The Health, Educational and Housing Facility Board of Memphis revoked the tax breaks granted to the owner of two beleaguered apartment communities that were the subject of reporting by MLK50: Justice Through Journalism, citing the board’s pattern of delays when dealing with wayward landlords.
Last month, MLK50 wrote about the troubling conditions at Grahamwood Place Apartments in Berclair – and how the board had allowed KeyCity Capital for more than a year to default on an agreement to provide quality affordable housing in exchange for a property tax discount.
Another story highlighted the slumlike conditions at Pinebrook Pointe Apartments in Parkway Village, also owned by KeyCity Capital, and its practice of renting faulty apartments at the complex while receiving a PILOT – or payment in lieu of taxes – subsidy
The Health and Ed Board canceled the PILOTs by a 5-1 vote after the landlord failed to pull off a years-long plan to improve living conditions at the properties. Residents had been living with leaky roofs and mold, plumbing issues and roach- and rat-infested apartments.
Although both properties were placed in legal default in October 2023, KeyCity Capital has not addressed critical issues such as the failing roofs. Rain regularly fell into the unit of one Grahamwood Place tenant that MLK50 spoke to, whose ceiling had a visible hole in it.
For nearly two years, the Health and Ed Board entertained promises of future repairs from Tie Lasater, KeyCity Capital’s managing partner. But Lasater still couldn’t present a swift plan at the board’s monthly meeting in August. Lasater did not respond to an email seeking comment afterward.
The board’s conversation touched on the same areas of concern: A dispute with a roofing contractor was still unresolved. Each property has a little more than 240 units, but they’re less than half full.
Charles Carpenter, an attorney for the Health and Ed Board, said the agency had an obligation to the tenants who are living with molded interiors and leaky roofs because of KeyCity Capital’s inaction.
“What we’ve also found from our experience is that when we actually terminate these PILOTs, we get more activity going that benefits the tenants than when we don’t,” Carpenter said before the vote. “In this case, it’s just been more kicking the can down the road for going on two years now.”
Terminating a PILOT contract is a rare act for the Health and Ed Board.
It remains to be seen what will take place at Grahamwood Place and Pinebrook Pointe. Some landlords are so reliant on tax breaks that their business plans fall apart once they’re gone.
Alex Uhlmann, who leads the Memphis Tenants Union, said providing housing that is well-kept and free of health hazards is always the responsibility of any owner.
“The PILOT should not [determine] whether or not people are receiving the normal services that you’re supposed to receive in an apartment,” Uhlmann said. “It’s just that the landlord-tenant relationship is so skewed that the landlords can argue that this is the only way that they can stay in business.”
The last time board members took tax breaks from a landlord, their action was short-lived.
Two Millennia-owned properties — Cavelier Court and Gospel Gardens Apartments — lost their subsidies late last year after lingering livability concerns. The large rental housing provider had a long history with code enforcement and tenant complaints.
The board revoked the tax breaks at its October 2024 meeting, records show, but did not approve the minutes until two months later. The delay allowed the City of Memphis to step in with a request to directly oversee improvements to the properties and keep the PILOTs as a result. Both apartment communities remain in legal default.
Close observers of the Health and Ed Board say new ownership often results in improvements, but that doesn’t usually happen until after a landlord loses the tax breaks.
“That’s pretty much what’s happened with Gospel Garden,” said Shirley Bondon, who leads the Black Clergy Collaborative of Memphis, a group that does outreach to tenants at troubled apartment communities. “Millennia gave up their investment in the property, and the silent property owner came in and started to make things better.”
Michael Finch II is the enterprise reporter for MLK50: Justice Through Journalism. Contact him at mike.finch@mlk50.com