MEMPHIS, Tenn. — A banner to attract new families could be seen hanging on a fence surrounding the Peppertree Apartments in Whitehaven on a day in late August.
On the same day, a federal judge barred the owners of the complex from signing leases with new tenants for the second time in less than a year.
The court said evidence suggests the property is “currently in a state of disrepair” after multiple walkways collapsed, injuring at least two people.
► MORE: WREG’s past coverage of the troubled Peppertree Apartments
WREG spoke with a resident who showed us around the complex in September during a Zoom interview on her cell phone. She said even temporary repairs to shore up the walkways aren’t safe.
“I literally just walked past one and it looked like it was about to break, like the wood looked like it was about to break. They didn’t really make that situation no better. Like, they just tried to do something real quick,” said the mother of three.
NewsChannel 3 isn’t naming the resident or showing her face, because despite her fears about safety, like many at Peppertree, she’s more afraid of losing the security of a roof over her head.
She and other residents said they’re worried walkways could still collapse.
“Everybody wants to move. Nobody likes the apartments because of, they’re not right. Honestly, I feel like they they need to be shut down,” she said.
A Shelby County inspector had already raised concerns about the repairs during an Environmental Court hearing in August, saying some of the 4x4s were “crooked.”
“They don’t seem very reliable,” said the inspector to Environmental Court Judge Patrick Dandridge.
‘This is just not a safe community at this point’
Memphis City Councilwoman Patrice Robinson serves the district that covers the Peppertree Apartments.
“It doesn’t make any sense and it really is not fair to those tenants to have to live in conditions where your sidewalk is falling in, on top of you or underneath you. It doesn’t make sense for buildings to catch on fire. I don’t know what the reason is, but more than one time. It doesn’t make sense that your children have to wake up to gunfire, this is just not a safe community at this point, or that part of the community, it’s just not safe,” said Robinson.
Robinson is in her seventh year on the council. She says that’s provided plenty of time for the owners to clean up the problems.
“Seven years with me as a representative of this area, that’s been long enough. That is way too long to make sure that the people who live in Peppertree have a safe place to live, an affordable place to live and a place that they can call home, and be proud of the fact that that’s where they live.”
Robinson added, “Just clean it up … and whoever the owners are, not calling any names, but they can do a much better job. I know it’s expensive, however, that’s the business they decided to be in, and they need to be held accountable.”
Germantown, Tennessee-based Tesco owns the property.
Through open records, WREG learned since 2012, Tesco’s received more than $22 million from HUD for housing assistance payments at Peppertree, money that covers rent for tenants at the 306-unit complex.
The NewsChannel 3 Investigators also uncovered records revealing that, just as attorneys were citing safety concerns so bad they didn’t think anyone else should live there, the federal government handed Tesco millions more.
In late, November 2021, Peppertree was declared a public nuisance.
“Residents often sleep on the floor to avoid being hit by stray bullets,” said Former District Attorney Amy Weirich during a press conference held in November about the nuisance order.
The DA’S office said police were called to the complex more than 1600 times in less than 18 months. A judge’s order stopped all new leases and renewals.
On December 1, 2021, Weirich and city attorneys took their case to federal court, even citing WREG’s reporting in their filings. Tesco countersued.
Records reveal that on that very same day, Tesco signed a brand-new contract with HUD.
The deal runs 10 years and pays the company more than $2 million dollars a year, based on two separate contracts (one for 243 units, the other for 63).
Over the next 10 years, Peppertree’s owners are slated to pull in more than $23 million. We showed Robinson a copy of the contracts.
She said, “What I am concerned about is, this is basically the same contract contract that I’ve seen before.”
HUD’s own rules outlined in the agreement read, “housing assistance payments shall only be paid to the owner … for eligible families leasing decent, safe and sanitary units.”
“But we should have an addendum to this to say, these are the things that are currently out of order in this particular complex, and we need to bring those up to our specifications, with some timeline,” Robinson added.
The contract is signed by Tesco CEO Jerry Sisson, and dated Dec. 1, 2021. There is also a signature from a HUD executive, and a representative from the Tennessee Housing Development Agency.
Why would HUD and Tesco sign a new 10-year contract if these conditions exist?
We asked that question to Ralph Perrey, the executive director of the Tennessee Housing Development Agency.
“You have to remember, if we’re involved in that agreement, it is only on administering a contract that HUD has put on that property,” Perrey said. “The question would be directed to whoever at HUD felt that it was appropriate to renew that contract.”
We asked HUD that question, and got a one-sentence response from a spokesperson:
“HUD is aware of the situation at Peppertree Apartments, however, due to ongoing litigation with the property owner, we are unable to comment further.”
We got a lengthier response late last year to questions we asked about the complex being declared a public nuisance. A statement from a spokesperson read:
“The safety and wellbeing of residents of HUD-assisted housing is our top priority. It is unacceptable for individuals—particularly seniors and children—to live in substandard conditions. HUD is in close communication with representatives from Peppertree Apartments, a privately owned property, and with the City of Memphis, regarding the safety challenges in the area. Our most recent meeting with the City was on October 26. The property owner notified HUD on November 23 about the recent declaration from the City and indicated its intention to continue working to improve safety. In Peppertree’s case, the owner representative has confirmed law enforcement stationed onsite and nearby. The property did receive a passing score during the last inspection in May 2019 and results from a management review earlier this year showed the property in compliance with HUD requirements. In instances where a property owner fails to fulfill its commitments, HUD is prepared to take enforcement action.”
Residents can contact the contract administrator, Tennessee Housing Development Agency at 800-314-9320, regarding concerns. This organization, contracted by HUD, oversees business agreement compliance and reports to HUD any issues not resolved.
THDA serves as the contract administrator. Perrey explained that role.
“Where the payments are concerned, we’re the middlemen. We collect the information from the property that goes on to HUD. HUD pays us. We pass those payments on to the property managers,” Perrey said.
THDA also conducts what’s called Management and Occupancy Reviews, or MORs, at properties like Peppertree. A team will conduct an on-site review and look at the general appearance and security of a complex and follow up on HUD inspections.
Peppertree’s last MOR was in September of 2021 and they received a Satisfactory Overall Rating.
MORs don’t allow for full, building inspections and Perrey said they don’t go inside units.
“We have some limited ability to keep an eye on basic management and operating practices. But what we don’t have is the authority to do anything about it if we find something wrong,” said Perrey, who added HUD has ultimate responsibility and enforcement authority.
When asked about his concerns about Peppertree, Perrey told WREG: “Well, you know, my biggest concerns are the things I hear about through your reporting and that of other media. These aren’t things that are necessarily going to come to our attention …
“It is a concern. You know, everything Mayor Strickland said put me down as seconding. It’s a very concerning situation, and I’m glad to see that some somebody with enforcement authority is, is enforcing some of the requirements of that property,” said Perrey.
Perrey referenced comments made by Memphis Mayor Jim Strickland, who has spoken out numerous times recently about the ongoing problems at Peppertree.
“This owner and this property management company appear like they don’t even care, they’ll pay lawyers, to fight it in court, but they won’t pay out money to fix the property,” Strickland told WREG during an August interview.
Should we be having another conversation about oversight and accountability?
We asked Perrey that question. He replied:
“I think the fact that the courts have stepped in, in the case of Peppertree, I mean, that that is one remedy in very extreme circumstances,” he said.
NewsChannel 3 reached out to Tesco about the new contract, and repeatedly over the last few months about the ongoing problems at Peppertree. We’ve yet to receive a response.
Alexander Wharton, the attorney representing Tesco in federal court, told WREG, “Just because you’re under contract doesn’t mean you get off scot-free.”
Wharton said while he couldn’t speak directly to the agreement, it sets expectations for the owners. He says HUD has a number of different ways to enforce the obligations outlined.
Wharton added his client wants a resolution to all of this, and they believe the key is for all parties to work together.
Wharton also said the crime issues surrounding Peppertree present a unique challenge.
He pointed out that most of the tenants are African-American single mothers, and the actions taken by the DA and city could come across as targeting and penalizing young, black mothers for behavior related to people who aren’t on leases.
He also said the police calls cited by the DA’s office happened when other complexes experienced the same, during the pandemic.
Attorneys for Peppertree were set to be back in Environmental Court on Oct. 12.
Meanwhile, we could find out by late December if and when Peppertree can start signing leases with new tenants again. That will mark the end of the 120-day period established by the judge’s order at the end of August.