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Health, Educational and Housing Facility Board
Q & A with Health, Educational and Housing Facility Board
Posted on 09/25/2018
By Leah Kraus, Digital Content Coordinator

The Health, Educational, and Housing Facility Board of Memphis is one of those little-known entities of City government and the administration of Mayor Jim Strickland — but it has a major impact on ensuring Memphians have access to safe, affordable, quality housing, which is a goal of Mayor Strickland’s.

The HEHF Board has helped re-develop 16,000 rental units across Memphis, housing more than 40,000 tenants.

The board issues tax-exempt revenue bonds and other types of financing to select housing facilities around the city to help meet affordable housing needs. The board consist of nine members that are appointed by Mayor Strickland. 

We sat down with Executive Director Martin Edwards and Chairman Daniel Reid to learn more about what they do.

Can you explain what the Health, Educational and Housing Facility Board does?
Daniel Reid: The primary focus of this board is to issue PILOTS (payment in lieu of taxes.) If we have an entity - say “ABC Village,” and they have been in such disrepair and the owners have been neglecting it - Martin Edwards comes in and buys “ABC Village,” we freeze the taxes on this dilapidated property, and Martin injects a certain amount of money into this property. 

All of a sudden, this property is really great but they’re only paying taxes as if it were still the dilapidated property. Martin has come in and made a huge investment in this community which is getting people pride in where they live, energy efficient appliances, it’s safe, children can play, etc. 

What we do is say “in order for us to issue this PILOT, we need to see what the tenant benefits are and we’re going to monitor them every three months. We’re going to make sure that if you say we have walking trails, we have computers for children after school, whatever the tenant benefit is, we’re going to monitor and make sure that’s happening to retain that tax freeze.” If that’s not happening we’re going to pull that PILOT.

Martin Edwards: In the last two years, we have issued PILOTs that have a total development cost of $207 million. Of that, $120 million was in construction. 

Daniel: Of this $207 million, that is creating jobs, pumping money back into our economy and also the product rendered at the end is good, affordable housing for people. 

When you see people who take pride in where they live, do you think that extends into other aspects of their lives?
Daniel: There is statistical evidence that shows just that. If you’re proud about where you’re laying your head at night and your children are going off to school and they’ve gotten a good night’s rest, it translates into your entire life.

Why is affordable housing is so important?
Martin: Well the ‘why’ is that it makes up a huge part of our population and of most cities. When we say “affordable housing,” what we’re really trying to say is “clean, safe, affordable housing” not just “affordable housing” and this board is really involved in trying to make sure that happens. I was out yesterday walking properties, seeing if they were doing what they had promised to do when they got this benefit to reduce their taxes -- in other words, were they using the cash flow saving that they had and putting it back in the property to make it clean, safe, and with tenant benefits?

Daniel: We are most concerned about tenant benefits. Tenant benefits can be anything from if you are living in a unit from say the 50s and the air conditioning is 20 years old, your bills and cost of living than a new rehabilitated property with energy efficient appliances and A/C are going to be higher.

Martin: There’s nothing wrong with affordable housing. A tremendous part of our total population can’t pay over X amount of money so this is a way to stimulate the improvements and new construction because of what we see every day is not only rehabilitation but new construction. South City is a good example. That’s all new construction. University Place on Lamar is another good example -- it was a blighted area before. Mason Village on Crump -- they’re building new affordable housing right there on Crump Avenue and it’s a breath of fresh air. 

How do you pick projects to get involved with?
Daniel: The developers come to us and say ‘We’ve got this project,’ and then that’s when Martin and the staff begins to vet the project for the PILOTS and look at what the tenant benefits are. Do the numbers make sense? What are the market rents in the area? What are their rents going to be? The project comes to us and then the staff asks if this is a good PILOT to be involved in.

Martin: It’s a two-fold deal. It’s a rehabilitation of what’s there because we already have the infrastructure. This city is one of the largest city footprints in America and it has got to utilize the infrastructure that’s here because if it doesn’t we’ll be broke. For years and years we annexed areas we couldn’t provide the infrastructure so as we redevelop inside the city those are city taxes that we now get back. 

How many PILOTs do you have?
Martin: We have 76 PILOTs, 40,000-plus tenants, and 16,000 units. That’s 11 percent of the total rental population in Shelby County.

Daniel: If you look at our surrounding cities, just to give perspective - Ripley is 12,000, Union City is 11,000, Halls is 4,000 - we’ve got 40,000. It’s its own city. When you start looking at the perspective it’s a huge number. 

Is there anything else you’d like to say?
Martin: It’s very important to me as a real estate guy to preserve the assets we have, and this is a way of asset preservation. Because what will happen to a neighborhood -- apartment communities in particular, because of their density crumble down, what happens around there as far as crime and everything else, the preservation is one of the more important things that it does because that preservation created not only good, clean places for people to live but $30-something million worth of new jobs. We’ve got a lot of properties around the airport -- those are important properties to the city to keep up and preserve because that work force lives and works there.

Daniel: We, through the delegation of the mayor and City Council, have allowed the freeze of taxes on a property so we’ve got to see that money being pumped back in. I think sometimes people think they’ve got a PILOT so they’re sticking that much money back in their pocket — no, they’re not. They’ve got to improve. We’re monitoring. We’re looking at them. If they fail, we put them on notice. If their occupancy drops below 80 percent, we put them on notice. Because when these properties start to degrade, it’s not something that takes six to 12 months -- it takes 30 to 60 days. It’s quick, it’s almost like a wildfire. If there is a shooting or they’re not keeping the property up, people are going to move. They’ve got children. They’re going to find another place to live. This staff is on top of that. Getting those letters out quickly – “what are you doing? occupancy has to get back up. Our compliance report that we review says you’re not doing these things.” If you’re not doing them, we’ll pull you off. And we’ve pulled people off. It’s not pretty. But on the same token, we don’t strong arm because the other side is if we pull that PILOT, that developer is probably going to go down and then all those families are going to be affected. Our whole mindset is those families. How do we make sure that developer is doing exactly what he said he would do and if he’s not, what can we do to help him so that it helps the families. 

Click here for more information on HEHF. 
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