VOL. 130 | NO. 224 | Tuesday, November 17, 2015
Hamlet Offers Plan For Global Ministries Foundation's Inner-City Apartments
By Bill Dries
Global Ministries Foundation founder Richard Hamlet has a multi-million dollar recapitalization plan to make extensive renovations at three inner-city apartment complexes his company owns.
Hamlet will present the $9.6 million to $12.8 million recapitalization plan to Shelby County Commissioners Wednesday, Nov. 18. The renovation would cost $15,000 to $20,000 per unit.
Commissioners almost certainly will have questions and criticisms, based on what they saw on an October tour of the Goodwill Village, Tulane and Warren apartments.
Hamlet and GMF officials have discussed the plan with individual commissioners, and he told The Daily News last week that those conversations have been “challenging.”
Since September, the commission has delayed approval of a recoupment agreement. It allows GMF tax-exempt status for its Serenity Towers high rise at 400 S. Highland Ave. in exchange for paying the county $5 a month per unit. The apartments are designated for low-income, disabled and elderly Memphians.
Global Ministries owns a total of 11,000 units at 61 properties in eight states. Hamlet says the company has a mission of providing affordable housing and a business plan that’s “risky.” He ultimately believes that plan – which mixes a portfolio of conventional rental real estate with federally subsidized rental housing – will work and be emulated by others across the country.
“We have a mission of taking on historically challenged Section 8 properties but that would be funded by other properties that are not Section 8 or have a higher demographic where there are profits coming from those other properties – like a real estate investment trust with diversified properties,” Hamlet said.
Half of GMF’s real estate portfolio is not federally subsidized.
In the last five years, Hamlet said Global Ministries has put $3 million in improvements into Goodwill Village, Warren and Tulane.
He defends the size of GMF’s portfolio as necessary to get the return necessary to take on aging and affordable housing. And past the recapitalization, Hamlet says GMF intends to invest more.
“We are looking at this as a positive, innovative model that will ultimately be an answer for a systematic Section 8 portfolio issue that HUD has out there,” Hamlet said. “There are many more properties like these that are out there that are old. They are crime ridden. They need revitalization and unless you have a nonprofit that has resources that will risk that private capital, which we are able to do … nobody’s going to touch these properties.”
Hamlet acknowledged that Goodwill Village, Tulane, Warren and another complex in Jackson, Tenn., have problems that caught him and his organization by surprise.
Hamlet apologized in April for the apartment conditions. In January, he tapped LEDIC to manage the properties.
Since the apology, federal inspectors with the U.S. Department of Housing and Urban Development and the city of Memphis began inspections. Some residents moved out temporarily while repairs were made and other conditions, including bed bug infestations, were dealt with.
Hamlet requested and was allowed to work directly with HUD officials in the Atlanta regional office, as opposed to the Memphis office.
He describes the problem as not enough GMF oversight of the management firms that handle the day-to-day business.
“We’re building that depth chart, and we are having to make adjustments,” Hamlet said. “This is pioneer territory for us. We are learning from our mistakes, and we are tweaking things so we have better oversight and better control over the kind of variables that will come up in this business.”
During the October tour, county commissioners still weren’t happy. Commissioner Eddie Jones, a city code enforcement officer, termed the conditions “startling.
Commissioner David Reaves said the group ended the tour with “a lot of emotion wrapped up in what they’ve seen.”
Commissioner Walter Bailey proposed the resolution that makes the recoupment agreement on Serenity Towers contingent on proof that GMF has taken adequate steps in the other apartment complexes it owns.
Bailey said the crime statistics alone showed that crime was “rampant” at Goodwill, Tulane and Warren.
“It was self-evident,” Bailey said in September. “It spoke for itself that there was enormous neglect regarding safety measures being implemented by the owner and management.”
Bailey specifically wants Hamlet to answer questions under oath or attest to the answers in what amounts to interrogatories – written questions and answers similar to those sought during the discovery portion of civil lawsuits.
“No sir, I wouldn’t advise him to do that,” attorney Chris Lamberson, representing GMF, told Bailey in September.
“Is there something wrong with that?” countered Bailey, who also is an attorney. “I want your client to respond to questions and stand by the responses with a signature. That’s all.”
“I would never ask a client to start making statement under oath unless they needed to,” Lamberson said. “I don’t think that’s required in this case.”