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VOL. 130 | NO. 105 | Monday, June 1, 2015

Global Ministries Appeals Failing HUD Scores at Memphis Properties

By Bill Dries

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A month after 40 units at the Goodwill Village and Warren Apartments were declared unfit by federal housing officials, the units have been repaired and the residents moved back in.

But both apartment complexes as well as a third, Tulane Apartments – all of which are owned by Cordova nonprofit Global Ministries Foundation – failed an overall inspection by the U.S. Department of Housing and Urban Development. GMF is appealing the failing scores.

LEDIC Management CEO Pierce Ledbetter, left, and Global Ministries Foundation founder Richard Hamlet deliver a progress report at Goodwill Village Friday, May 29. Hamlet acknowledged three of GMF’s Memphis apartment complexes failed a recent HUD inspection. GMF is appealing the low scores.

(Daily News/Bill Dries)

Global Ministries Foundation founder Richard Hamlet has also requested to work with HUD officials in Washington and Atlanta instead of HUD’s Nashville field office. He cited the federal requirement to immediately move residents in the unfit apartments to other housing once HUD agreed with the findings of city code enforcement inspections.

“We were asked to have residents moved in 24 hours, which is an impossibility, quite frankly,” Hamlet told reporters Friday, May 29, in a progress report at Goodwill Village. “And city code allowed 15 days. We were put in a very difficult situation, and we had to stop working on inspection work to take care of 40 families.”

Hamlet’s comments came one month after he apologized for conditions at the apartment complexes and vowed to fix them.

He said his foundation complied with the immediate relocation but consulted with its legal counsel in Washington, D.C., about its disagreement with HUD’s Nashville field office. The immediate move for the 40 families also ended the federal subsidies HUD was giving GMF for those units.

“We wanted to work with another office where we had a clean slate, where we could be a HUD partner that could ask and receive the help that we need to as a HUD partner with a functional working relationship,” Hamlet said. “These are privately owned properties. We raise private capital. We have bond investors.”

Warren and Tulane each scored 50 on a HUD scale in which 60 is a passing score. Goodwill Village apartments scored a 49 in the inspection. A fourth GMF property, Madison Tower, passed.

LEDIC Management founder Pierce Ledbetter began working at the properties this past January in a contract with Global Ministries. Ledbetter said the contract included the condition that Global Ministries would pay whatever was necessary to bring the complexes into compliance with housing standards.

“We have directions from GMF to make all repairs on any deficiencies regardless of the score, regardless of appeals,” Ledbetter said, referring to the HUD scores. “Our goal is going to be 100, and we won’t stop until we get as close to that as we can.”

Short of HUD approval, Ledbetter said the units were inspected by licensed Tennessee contractors who said in notarized affidavits that the units now comply with Tennessee code.

GMF owns apartment complexes and rental properties in seven other states through its housing subsidiary, GMF Preservation of Affordability Corp.

“We wanted to work with another office where we had a clean slate, where we could be a HUD partner that could ask and receive the help that we need to as a HUD partner with a functional working relationship.”

–Richard Hamlet
Global Ministries Foundation

Each property has a separate business housing corporation, and the properties rent to families who receive federal housing subsidies to pay their rent.

Hamlet said Global Ministries has put $3 million into improving its Memphis properties since closing on them several years ago and has never seen a profit from them. He did not have a price estimate on how much it would cost to repair the problems in the three complexes.

“We’ve already spend several hundred thousand dollars on corrections and there’s much more to be done,” he said. “We don’t have a total amount based on the scope of the whole property in terms of each unit.”

Hamlet also said Friday that GMF still intends to pursue a substantial rehabilitation of apartment units in the next five years at a cost of $25,000 to $30,000 a unit, for which GMF will seek new investors.

“That is still the plan,” Hamlet said. “We don’t want to sell these properties.”

Hamlet and Ledbetter also outlined a plan last week to install better lighting at Goodwill Village as part of a crime-reduction plan.

Ledbetter described the goal as lighting that would make Goodwill Village “stand out like the Liberty Bowl.”

Ledbetter said he wants the complex to be part of the federal Safeways program by the end of the summer. The crime-reduction program includes specific safety standards that renters can rely on when choosing a place to live.

It is credited with dropping the crime rate in several Memphis apartment complexes that had some of the highest concentrations of crime in the city before the measures were enacted.

PROPERTY SALES 36 154 6,546
MORTGAGES 34 94 4,129
BUILDING PERMITS 201 554 15,915
BANKRUPTCIES 43 126 3,396