VOL. 131 | NO. 103 | Tuesday, May 24, 2016
Global Ministries Continues to Take More Heat
By Bill Dries
The receiver for the Warren and Tulane Apartments is in place with the notice filed in Memphis federal court last week that Foresite Realty Management LLC had accepted the job and that its bonding is in place.
U.S. District Judge Jon P. McCalla has scheduled Foresite’s first monthly report as receiver for sometime in July. The task of the Chicago-area real estate company is to sell both complexes.
Foresite’s appointment by McCalla was the result of a consent order between Global Ministries Foundation, which owns both apartment complexes, and the Bank of New York, which is suing GMF in federal court as trustee for the holders of $12 million in bonds used to finance GMF’s purchase of the two apartment complexes.
The bank alleges that the poor condition of the apartments and a decision by federal officials to cut off federal rent subsidies and move residents out of both communities warrants court action beyond the receiver.
A memorandum of law, filed with the lawsuit on March 6, also alleges “an appearance of fraud” by Global Ministries.
And as Foresite was moving into place, GMF was drawing fire from other quarters for the conditions of other properties in its real estate portfolio.
U.S. Sen. Marco Rubio of Florida called for a federal criminal investigation of the way GMF has run the Eureka Garden and Washington Heights apartments in Jacksonville, Fla.
Rubio called Global Ministries a “slumlord” during a May 13 tour of Eureka Garden one week after Bank of New York filed its lawsuit in Memphis federal court. Rubio vowed to put GMF “out of business” and told GMF employees he encountered in the complex that what they were doing is inexcusable, according to an account of the tour in the Florida Times-Union newspaper.
Global Ministries, in a written statement, called Rubio’s visit and statement at Eureka Garden “political grandstanding” and said the allegations are false.
It isn’t the first time Rubio has been critical of GMF. In April, from the floor of the U.S. Senate, he called for changes in how the federal Department of Housing and Urban Development inspects rental properties where tenants pay their rent with HUD subsidies.
“The bottom line is, the federal government has failed them,” Rubio said of the tenants of Eureka Gardens, whom Rubio said face “dangerous living conditions and bureaucratic indifference.”
The foundation called claims that it is not doing enough to maintain and repair its affordable housing properties “frivolous.”
“GMF invested millions of dollars in Warren and Tulane, but unfortunately we were not successful in responding to the challenging needs of these historically troubled properties,” GMF CEO Rev. Richard Hamlet said Friday, May 20, in a written statement. “GMF’s mission is to go into properties with the most need and look for solutions to problems that existed long before GMF acquired them.”
Rubio toured Eureka Garden with Jacksonville Mayor Lenny Curry.
Curry and Memphis Mayor Jim Strickland have been talking about how each city government is handling the properties in their respective cities.
Strickland said Friday others in both administrations in Memphis and Jacksonville continue to talk and coordinate their actions where possible.
And Strickland said he and others in his administration talked with HUD officials just last week about the relocation of residents out of Tulane and Warren to other subsidized complexes.
Nearly obscured by the federal lawsuit, Rubio’s tour of the Eureka Garden and the move-out of Warren and Tulane residents is another front in the controversy.
It involves the bonds that finance GMF’s purchase of the apartment complexes – bonds issued by the Memphis Health, Educational and Housing Facility Board.
Earlier this month, S&P Global Ratings downgraded its investment rating on 23 apartment bonds issued on behalf of Global Ministries. It is the second time since February the bond rating agency has acted.
S&P downgraded in February the bonds used specifically by GMF to buy Warren and Tulane – the bonds overseen by Bank of New York.
The May downgrading includes the Warren and Tulane bonds, but also takes in the Health & Ed bonds for Goodwill Village, Madison Towers and Serenity Towers in Memphis. With the downgrade, S&P noted it expects the other GMF properties to come under increased scrutiny of living conditions and possible code violations.
The Health & Ed board was temporarily de-authorized in April by the Tennessee Housing Development Agency for two weeks for reasons that generally involved publicity about Global Ministries.
THDA officials haven’t been more specific, saying only that they were concerned about the GMF situation in general.
The board was back in business two weeks later after appointing Martin Edwards as its new interim director.