The residents at Tullahoma Village will soon see some major improvements in the next few years thanks to new ownership.
In October the city’s Health, Educational and Housing Facility Board held a public hearing before its meeting with representatives of Community Preservation Partners (CPP) to authorize them to issue a bond in in the amount of no more than $10 million for the purpose of purchasing and rehabilitating, equipping or reconstruction and reinstalling the 89-unit Tullahoma Village Apartment Complex 1015 S. Franklin St.
According to City Attorney Steve Worsham, the purpose of the board in the meeting was to authorize the issuing of the bonds under the appropriate legislation.
“Our only purpose here is to authorize the issue of these bonds under the appropriate legislation that allows it,” Worsham said.
Worsham introduced the board to the Senior Vice President of Community Preservation Partners East Seth Gellis and CPP representative Scott Finke and their attorney Pete Ezell of Baker Donelson in Nashville.
Ezell spoke first and told the board this will be one of two meetings relating to the project. The first meeting was to ask them to pass an inducement resolution which approves an inducement agreement between the board and the partners to issue the bonds. Once the board approves, it will give them the comfort to go forward to make the application to the Tennessee Housing Agency Development Agency. They will meet with them again in 2022 before after they have prepared the documents for the bonds and before closing for approval of the documents and to provide updates.
Ezell also told the board that their clients for this project will be the Tullahoma Village Community Partners, LP, an entity for CPP. He said CPP creates a new entity for each project, where it will control and sell interest in the partnership to raise equity and money. The bonds will pay for part of it, about $10 million, they will raise about $5 million via selling tax credits.
CPP and the project
Gellis then spoke to the community about CPP’s background and what the project will be. He said CPP is a “people first, for profit mission driven community developer” whose job is to insure affordability with basic perpetuity, and CPP is not a management company, as it has an asset management division. As long-term owners, the company believes that housing is a basic human right and it believes in making meaningful investments in its communities and providing safe and comforting environments.
“We are really focused on making a difference in place making for the residents living in our communities,” Gellis said.
He stated Tullahoma Village is in need of renovations. According to Gellis, the preliminary estimates it will be $45,000 to $50,000 per unit for direct renovation costs, $60,000 to $65,000 to help pay for the contractors and engineers per unit, which will be a total investment of between $5.3 to $6 million.
He said this is the catalyst for the betterment of the community, and they will be making partnerships with the community, community groups, police and fire departments to make this a successful community.
To take on the overall $14 million project Gellis said they will raise $7.9 million of permanent debt through the selling of the bonds and sell $5 million in tax credit equity to investors who will receive the benefits of the tax credit and a deprecation of the property and exit in 15 years.
CPP representative Scott Finke talked to the board about the specifics of the renovations and construction. He said the hard cost will be used to provide upgrades to the units like floors, kitchen appliances, bathrooms, vinyl siding and so on. He added they plan on making common areas like a computer room, library and playground area for the apartment complex while converting a few units to be handicapped accessible.
When asked if they have been talking the police department, Finke said they have talked to a few officers who were patrolling the area and told the board while CPP considers themselves specialists in turning around troubled properties and they would not classify Tullahoma Village as one. However, he said there was a general need for to provide security cameras, better lighting, redirecting access via deterrent landscaping and creating a sense of community where people are comfortable with working with management to weed out bad apples. He emphasized that development doesn’t happen overnight and it takes active management like the complex has currently.
“What you get is a community that thrives,” Finke said. “You have to put the humanities in, you have to make them comfortable being in them and then you have to get bad apples out, the few that are there.”
Gellis added they are going to see what’s working and implement things that they know will work to reduce hardship on the property in order to make the community succeed.
“The reality is we take our responsibility very seriously,” Gellis said. “We take our investment seriously, we want to look after it and if we are making this meaningful investment in the community then we want to make sure it lasts.”
After the discussion, Tullahoma Mayor Ray Knowis said he is not concerned about the finances of the project as he was more concerned about the compatibility of the units as currently they are not compatible to live in. Gellis agreed with the Knowis and said the units were less habitable than they were a few years prior.
Knowis then asked what the timeline will be for the renovations of the units, and Gellis said renovations take 9 to 12 months to completion and they won’t be able to start until June 2022.
When asked if they will have to displace any of the residents during construction, Gellis said tenants will be asked to leave for the day and return in the evening as they work on the units over a period of a few days. Gellis said depending on the financing they can offer residents to stay in an unoccupied unit or a hotel if needed, but they look for vacancies first before temporarily relocating them if necessary. They have a budget in case.
When asked about handling complaints during this period Gellis said they listen and address them as some people just want to be heard. He added before the COVID-19 pandemic, they held monthly meetings to update the tenants. He said they focus on communication with the residents ahead of time by provided several 30 day notices before the renovations start.
Board member Daniel Berry said he went to their website and viewed some of their properties to get a better understanding and what he saw was promising.
After the public hearing discussions were finished the board passed both the resolution and the inducement agreement.