-Compliance letter that Board staff will send to the PILOT Lessee, giving them an opportunity to address the matters to the satisfaction of the Board. When that does not occur, Carpenter stated that his firm will then send out the Legal Notice of Default, which is issued to all parties to the property, including the lenders. Carpenter stated that his firm will continue to monitor these matters and keep the Board advised. Carpenter stated that if the Notices of Default are not addressed promptly and the property is not in compliance with the Board policies and procedures, the next step would be the termination of the PILOT.

2.    Carpenter advised that there has been one (1) Notice of Non-Compliance issued to Sunridge Apartments on October 10, 2023.

3.    Additionally, Carpenter advised there has been a Notice of Lien filed against the following:

a.    Youngblood Builders Supply vs. Mem3 Sunridge LLC (d/b/a Sunridge Apartments) Notice of Lien Claim in the amount of $11,241.81

b.    Youngblood Builders Supply vs. Mem3 Cedarwood, LLC (d/b/a Cedarwood Apartments) Notice of Lien Claim in the amount of $31,165.66

Carpenter stated that his firm will continue to monitor these claims and communicate with the PILOT Lessee to determine if there is some affirmative defense, but otherwise, his firm will monitor the management and payment of these liens and keep the Board advised.

4.    Carpenter reported that the PILOT Refinancing of Creekside Meadows (Bent Tree) is still pending. Carpenter advised that his firm is working with the PILOT Lessee’s legal counsel as the PILOT Lessee goes through this refinancing process with Housing and Urban Development (HUD) and will keep the Board advised.

5.    Carpenter reported three (3) successful PILOT Closings during the month of October 2023:

a.    Jefferson Square Apartments PILOT; and

b.    Barry Towers Apartments PILOT.

Both Jefferson Square and Barry Towers are Memphis Housing Authority (MHA) properties that were closed in a joint venture with MH Strategies, a public private partnership for the completion of substantial rehabilitation to each property. The Board previously approved a condominium regime for each PILOT property. The condominium regime is a different structure, but it has allowed these properties to maximize the advantages of different incentives and tax credit programs, which benefits may not have otherwise been available to aid in the rehabilitation of these two towers, formerly owned exclusively by MHA.

c.     Edgeview at Legends Park; Carpenter stated that this is also a joint venture with MHA and Pennrose, and this will be new construction of a senior facility at the property formerly known as the Dixie Homes Apartments. Carpenter stated that this new construction will also set aside units for veterans and will be a great development, once completed.

6.    Carpenter reported one (1) successful Bond closing during the month of October 2023 for Edgeview at Legends Park. Carpenter stated that the principal amount of that fund closing was $12,800,000 and his firm is presenting to the Board today the state form on Report on Dent Obligation, which has been filed with the Department of Local Government at the State of Tennessee with a filed copy being returned to the Board.

7.    Carpenter reminded the Board that over the last couple of years, Tennessee Housing Development Agency (THDA) has started to allocate its allotment with the three (3) grand divisions of the state. Since that time, the allocations awarded have come out later. Carpenter advised the Board that there was a round 2 this year and as a result, The Gardens at Forest Hill Irene was given an award for volume cap and tax credits, but that required this developer to close the financing by December 15, 2023. Based on the shortage of time, The Gardens at Forest Hill Irene has declined the conditional commitment from THDA and intends to reapply in the 2024 year for those allocations. Carpenter stated that it is unclear what will happen with the remaining allocation at this point for the Western Grand Division, but his firm will continue to communicate with THDA and advise the Board if there is an opportunity to somehow utilize that allocation for the Western Grand Division during 2023 because the allocation will NOT roll over to 2024.

8.    Carpenter reported that his firm has also continued to work with the Environmental Court, and as previously reported, several PILOT properties are currently in Environmental Court for various code violations or other violations. Carpenter stated that his firm has been communicating with the city and county prosecutorial staff looking at the different properties and observing the statements and commitments of the PILOT Lessee, and that is an ongoing process. Carpenter stated that his firm will continue to monitor and bring to the attention of the Board any material developments that come out of Environmental Court, and to position the Board to take whatever steps that may be necessary to protect the policies and procedures of the Board for overseeing the PILOT properties and to work cooperatively with the Environmental Court.

9.    Finally, as part of the monitoring activities, Carpenter reported that the County Commission has now filed a resolution addressing the Economic Development Growth Engine (EDGE) PILOT Program. Carpenter reminded the Board that the specific distinction from the Board’s PILOT program, is that the EDGE PILOT program is based on job creation and other economic development components, and it seems that the intent of this County Commission Resolution is to look at the wages that are being paid to the workers that use job creation as a part of its methodology and to make sure that they are being paid prevailing wages. Carpenter reported that the matter came before the County Commission on Monday, October 30, 2023, and after discussion, EDGE was requested to bring back certain data points and other analysis for the Commission to review in order to move forward. Carpenter stated that he would continue to monitor this because it is a PILOT program, and it could impact other PILOT programs outside of EDGE. Although job creation is not a part of this Board’s PILOT criterion, his firm will continue to oversee this matter and advise the Board of any points that might be important or impactful.

Chairman Dan Reid stated that this would be a good time for Carpenter to talk about the difference between EDGE and HEHFB, as EDGE is concerned with job creation and HEHFB is concerned with tenant benefits and occupancy, among other things. Carpenter stated that each PILOT program is different. Carpenter stated that (i) The Health, Educational and Housing Facility Board of Shelby County, Tennessee, (ii) Downtown Memphis Commission, through its Center City Revenue Finance Corporation affiliate, and (iii) EDGE, all have PILOT programs. Carpenter stated that the HEHFB of Shelby County, TN has the authority to issue PILOTs, but they have not recently issued any new PILOTS but there are a few outstanding PILOTs issued under earlier authorizations.

Carpenter stated that The Health, Educational and Housing Facility Board of the City of Memphis, TN PILOT is straightforward and does not deal with job creation, but with tenant benefits and with exterior quality of the premises, and occupancy. Carpenter stated that there are minimum standards with each of those, and from an underwriting standpoint, in order for a property to qualify for a PILOT, it has to meet certain minimum standards concerning initial investment in capital improvements to the property. Carpenter stated that there are external, or third-party monitors, and internal monitors that go out to ensure that these properties are meeting the policies and minimum qualifications of this Board’s PILOT program.  

Carpenter stated that other issuers of PILOTs have different standards that have to be maintained. Carpenter stated that this is what Chairman Reid is referring to when discussing the differences in the Board’s program, as it is more straightforward, but it is also complicated because there are other entities that are involved with properties in the Board’s PILOT program. These entities include MHA with Section 8 vouchers, HUD with its housing assistance program, Code Enforcement, Environmental Court, Health Departments, and other agencies that are involved that oversee all these properties, so it is not just one entity involved when it comes to the oversight of affordable multifamily housing in this community.

There being no further questions or comments, the Legal Report was concluded.    

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.

1.    Joyce Warren introduced herself as a resident of Memphis Towers. Warren stated that she has received a letter from Millennia Housing thanking her for response to Millennia for the demand letter that she wrote and thanking her for her feelings toward the $57,400 investment per unit of rehabilitation and the substantial rehabilitation will result in preservation of 296 affordable housing units. Warren stated that she lives at Memphis Towers, and she does not see $57,000 worth of anything. Warren stated that she lived in a new apartment, and she has mold in her walls, her Venta hood does not work, and her sinks are coming out of the wall. Warren stated that residents are struggling with bugs, bed bugs, and rodents and stated that nothing has been done properly. Warren stated that she would like to know what Millennia is doing with the money that is supposed to be going into the units and why do residents have to suffer.

2.    Norris Cansler introduced himself as an 85-year-old man that has lived at Memphis Towers for 3 years. Cansler stated that he would like to address his comments to whomever it may concern, whether it is Millennia, HUD, or any other agency that may have some contingency upon this reaction that he is trying to endure. Cansler stated that Millennia has no shame and these mitigating circumstances that are current and ongoing prevent Memphis Towers tenants from receiving happy, healthy living conditions in these quarters. Cansler stated that Millennia continues to feed at the public, state, county, city, and federal feed troughs seeking unjustified compensation for mold, constant unworking elevators, low water pressure, unsecured entrance and exit doors inside and outside the building, no safety bars in the bathroom that may mitigate slips, falls, and injuries while elderly and disabled people are showering or bathing, consistent water and sewage leakage inside and outside the building that makes the sidewalks a cess pool. Cansler stated that the continued effort to feed at the public, state, county, city, and federal tax trough with unresolved influence, mitigating these circumstances is reprehensible. Cansler stated that Memphis Towers has problems with unsecured entrance and exit doors with no safety applied by any security force that only treats the tenants as criminals. Cansler stated that the untrained office staff lacks interpersonal skills, empathy, and cordiality. Cansler stated that he is of the opinion that Millennia has employed foxes to guard the chicken coop. Cansler stated that giving support to marginalized tenants and those that must survive on the bottom rung of the economic ladder is commendable, but not at the expense of fair and equal accommodation. Cansler asked if Millennia has no shame or is this business as usual?

3.    James McNabb introduced himself as a resident of Memphis Towers. McNabb stated that he doesn’t understand how people have the right to invade a person’s privacy, because a couple of days prior, McNabb stated that he was invaded, and he did not appreciate it. McNabb stated that the Millennia staff walks into units unannounced and that is an invasion of privacy. McNabb stated that he has lived at Memphis Towers for six (6) months, and he still has not received his mailbox key. McNabb stated that he has to wait by the mailbox every day for the mail person to give him his mail.

4.    Andrea Smith introduced herself as a resident of Memphis Towers. Smith stated that she has previously spoken before the Board concerning the mold in her bathroom and kitchen ceiling. Smith stated that Millennia came into her unit and spray painted the mold. Smith stated that Code Enforcement came to her unit on September 27, 2023 and stated that they would return in two (2) weeks. Smith stated that there is no maintenance personnel on the property and that anyone can walk in the door, there are no key cards, and the back door is open a little, and people can walk through the back. Smith stated that the property is not secure, and the tenants do not know many of the other residents or managers because there are no meetings. Smith stated that residents need to know because Millennia needs to fix a lot of different things.

5.    Keisha Small introduced herself as a resident of Hope Heights Towers. Small stated that Millennia does not need to own any property anywhere in the country. Small stated that living in Hope Heights Towers is stressful and depressing and residents are treated like prisoners in their own homes and do not deserve to be treated like this. Small asked Millennia representatives if they would want their parents to live like this. Small stated that she does not want Millennia, or any slum lords, to own any properties. Small stated that Millennia does not deserve any more tax breaks because they do not know how to treat residents and they do not care about resident safety or security, and residents deserve those things.

6.    Caroline Francisco introduced herself as an organizer with the Memphis Tenants Union. Francisco stated that Millennia has a long history of lying and saying whatever they need to say to line their pockets. Francisco stated that there is not enough time in public comment to thoroughly debunk every lie Millennia has told, but she would like to bring to the Board’s attention a specific lie told by Arthur Krauer at the Board’s October 4, 2023 Board meeting. Francisco referenced a statement Krauer made that the members of the Memphis Towers Tenants union represent the interest of less than 1% of tenants at Memphis Towers. Francisco then referenced a statement made by Claudine Gearing at the Board’s October 4, 2023 Board meeting, when Gearing stated that of the three (3) towers, they are 53% occupied and of the two (2) towers that are complete, they are 80% occupied. Francisco stated that is 157 current occupants of Memphis Towers, and as of the October 4, 2023 Board meeting, 10 Memphis Towers residents have spoken before the Board, not including Hope Heights tenants, former Memphis Towers tenants, or new Memphis Towers tenants who are here to speak today, and that makes up 6% of tenants who have spoken before the Board and live there, which disproves Krauer’s lie. Francisco stated that as to the demands that the Memphis Tenants Union has given to Millennia around security, that the Union formulated those demands after an intensive survey campaign to survey people throughout the entire building and 56 tenants in the building completed that survey, which makes up 36% of all Memphis Towers occupants which informed the demands that were given to Millennia. Francisco stated that this is honestly the bare minimum and many doors were knocked, residents were not home, or were hospitalized and many more tenants could have been reached, but the union had voted upon a threshold of 50 before they were going to move to the next step. Francisco stated that following those demands being issued to Millennia, residents wanted to show that there is strong support for these demands in the building, so the Memphis Towers Tenants Union did a wristband campaign and 62 tenants signed on to that wristband campaign saying they explicitly endorse those demands, and that is 39% of tenants, and it could have been much higher. Francisco asked that the Board not allow Millennia to say that less than 1% of tenants are represented by the Memphis Towers Tenants Union and that the Memphis Tenants Union has been organizing at Memphis Towers for over 2 years, tirelessly working to talk with neighbors and represent the interests of how Millennia manages.

7.    Alex Uhlmann introduced himself as an organizer with the Memphis Tenants Union. Uhlmann stated that the Memphis Tenants Union has been coming to Board meetings for a while now, stating that this is the fifth meeting the Memphis Tenants Union has attended and they have played this kind of game where the Memphis Tenants Union says what is really happening in the building and then Millennia tells the Board a completely different story and cannot come up with a plan, and cannot tell the Board why things have not changed since they appeared last month.  Uhlmann stated that he has been encouraged by some of the Board’s comments, especially at the Board’s October 4, 2023 Board meeting, but at the end of the day, these are just words, and the Memphis Tenants Union really needs to see some action taken on these properties because the living conditions are not acceptable. Uhlmann stated that residents are in attendance today at risk of retaliation and it is not an easy thing for tenants, and the Memphis Tenants Union is asking that the Board listen to the people that are living in these buildings about their real lived experiences and do something about it to make sure that they have better living conditions at Memphis Towers. Uhlmann stated that the Memphis Tenants Union believes that stripping Millennia of their tax breaks will accomplish this.

Chairman Dan Reid thanked everyone for their public comments and expressed his appreciation for everyone being here to voice their concerns. There were no further questions or comments.

 Action Items-

1.    Status Update for Millennia Housing Portfolio (d/b/a Memphis Towers, Cavalier Court, Gospel Gardens, and Hope Heights)

Charles Carpenter introduced this agenda item and introduced representatives in attendance in person for Millennia Housing and began by stating that at the Board’s October 4, 2023 Board meeting, there was discussion  of a public announcement that Millennia had made from its corporate offices as to a right sizing of the corporation and that there would be some decisions made as to the reduction of its multifamily affordable housing portfolio. Carpenter stated that there has been watchlist concerns of certain Millennia properties in Memphis that Millennia has been working on and the Board’s policy is to look at the developer portfolio as a whole and that is why, in addition to Memphis Towers, the other properties in the portfolio are to be discussed today for Millennia to provide the Board with some idea and guidance as to how it will proceed going forward with the PILOT properties. Carpenter then turned the meeting over to Arthur Krauer, a representative in attendance for Millennia Housing Management, for an update. Krauer stated that Millennia holds five (5) properties in the City of Memphis, and only one of those properties is planned to be sold and that is Serenity Towers. Krauer stated that the remainder of the properties will continue to be owned and managed by Millennia moving forward.

Carpenter asked Krauer to give the Board an idea about how Millennia intends to move forward and discuss each property. Krauer stated that with Cavalier Court and Gospel Gardens, which are family properties, Millennia is expending resources now to improve them. Krauer stated that both properties have gone through full renovations and are tough properties in tough areas. Krauer stated that Millennia wants to improve security at both properties to make sure they are stable moving forward and increase occupancy. Krauer stated that Hope Heights and Memphis Towers are senior properties, further stating that Hope Heights is a fabulous property with two full time service coordinators and the property is well maintained and clean. Krauer stated that with Memphis Towers, Millennia is currently working on completing renovations, which should be completed by the end of November 2023 or mid-December 2023. Krauer stated that all outstanding items will be completed, and Millennia will be in very good shape to manage that property.

Carpenter asked if Krauer would explain the site management at each property and asked if they are managed by a third party or are the managers employees of Millennia. Krauer stated that Millennia manages all of its own properties, and that includes both maintenance and management staff. Carpenter stated that under the Board’s PILOT Policies and Procedures, there are quarterly reports that are required to be filed with the Board and based on the records of the Board, there are outstanding reports for the second quarter as well as the third quarter. Carpenter explained that this omission represents grounds to have the subject properties placed on the watchlist, if not more serious sanctions. Krauer stated that he was unaware of this, and he will make sure those reports are filed. Chairman Dan Reid stated for the record that reports are delinquent for both the second and third quarters of 2023. Carpenter asked Stephanie Bryant who Board staff submits the requests to for the past due quarterly reports for Millennia. Bryant responded that email requests have been sent to Angelica Sinito, Frank Sinito, James Wells, Tom Mignogna, and all other management contacts the Board has been provided by the PILOT Lessee. Bryant also stated that email requests for outstanding reports have been sent multiple times.

Chairman Reid then asked for Bryce Miller to provide any comments from his observations of each Millennia property. Townsend began by reporting to the Board that he performed site visits to each Millennia property on October 31, 2023 and reported his observations. Miller began with Memphis Towers and stated that during his site visit, he observed the back door propped open and stated that something more needs to be done with the back door security. Miller stated that he has spoken with the construction manager about securing the hole in the back gate, which he believes once secured, may help alleviate some of the back door issues. Miller stated that there are two (2) back doors at this property, and one is always secure, while the other is most often open or being propped open. Miller stated that the two (2) interior cameras that are facing the front door are operational, but the remaining interior cameras are not operational. Miller reported that both elevators were operational during his site visit and outdoor cameras facing the front door and the parking lot appear to be operational. Miller stated that Memphis Towers is an active construction site and contractors are moving about the property throughout the day. Miller stated that he was able to sit and observe the property for over an hour on this site visit and he observed the front door working and operating as intended, and the property seemed quiet and inclusive of normal comings and goings.

Miller then began his report on Cavalier Court, stating that there are several broken windows on the property, two (2) buildings with severe fire damage, dirty siding, and a large pothole that has been a problem for more than six (6) months and is now growing grass out of it. Miller continued stating that basketball courts have no nets on the goals, with one goal appearing to be bent over some, the playground appears to need updates, several areas of soffit and fascia falling, and fire damaged units need to be more secured.

Miller moved on to report on Gospel Gardens, stating there was a lot of trash around dumpster areas, but noted that there were people in that area cleaning the trash up from the grounds. Miller reported several areas of perimeter fencing that are missing around the property, several broken windows, tall grass and unmanicured landscaping, roof, siding and gutter damage. Miller stated that blinds in several of the units appear to be either missing or in various states of disrepair.

Lastly, Miller reported his observations of Hope Heights, stating that the property was clean, front door was secure, and cameras are posted on the property.  Miller stated that there were a couple of windows with trim damage, as well as a small area of gutter and facia damage, but overall, the exterior of Hope Heights was in good condition. That concluded Miller’s report to the Board.

Carpenter addressed Krauer, stating that Serenity Towers is not part of the Board’s overview and should not be included in his response, and asked Krauer are any of the other Millennia properties participating in the Board’s PILOT program that are in Environmental Court. Krauer stated that he has not been to the Environmental Court for any of them and would need to verify whether they are or not. Krauer stated that there may be a code enforcement issue, but the only properties he is aware of being in the Environmental Court are Memphis Towers and Serenity Towers. Carpenter stated that the Board wants to stop the revolving door, each meeting having tenants come and share with the Board their experiences, and Carpenter stated that the Board will need to put some hard deadlines in place as to when these various issues would be addressed. Carpenter reminded the Board and representatives, as stated in the legal report, that his office has been in communication with the Environmental Court, and he would like to try and coordinate these dates so that everyone will be on the same page. Carpenter stated Cavalier Court and Gospel Gardens have previously been in Environmental Court and there had been a change in legal counsel for Millennia in Environmental Court. Carpenter asked Krauer who the legal counsel of record is now for Millennia in Environmental Court, to which Krauer replied, Alex Elder with Alan, Summers and Gresham. Carpenter stated that Hope Heights has been in Environmental Court for inoperable elevators and asked Krauer if that issue has now been cured. Krauer replied that it has and the elevators are now working.

Carpenter stated that there needs to be some additional diligence with the Environmental Court to make sure that the Board can have one date that it can make a determination if the Millennia portfolio is in compliance with the Board’s policies and procedures. Carpenter stated that one he would like to make clear publicly is that the policies and procedures that govern the Board’s PILOT program may be less restrictive than others as far as the Environmental Court, HUD or MHA vouchers are concerned. Carpenter stated that the Board is not intending to enforce another entity’s policies and procedures, as the Board only has the authority to enforce its own policies and procedures.  Carpenter stated that the Board is seeking to coordinate its efforts with these other entities to get some relief for the tenants, so the Board is not overstepping its bounds, but it is working cooperatively with the other entities so that the relief to the tenants can be achieved. Carpenter stated that as a part of this, the Board is going to ensure that the tenant benefits that were stated to the Board when these PILOTs were approved, that each entity remains in compliance with those tenant benefits and that the outside of the properties are being properly maintained according to the Board’s policies and procedures. Carpenter recommended that Millennia representatives appear before the Board at the December 6, 2023 Board Meeting, and that in the interim, to commit to communicating with all other oversight entities and coordinate whatever deadline dates or compliance dates that they would have as a part of their own oversight. 

Cliff Henderson stated that at the Board’s October 4, 2023 Board meeting, there were questions about property management and other things, and asked what changes or progress has been made since that time. Krauer stated that he believes Millennia is managing the day-to-day needs of the property and stated that there was a HUD tour today of multiple units at Memphis Towers and Krauer stated that HUD was genuinely pleased with what they saw. Krauer stated that Millennia has the right staff and has been working on educating the staff and making sure that staff understands how to support and serve the residents of Memphis Towers, and Millennia has been making strides there. Krauer stated that Millennia has one vacant service coordinator position and one maintenance position, and they are working to get those positions filled. Krauer stated that aside from that, Millennia is doing the job that they are supposed to be doing and running the property successfully.  

Henderson stated that with some of the units that are being renovated, everything is not going to be done perfectly by the construction crew and asked Krauer is there is something where the construction crews are coming back in to do fixes and updates that have been described to the Board, whether it is leaks or other things, or if those items are going to property maintenance. Krauer stated that once a punch list is completed with construction and the unit is signed off on, that unit is cleared and any items that may arise following that become a management issue, not a construction issue. Krauer stated that one tower is complete and fully leased, while a second tower is completed, but not fully leased and the third tower construction is currently in progress. Krauer stated that the two towers that are not fully leased are still under construction warranty period. Krauer stated that two (2) residents just yesterday stated that their p-tech wall units were not working properly, and Krauer walked into the units and tested them, they were not working appropriately, and construction replaced both wall units. Krauer stated that issues in the walls, or any similar type issues that are construction issues are remedied immediately. Krauer stated that on the other hand, if the issues are past the punch list or construction warranty period, the burden is on maintenance to do, and maintenance will make those repairs as they are notified.

Henderson stated that everyone in this meeting today for these issues with Millennia do not want to continue to come into these meetings, and asked Krauer, from his perspective, how do we address this. Henderson stated that as previously discussed, the solution is in the middle, as there are two sides to the issues, and as stated previously by Buckner Wellford and Charles Carpenter in prior meetings, the nuclear option of terminating the PILOT is not a desired option. Henderson stated that it seems that local Millennia staff has gotten direction from the Millennia corporate office that Millennia is going to continue to have a path with these other properties, except for Serenity Towers. Henderson stated that it seems like something is going on with the maintenance workflow and asked if that is something that is stemming from general property management and asked Krauer what Millennia is doing right now to address that. Krauer stated that he will challenge the premise because he is not sure he completely agrees with Henderson.

Krauer stated that at the Board’s October 4, 2023 Board meeting, he told the Board that he was happy to go outside the meeting and talk to residents about individual units and individual issues and he would address them that day. Krauer stated that when he and the tenants in attendance at that meeting exiting the meeting and went outside, he asked them if anyone had individual issues in their units, one woman stood up to speak to him, and then they both were told that tenants were not going to speak to Krauer individually. Krauer stated that he does not know how to fix problems.

Henderson asked how Millennia logs an issue when a resident has an issue. Krauer stated that the bane of property management is any kind of trajectory that does not work through the maintenance system. Krauer stated that in other words, if the maintenance staff member is walking through the hall and a resident asks the maintenance staff person to check their sink, maintenance staff cannot do that because there is then no record of it and no way to track to ensure the job was done. Krauer stated that Millennia has a work order system, and their goal is to complete all work orders within 48 hours, when possible. Krauer stated that if the work order is more significant, Millennia will identify the issue, if for example a part is needed, the repair may take more time and Millennia will notify the resident and address that issue. Krauer stated that Millennia also has quarterly inspections, which he refers to as relationship management. Krauer stated that Millennia will inspect units and evaluate what Millennia may need to remedy from its side and make sure that Millennia is providing exactly what it is supposed to provide and meeting its obligations to the resident. Krauer stated that this is also an opportunity for Millennia to see whether a resident is meeting their obligations to the property as well by making sure the resident is keeping the unit clean, decluttered, and ensuring the unit is not being damaged. Krauer stated that Millennia just completed quarterly inspections and is going to have to issue ten-day notices, as these units are brand new rehabilitated units that look very, very rough because of how those units are occupied.

Krauer stated that Millennia will issue ten-day notices for those tenant issues to be remedied and if the noted deficiencies are not remedied, Millennia can move forward with eviction proceedings. Krauer stated that eviction is Millennia’s nuclear option, and it does not want to go down that road for any reason, and Millennia has a service coordinator in place to help and assist residents if they are having issues maintaining their units and to make sure to try to connect the services that can assist. Krauer stated that ultimately it is the stated work orders and quarterly inspections that Millennia uses as the tools to maintain properties. Krauer stated that units he saw through quarterly inspections that are well maintained look fabulous, as these units are newly rehabilitated, so it begs the question of how some units get so bad so fast. Krauer stated that either the units were constructed so poorly that they just fell apart, which is not the case, or some of the units are used very harshly, so Millennia must go in to remedy those cases.

Following Krauer’s comments regarding HUD inspections at Memphis Towers, Carpenter asked that Millennia provide the latest REAC Reports for each of the properties, as well as any other communication Millennia has received regarding compliance and oversight of the property from HUD. Krauer stated that he would check with Millennia’s legal counsel about the communications between Millennia and HUD and stated due to the volume of units Millennia operated with HUD oversight, Krauer would need more specific details on what Carpenter is looking for in those communications between Millennia and HUD. Carpenter responded that his firm can communicate that with Millennia and further stated that the REAC reports from HUD inspections would be very helpful. Representatives for Millennia are asked to return to the Board’s December 6, 2023 Board meeting. There being no further questions or comments,

There was no action taken by the Board and the update was provided for informational purposes for the Board.

Members of the Memphis Tenants Union left the meeting.

Arthur Krauer left the meeting.

Frank Carney, Walter Frank, and Lewis Clarke entered the meeting.

2.    Affordable Multifamily PILOT Application for Cleveland Crossing LLC (d/b/a Broadmoor Apartments)

Charles Carpenter introduced this agenda item as a new PILOT application stating that action items two and three are the same development team. Carpenter reported that Board staff and legal counsel have completed the pre-submittal conference with the applicant for each PILOT application for (i) Broadmoor Apartments and (ii) Woodland Apartments and each application qualifies under the Board’s basic eligibility guidelines and underwriting criterion. Carpenter invited representatives in attendance for these two (2) applications to have a seat at the Board table, introduced Frank Stockdale Carney as legal counsel to the applicant, and turned the meeting over to him for further comment.

Frank Stockdale Carney introduced representatives Walter Frank and Lewis Clarke. Carney continued by stating that Broadmoor Apartments is a 36-unit complex located in midtown and the applicant will be completing a substantial renovation to the property, as described in the application submitted to the Board in addition to substantial tenant benefits along with additional security and improvements.

Carpenter asked representatives to walk the Board through the planned tenant benefits for the project. Carney stated that as part of the renovation, the applicant plans to install washer and dryer hook ups, as well as the washer and dryer appliances for each unit as well as adding central HVAC to each unit. Carney stated that the applicant also plans to install video cameras and security upgrades. Clarke added that they also intend to implement a more thorough screening process for all the tenants to improve the tenant base and the security of the tenants. Clarke stated that prior ownership has gone through a couple of different management solutions, and as the new owners, they plan to do all the management in house. Clarke explained that his team has recently formed a new property management company that is currently managing some other properties for this ownership group in Mississippi and will be taking over Broadmoor Apartments and Woodland Apartments and will be implementing background checks and tenant screening checks as more of an intangible tenant benefit.

Carpenter asked Bryce Miller to provide comments from his observations of the projects. Miller stated that other than a couple of broken windows at Broadmoor Apartments, that both Broadmoor Apartments and Woodland Apartments appear to be good properties in good condition. Carpenter asked what the current occupancy at Broadmoor Apartments is, to which Clarke responded approximately eighty percent (80%) occupied. Carpenter asked if the applicant plans to perform renovations with the tenants in place. Clarke stated that at Broadmoor Apartments, there are three (3) units that are currently down to the studs, and the development team plans to begin with those and other units that are unoccupied and need various levels of repairs and upgrades and work on those in addition to some of the exterior improvements with installing lighting, additional security cameras, restriping the parking lot, and completing fencing repairs. Clarke stated that these items will be the focus of the first 60-90 days, and then as tenants move out and unit's turnover, the units will be substantially rehabilitated at that time. Clarke stated that 40% of the units currently have central HVAC, and the intention is to install central HVAC in the remaining units, which will be the large upgrades that the development team will be working on and coordinating the electrical and mechanical trades to complete that scope of work. Clarke stated that by the spring of 2025, the development team anticipates renovations to be completed. Carpenter stated that the application complies with the Board’s policies and procedures and recommended approval. There being no further questions or comments,

Monice Hagler moved to approve the Affordable Multifamily PILOT Application for Cleveland Crossing LLC (d/b/a Broadmoor Apartments). Cliff Henderson seconded, and the motion passed unanimously after proper roll call vote of the Board members.

Chairman Reid stated that he drove by Broadmoor Apartments recently and stated that the property looks better than it has looked in years.

3.    Affordable Multifamily PILOT Application for Goodbar Townhomes LLC (d/b/a Woodland Apartments)

Thereupon, Carney stated that Woodland Apartments is a 34-unit multifamily apartments complex located on Goodbar and is a very similar property to Broadmoor Apartments. Carney stated that the development team is investing substantial funds into improving the units, as well as investment in tenant benefits. Carney stated that this complex will be upgraded with Central HVAC as well, along with security upgrades, improved lighting, and an upgraded laundry room. Carpenter asked Bryce Miller to provide comment form his observations of the site. Miller stated that the property looked to be in good condition, but he did observe outdated AC units, but stated that the application addressed that issue with the proposed renovations. Chairman Reid stated that he is recusing himself from the vote on this application based on the lender. Carpenter stated that this application complies with the Board’s policies and procedures and recommended approval. There were being no further questions or comments,

Cliff Henderson moved to approve the Affordable Multifamily PILOT Application for Goodbar Townhomes LLC (d/b/a Woodland Apartments). Katie Shotts seconded, and the motion passed unanimously after proper roll call vote of the Board members.

Chairman Reid recused himself from this vote.

Walter Frank, and Lewis Clarke left the meeting.

Phil Balderston entered the meeting.

4.    Affordable Multifamily PILOT Term Extension Application for Bent Tree LLC (d/b/a Creekside Meadows) (Deferred from the October 4, 2023 Board Meeting)

Charles Carpenter introduced this agenda item by stating that it was deferred from the Board’s October 4, 2023 Board meeting. Carpenter stated that his firm has stated to the applicant as well as its consultant and legal counsel the until the refinancing was completed where there was evidence that funds were available to complete the agreed upon repairs at Creekside Meadows (Bent Tree) and Mill Creek Apartments, that this matter would be held from final vote. Carpenter introduced Phil Balderston, owner of Creekside Meadows (Bent Tree) and Mill Creek and invited him to make any further comment.

Balderston thanked the Board for having him and stated that this morning he walked both properties prior to the Board meeting and is proud to report he thought both sites looked spectacular, each is in good standing, and continue to improve month by month.  Balderston stated that both properties are in the condition of strong workforce housing complexes, comparable to those found anywhere in the country, and as with other workforce housing that was bult in the 1960’s and 1970’s, there are some base building items like the parking lots and some of the siding discussed previously at Mill Creek, that will need long term work and he has already set up a structure for how that work is going to take place. Balderston stated that his group continues to work on completing the refinancing, but there have been substantial changes made to both properties in the last twelve (12) months.

Balderston stated that there have also been substantial changes to interest rates, and Balderston stated that Carpenter’s firm has been working closely with his attorneys and the lender and all parties have come to a place where he believes in terms of the legal documentation, that his team is in good shape to close the refinancing and he is currently waiting for his lender to finalize underwriting to close. Balderston stated that both properties are now in good shape physically as well as financially. Carpenter asked what the current occupancy rate is at Creekside Meadow (Bent Tree) and Mill Creek. Balderston responded that both properties are approximately ninety percent (90%) occupied.

Bryce Miller stated that he was at both properties on October 31, 2023 and the property looked great and continues to make improvements. Miller stated that the repairs needed from storm damage previously reported seems to have been completed, some additions to the tenant benefits have been added in the form of a dog park, as well as some work on the siding at Mill Creek. Miller reported speaking with a security contractor with Stealth Security, that was repairing some security on the property at Creekside Meadows (Bent Tree), and that he continues to see improvements at both properties.  

Balderston stated that in the last thirty (30) days at Creekside Meadows (Bent Tree), all junction boxes and exterior lighting issues have been completed as well as a lot of the doors that needed work have been completed. Carpenter confirmed that his firm has been working closely with the owner’s legal counsel and the Board has approved the requisition structure for the repair replacement process, which will be effective for Mill Creek as well as Creekside Meadows (Bent Tree), and now, it is simply waiting for the refinancing to close. Carpenter stated that as previously indicated by the Board at the October 4, 2023 Board meeting, that having evidence of the availability of funds to complete the remaining work is a prerequisite to moving forward, so based on that, Carpenter recommended representatives appear before the Board for an update at the December 6, 2023 Board meeting and hopefully this will provide enough time for the refinancing to be completed and close and the Board will be able to make a determination on the PILOT Term Extension at that time.

Chairman Dan Reid thank Balderston for his involvement with these two (2) properties, stating that the pictures provided to the Board of these properties looks very different from the pictures he has historically seen and thanked Balderston for his commitment. Representatives were asked to appear before the Board at the December 6, 2023 Board meeting. There being no further questions or comments,

Action was deferred to the Board’s December 6, 2023 Board Meeting.

Phil Balderston left the meeting.

 PILOT Default Status Updates:

1.    Creekside Meadows (Bent Tree)

2.    Mill Creek Apartments

An update for Creekside Meadows and Mill Creek Apartments was provided during the Action Items.

3.    New Horizon Apartments

Charles Carpenter introduced Mark Jobe with Glankler Brown, PLLC as the representative for this agenda item and turned the meeting over to him for comment. Jobe stated that the pending sale for New Horizon Apartments has fallen through, and the purchaser has sent notice of termination of that contract. The principals are regrouping and reviewing their business plan and figuring out where to go next and how to proceed both long term and short term. Jobe stated that occupancy remains stable and is 74% occupied, not including down units, and with down units is 68% occupied. Jobe stated that renovations did slow during the due diligence period and anticipation of the closing that did not occur. Jobe reported that there was a fire at the property and that management is working on what will have to be done with that building. Jobe stated with that said, there are operational concerns and ownership is regrouping and figuring out a path forward. Jobe reported that tenant benefits have continued to be delivered on the property, including 24-hour security, but also through several functions on site, including book giveaways, workforce development workshops on a weekly basis, and a Halloween event. Jobe stated that there is also a football and cheerleading team that are made up of children at the premises. Jobe stated that the current owner would either like to see the previous sale come back to life or find another purchaser for the property.

Carpenter stated that this is a challenging property, and the Board has been working with ownership over time and was very disappointed to see the termination of the sale, but the PILOT Lessee is who the Board is contractually involved with, and the Board would need to have guidance from the Lessee to further discuss the plans and direction the property is headed so that the Board can take the appropriate steps. Carpenter asked Bryce Miller to provide any comments he may have for the Board from his inspections of the property.

Miller stated that the fire on site was terrible and caused severe damage to the property. Miller reported that he has spoken to Yitz Horowitz, the construction manager on site, and he expressed since the sale is not going forward that it would be all-hands-on-deck at this point, and they are in the process of rehiring contractors and getting construction moving again in the right direction.

Carpenter stated that based on this report, he recommends that Miller would communicate with the PILOT Lessee to set up a meeting at the property and determine a timeline for how they intend to move forward, and this should be completed prior to the Board’s December 6, 2023 Board meeting, and at the December 6, 2023 Board meeting, the current PILOT Lessee should give an outline of its plan moving forward. Staff confirmed that New Horizon is currently up to date on all quarterly reporting submissions. Chairman Reid stated that representatives are to appear before the Board at the December 6, 2023 Board Meeting.

4.    Sunrise Villas

Charles Carpenter introduced Frank Stockdale Carney as the representative for this agenda item and turned the meeting over to Carney for comment. Carney introduced Shimon Weinberger from the ownership group also in attendance for this agenda item. Carney stated that he reported at the Board’s October 4, 2023 Board meeting on behalf of Sunrise Villas and that all deficiencies that were being referenced have been addressed. Carney stated that siding repairs have been completed, vegetation overgrowth has been trimmed, trash has been cleared, and the grass has been cut and maintained. Carney reported that the ownership is still having problems with the interiors regarding the blinds, which they have addressed with tenants, but is an ongoing issue.

Carpenter asked Bryce Miller to provide any comments he had on the property. Miller asked representatives if all siding had been completed on all the buildings. Carney stated yes and explained that there are two (2) types of siding one is metal and one is wood. Miller stated that he felt like that may be where the confusion was for him, as during his inspections, it appeared that the siding was not complete, and he was under the impression that the siding that is wood was not complete and was waiting to be covered, but he understands now that it is simply a different material. Carney stated that he would confirm this with ownership and make sure that the siding is not going to be painted and will follow up with Miller. Miller stated that he will wait for follow-up from Carney before confirming siding is complete.  

Carpenter asked Miller about his observations concerning the parking and landscaping upgrades. Miller stated that the grounds looked well maintained and would not require many additional cuts prior to winter. Miller stated that there was a small area of standing water following a rainstorm at the property, but this was not a big concern. Miller stated that the rest of the property appeared secured. Carpenter asked representatives what the current occupancy is at the property. Carney stated that he would get that information from management and report it back to the Board. Chairman Reid asked staff if Sunrise Villas is current on all quarterly compliance submissions, to which Stephanie Bryant responded no. Bryant stated that Sunrise Villas is currently delinquent on both quarter 2 and quarter 3 reporting submissions and further stated that she has included Carney and Elizabeth Friary in multiple emails requesting the delinquent reports, but to no avail. Carney stated that he was under the impression that the reports had been submitted, but he will follow up with the PILOT Lessee. Carpenter recommended that representatives appear before the Board at the December 6, 2023 Board Meeting following reconciling with Miller concerning the siding concerns as well as the submission of outstanding reports due.

New Business

There was no new business.

Chairman Reid stated that the next meeting of the Board is scheduled for Wednesday, December 6, 2023 @ Noon. There being no further business, the meeting was adjourned by the Chairman at 01:27 p.m.