Bridgeport Manor (formerly Cambridge Court) has blighted buildings on its 636-unit property in Whitehaven. The apartment is currently in legal default under the tax break from the Health, Educational and Housing Facility Board of Memphis. Photo by Andrea Morales / MLK50

Twelve apartment communities receiving tax breaks from the Health, Educational and Housing Facility Board of Memphis to provide affordable housing are in legal default due to various issues, including substandard living conditions.   

The list obtained by MLK50: Justice Through Journalism includes Grahamwood Place, a 244-unit complex that has slipped in and out of compliance since October 2023, and other apartment communities in the city.

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The Health and Ed Board primarily issues bonds and gives property tax discounts to developers who want to build and renovate multi-family housing. They also have the power to cancel a PILOT contract — which stands for payment in lieu of taxes.

Complaints from residents and housing organizers, along with the increased public scrutiny from the Shelby County Board of Commissioners, have pressured the Health and Ed Board to change its oversight policies in March for the second time since 2022.     

The board’s rule changes created four levels of compliance. Each step brings more scrutiny, monitoring and reporting before an apartment community lands in legal default. Once in legal default, some of these landlords are summoned to the board’s 11th-floor conference room downtown to share progress reports on the conditions. 

Tax breaks propped up a troubled Memphis apartment complex — and tenants paid the price

But the process can drag on for months, or even years, while residents languish in difficult living conditions. None of the properties in legal default since the rule changes have lost their tax breaks.

Notably, the residents of the senior apartment community, Memphis Towers, tried to lobby the board to revoke the tax breaks for the large national housing provider, Millennia, two years ago. Tenants complained of mold, broken elevators and an unsecured entrance for months before the property was sold to a new owner.

Memphis Tenants Union members from Millenia apartments attended the HEHFB meeting to speak about their living conditions in November 2023. Photo by Andrea Morales / MLK50

County commissioners formed a committee last year to study and, possibly, reform the PILOT program, citing a lack of clear accountability for the nearly $41 million in taxes that are abated annually. PILOTs let companies and real estate developers pay a fraction of their property taxes in exchange for creating new jobs or affordable housing. 

The committee proposed a six-month moratorium on new housing tax breaks to allow time to gather data on existing contracts. The proposal stalled when it came before the full Board of Commissioners in March, and it was sent back to the committee for more input from the PILOT-granting boards. 

”We’ve been learning the hard way through Millennia and [other companies], I mean the list goes on and on. There have been a lot of bad actors that are exploiting our loosely constructed concept of an enforcement mechanism,” said Austin Harrison, a member of the committee and a professor at Rhodes College. “We really need to tighten that up across all the agencies.”

Michael Finch II is the enterprise reporter for MLK50: Justice Through Journalism. Contact him at mike.finch@mlk50.com