Memphis board gets ban on new bond issues

Personnel, GMF, media attention spur THDA action

The Tennessee Housing Development Agency has prohibited the Health, Educational and Housing Facilities Board of Memphis from issuing additional bonds for low-income housing pending a resolution of its mounting problems, according to a letter from the Nashville-based agency.

John Baker, former executive director of the housing facilities board of Memphis, resigned his post last December after working there for 17 years. His replacement has not been named.

The agency is also dealing with the aftermath of a bond issued to Global Ministries Foundation to buy the troubled Warren and Tulane apartments. In February, GMF lost funding from the U.S. Department of Housing and Urban Development after the nonprofit failed to provide good living conditions to its tenants. As a result, bond holders received a default letter and the value of the $11.8 million bond decreased to 30 cents on the dollar.

THDA’s executive director, Ralph Perrey, said the local board should temporarily stop issuing bonds so it can deal with the bond for Warren and Tulane, which is attracting local and national media attention, and while it looks for Baker’s replacement.

“It concerned us that the agency is in transition,” Perrey said Monday. “They are working through a number of issues that attracted local and national media. We wanted them to deal with those issues without adding to their workload.”

Perrey said in the letter dated March 21 that THDA directed two developers to other agencies that can issue bonds.

Daniel Reid, the housing facilities board chairman, said in a written statement that Martin Edwards was named interim executive director. Reid added that Edwards, the board and the city are working with THDA to address the state’s concerns.

Local bond issuers such as the housing facilities board can apply for portions of THDA’s tax-exempt bond authority to sell bonds on behalf of a developer.

The housing facilities board issues tax-exempt bond financing to developers for multifamily housing for low-income residents in Memphis. The board currently has 28 active bonds worth about $245.6 million. The board also approves payment-in-lieu-of-tax programs (PILOTs) for multifamily housing, allowing a developer to invest money to repair properties.

The quasi-government agency has issued $49.9 million in bonds to GMF to buy seven properties. This little-known nonprofit came to light after The Commercial Appeal published an investigation last year into poor living conditions that included bed bugs, mold, leaking plumbing

and other problems inside some Warren and Tulane apartments.

Reid challenged THDA’s decision. In a letter he demanded an explanation of what he described as “imposed sanctions.” He also told Perrey to disqualify or not allow John Baker from attending the appeal hearing. Baker is also a THDA board member and the former executive director of the Memphis agency. Reid said Baker is currently “engaged in legal action against the board.”

Perrey responded by letter: “We have not ‘imposed sanctions’ as you put it. Rather, we recognize that your Board is in the midst of a transition in leadership and that you are dealing with issues that have lately attracted national media attention. We felt it prudent not to add to your workload while you are working to resolve those matters.”

Baker declined to comment for this story, but said he is “not engaged in legal action against the board.”