Archive for March, 2016

A Story of Our Two Health Education and Housing Facility Boards

Wednesday, March 30th, 2016

March 29, 2016

This is a story of our two Health Education and Housing Facility Boards, one is a Shelby County HEHFB and one is a City of Memphis, HEHFB. I have asked for copies of bond information including Bond Counsel fees and other bond Issuance and Professional fees. As usual, it was fairly easy to get the information from the County Board and impossible to get it from the City board. I finally got some information about 5 bond issues (MemphisHEHFB) from the State of Tennessee Comptroller after no response from the City of Memphis board. I am still waiting for additional information from the State of Tennessee that generally has been very forthcoming. I have previously published the information about the 5 bonds issued by the Memphis board and here is a recap of the information from the Shelby County Board followed by the City of Memphis Board’s  5 bond issues that we have.  Please note that the Shelby County HEHFB has a written policy limiting the Board Counsel fee. There is no such policy for the Memphis HEHFB and therefore they paid $59,000 more on just 5 bond issues on which we have information.

 

Name of Project from the Shelby County HEHFB Bond Amount Bond Counsel Fee Board Counsel Fee Maximum Board Counsel Fee Allowed  per County Policy Total of All Fees for Bond Issue
MUS 2011 $12.255M $30,000 $14,830 $22,255 $195,893
Rhodes 2011 $32M $60,000 $28,000 $42,000 361,768
Southern College of Optometry

2011

$9.8M $25,000 for Bond Counsel, Purchaser and Trustee Counsel $12,500 $19,800 $29,000
Harding 2011 $7.47M $30,410 $14,110 $17,209.80 $115,279

 

Eastwood Apts 2012 $1.1M $36,000 $3,400 $3,300 $114,528.37

 

Methodist 2012 $98.26M $153,000 $40,265 $108,260 $153,000
St. Agnes, 2012 $5.5M $30,733 $13,155 $14,000 $50,388

 

Grace St. Luke’s Episcopal School 2012 $5.875M $30,000 $14,970 $14,750 $70,533
The Village of Germantown 2012 $39.96M $160,000 $48,160 $49,960 $1,418,414
Trezevant Manor 2013 $66.475M $120,000 $49,805 $76,475 $1,578,135.50
St Benedict 2013 $10M $15,000 $7,500 $20,000 $33,000
Countryside North Apartment 2013 $5M $42,000 $18,122.50 $13,000 $191,446.45

 

 

 

Name of Project from the Shelby County HEHFB Bond Amount Bond Counsel Fee Board Counsel Fee Maximum Board Counsel Fee Allowed  per County Policy Total of All Fees for Bond Issue
Southern College of Optometry 2014 $9.8M $25,000 $12,500 $12,500 $43,500
Presbyterian Day School 2014 $10M $10,000 $5,000 $5,000 $15,000
The Village of Germantown 2014 $21.94M $142,000 $30,140 $71,000 $1,020,587
St. George Independent School 2015 $32.585M $40,000 $20,000 $50,585 $106,936
Rhodes College 2015 $21.35M $55,000 $27,500 $27,500 $294,646

 

 

 

 

 

 

Name of Project from the Memphis HEHFB Bond Amount Bond Counsel Fee Board Counsel Fee Maximum Board Counsel Fee Allowed  per County Policy Total of All Fees for Bond Issue
Uptown Senior Housing Project 2006 $4M $40,000 $25,000 $11,000 $222,550
Arbors of Hickory Ridge $11.45M $26,000 $30,500 $21,450 $235,767
$4.061M $25,255 $23,500 $11,122 $70,700
John Madison Exum Towers $19M $85,000 $40,000 $29,000 $159,600
Uptown Manor Senior Project 2015 $2,825M $21,000 $21,350 $8,475 $278,687
Total of actual Board Counsel Fee versus fee per County limitation fee $140,350 $81,047

The savings here would have been $59,303 if county policy applied

 

As you will see most of the above County bond issues were for educational, medical and retirement facilities. Only two (Countryside and Eastwood) were similar to what has been financed by bonds from the Memphis HEHFB.

My investigation of these two boards was instigated by the Global Ministry story and the bond downgrade. There is a real question of transparency and adequate ethics rules, conflict of interest rules and rules concerning competition for front end bond expenses. I have not yet, in response to my open records request, received past bond information from the Memphis HEHFB. I have received past bond information from the State of Tennessee (Steve Osborne, Senior Analyst, Comptroller of the Treasury ǀ State and Local Finance). Here is some of the information that he sent showing past bond expenses and who participated.

Here is a list of past bond work done by Charles Carpenter (board counsel for the Memphis board). While Mr. Carpenter is a competent bond counsel lawyer, there needs to be more transparency in the issuance of these bonds, written conflict of interest rules, limitation of front end bond costs and competition for the various issuance costs. There is also a need for a public discussion of the best and most cost efficient method to provide adequate housing for those unable to work and provide needed housing for themselves.

Where Does The Increased Downtown Tax Revenue Come From?

Tuesday, March 22nd, 2016

March 22, 2016

Where Does The Increased Downtown Tax Revenue Come From?

I read with interest the March 20th Sunday article in the Commercial Appeal entitled Bass Pro sales near $45M in nine months. This would be from May 2015 thru January 2016. This is indeed good news for cash strapped Memphis but the question still remains in my mind, what downtown sales tax businesses are responsible for an increase of over $7 million in Tourist Development Zone sales taxes returned to Memphis in the fiscal year from July 1, 2014 to June 30, 2015. Read the article at http://www.memphisshelbyinform.com/2016/02/16/tdz-tourist-development-zone-revenue-review/

 

Now the CA article claimed that the Bass Pro Pyramid sales for June 2015 were $7.1 million. So let us assume that May 2015 (the opening month) was $6 million or a total for the first two months of $13 million. This would account for about $1.17 million in additional sales tax returns to the downtown TDZ. But there was over $7 million extra TDZ returns in the year ending June 30, 2015.  This is the question I asked the Downtown Memphis Commission? They said they would investigate and let me know. To date I have heard nothing from them.

In any event, considering that Memphis is in such desperate need of additional income, it is good news to hear that the incremental sales taxes for 2015 over and above 2014 are up over $7 million. Let us hope that this trend continues.

Can any of you readers tell me what downtown businesses in the downtown TDZ zone, other than Bass Pro, could be responsible for the big increase in TDZ incremental sales taxes? Let me know at memphisshelbyinform@gmail.com.

 

The Hidden Cost of Health Education and Housing Board Bonds

Tuesday, March 15th, 2016

March 15, 2016

 

The Hidden Cost of Health Education and Housing Board Bonds

The Commercial Appeal recently published a story about a downgrade of a local bond issue as follows. “On Feb. 12, the Bank of New York Mellon Trust Company, which oversees the$11.8 million bond, sent a notice of default to bondholders notifying them the U.S. Department of Housing and Urban Development had ended its contract with the borrower, Global Ministries Foundation.”

I have been researching the whole issue of City and County boards and commissions and particularly the Memphis Health Education and Housing Facility Board. I asked that board for a list of bonds issued by the Board for the last five years with cost data and information of the parties receiving payment upon the issuance of the bonds. The board has failed to respond to that request for open records. Therefore I went to the State of Tennessee and received five reports on local bond issues from Steve Osborne, Senior Analyst, Comptroller of the Treasury, State and Local Finance. Here are the five issues I received.

Uptown Senior Housing Project ($4,000,000)

Arbors of Hickory Ridge ($11,450,000)

Housing/Social Services ($4,061,000)

John Madison Exum Towers ($19,000,000)

Uptown Manor Senior Project ($2,825,000)

The five reports are very revealing but first I have to tell you about my request to the Shelby County Health, Education and Housing Facility Board (same name as the similar City HEHFB) but a completely different board. I asked for their documents on ethics and conflict of interest policy and I received it as shown. I particularly call your interest to page 6 wherein is shown a maximum fee calculation for the legal fee of Bond Counsel.

I have shown below the fee paid to the bond counsel of the Memphis HEHFB board on the five recent bond issues versus what would be the fee from the Shelby County Board HEHFB.

 

 

 

 

 

Name of Project Bond Amount Actual Bond Counsel Fee City of Memphis HEHFB Maximum Bond Counsel Fee of County HEHFB
Arbors of Hickory Ridge Project $11,450.000 $26,000 $21,450
Housing and Social Services $4,061,000 $25,255.08 $11,122
John Madison Exum Towers and Apartment I and II $19,000.000 $85,000 $29,000
Uptown Housing Senior Project 2006 $4,000,000 $40,000 $11,000
Uptown Manor Senior Project $2,825,000 $21,000 $13,062.50
Total Bond Counsel Fee $197,255.08 $85,634.50

 

On these five bond issues, this is $111,621 more than the County maximum amount in their ordinance. But this is just the beginning of the cost of the bond issuance. The total for these five bond issues just for the Memphis HEHFB is $967,304.03.

Then there is the question of a possible conflict of interest although apparently there is no provision that I have been able to obtain concerning a City of Memphis conflict of interest policy although I have been told that the Strickland Administration is working on such a policy.

I think that it is high time that we get a discussion going on this high cost of bond issuance and is this approach to adequate housing for low income citizens the best and most efficient method. Also there needs to be a clear and open policy on bond issuance fees, conflict of interest and ethics.

 

 

I will raise my $106,000 bet by $234,000

Tuesday, March 8th, 2016

March 8, 2016

I will raise my $106,000 bet by $234,000

 

Last October I posted a blog article describing the lawsuit filed by the Shelby County School system board for the purpose described below in my posting. A few days ago I asked for an update of the current billed cost of the lawsuit. They upped the ante by $234,000 for a total to date of $340,000.  Obviously they think spending your money is worth it. Who knows what it may cost in the end. I ask you the taxpayers of Memphis and Shelby County this. Do you want to turn over your taxing authority to the Shelby County School Board and let them determine what taxes you must pay for the education of your children? This is what they are asking in the suit.  As a template, consider what results we have achieved nationally from the Federal Department of Education as shown below. Let me know what you think of this lawsuit.

Big Time Bet By The Shelby County School Board

Posted by jsaino on Oct 29, 2015

October 29, 2015

Big Time Bet By The Shelby County School Board

As you have read, the SCS System has filed a massive lawsuit to take the funding out of the hand of the taxpaying public and their elected representatives and put it in the hands of the various school boards across the state of Tennessee. They want to determine how much is required to do the education job and then the taxpayers must come up with the money. The proposition is “MORE MONEY EQUALS BETTER EDUCATION” and they know best how to do it. They just need the resources.

I filed an open records request with the SCS System and asked what the estimated total future cost of the lawsuit would be and asked how much had been billed to date. They responded promptly and said that there was no estimate of total future cost but that they had been billed for $106,775.35 in four monthly billings. This is just the beginning.

Next year there will be an election at the national level for President, for the House of  Representatives and for 1/3 of the Senate. If some fiscally responsible people are elected in a majority I hope they will consider the elimination over time of the Department of Education at the Federal level. This department was created by President Jimmy Carter in 1979 and has grown like most of the Washington establishment. Look at what President Obama has requested for this failure.

In his budget proposal, the president has requested $69.8 billion in discretionary spending for the Department of Education, a $1.7 billion increase over last year’s funding level. This is in addition to $13.3 billion in additional mandatory spending for Pell Grants, bringing the total budget request to $83 billion—a 40 percent increase from Fiscal Year 2008.

No one can claim any success from this monumental failure in educational spending. Let us not repeat this kind of failure at the local level.

Boards and Commissions in Memphis and Shelby County

Thursday, March 3rd, 2016

March 3, 2016

Boards and Commissions in Memphis and Shelby County

 

Recently I became interested in Memphis and Shelby County Boards and Commissions. My interest was piqued by all the news concerning Serenity Towers and Global Ministries. Here is a news article on the bond issue for this property.

The Health, Educational and Housing Facility Board of Memphis, Tennessee facilitated the GMF acquisition through the issuance of tax exempt 501(c)3 housing revenue bonds on behalf of the purchaser. Merchant Capital served as the bond underwriter in the placement of the bonds with investors, as the bonds were rated investment grade by Standard and Poor’s rating agency. Jones Walker served as Bond Counsel. Kristin Neun, Esquire, served as FHA counsel. Charles Carpenter, Esquire, served as counsel to the Issuer. The Bank of New York Mellon serves as Trustee. Glanker Brown serves as GMF’s corporate and owner counsel within its expanding national affordable multifamily housing portfolio.

A recent article in the Commercial Appeal stated the following.

About a third of all the units inside Serenity Towers have bedbugs, according to a Memphis Code Enforcement report released Friday.

The report says 134 units have bedbugs inside the senior high rise apartment complex. Other code enforcement violations included cockroaches, broken or damaged windows, leaks in the ceiling, broken thermostats, damaged toilet and faucets among other things.

City code enforcement officers inspected the 396 units in the property on Feb. 11, 2015. The inspection came after several tenants complained of bedbugs and other problems.

Rev. Richard Hamlet, founder of Global Ministries Foundation, said in a statement he was aware of the bedbug problem since his nonprofit bought the property. His staff is working to eradicate the infestation. GMF bought the senior property in 2014 using a $14.5 million bond issued by the Health, Educational and Housing Facilities board of Memphis.

With that background, I started investigating the various boards and commissions. What I found was 46 City Boards and Commissions and 36 County ones. Some are joint boards but many are stand alone ones. It was interesting that the City Health, Education and Housing Facility Board and the County Health, Education and Housing Facility Board have the same names but are completely different and separate

The City HEHF Board states its purpose as follows.

Function & Authority: 
The Health, Education and Housing Facility Board a public nonprofit corporation issues tax exempt revenue bonds for the development or rehabilitation of multi-family housing facilities to be occupied, according to the state statute ?by persons of low and/or moderated income, and/or elderly and/or handicapped persons.

The County HEHF Board states its purpose as follows.

Functions & Authority
The function of the Health, Education, and Housing Facility Board is to assist in the financing of health facilities, educational facilities, and housing facilities for low and moderate income families, disabled individuals and the elderly.  The financings are accomplished through the issuance of revenue bonds payable solely from the revenues of the project.  The taxpayers and the County of Shelby are never liable for the repayment of the bonds.

I asked both boards for their ethics documents and conflict of interest policies. From the County Board I received a prompt answer with the statement of policies and procedures revised 11/4/15 and By-Laws revised 2007.

From the City Board I got the 2008 By Laws and a financial statement.

I attended a meeting of the Memphis HEHF on February 29th for a required hearing concerning a request that the board issue its Multifamily Housing Revenue Bonds (Patterson Flats Project), Series 2016 in an aggregate amount not to exceed $12 million dollars. After the required reading I asked some questions concerning fees related to recent bond issues. Mr. Carpenter did not know but referred me to the State of Tennessee for this information. I asked him who was paid the $110,000 in legal and professional fees shown in the 2014 financial statement and he said that he was paid those fees. I asked about the details of the recent resignation of John L. Baker, 17 years as director of the Memphis HEHF board, and was told that that could be discussed only at a regular monthly meeting of the board and that the March meeting on the first Wednesday was cancelled as there was no business to discuss.

This whole matter of this housing for low and moderate income individuals and families, the cost and effectiveness of this approach needs a public discussion and possible alternatives to this expensive program. What do you think?