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Center City Revenue Finance Corporation Board Meeting - May 29, 2018, 11am

Despite getting two months of run around from Downtown Memphis Commission CEO, Jennifer Oswalt, Sarah Fleming has provided comments and questions to the board regarding the gross mismanagement of the PILOT and Master Deed for 1 S. Main Street.

PILOT Program enables developers to facilitate a Ponzi-esque Scheme. 1. If the CCRFC allows for the condo-izing of properties under it’s PILOT program, allows for those units to be sold by the developer, and then allows the property in its entirety to be sold again, they are being willfully complicit in allowing developers to facilitate a Ponzi-like Scheme.

2. In 1993 the property commonly referred to as the “1 S. Main” building was condo-ized by then developer H. Turley into the One South Main Condominium Project.  Unit 2 of the One South Main Condominium Project was then “sold” to V. Kuglin (with C. Reyes as her assigned and intended beneficiary) for $55,000.  There are many deeds and contracts clearly documenting this “sale.”

3. Under the guidance of the PILOT program/project, the entire building of the One South Main Condominiums was then allowed to be sold to Madison Hotel LLC (in 2007) and again to 1 S. Main LLC (in 2016).

4.  In 2018, the current developers and owners of the One South Main Condominium Project created a false narrative of multiple defaults against the true owners of Unit 2 (V. Kuglin and C. Reyes), and in a court of law established them not as owners, but rather as Tenants in Suffrage. How can a property that has already been sold to one individual be sold again to someone else? This is fraudulent and a sale of this nature would NOT be possible outside of the PILOT program.

The CCRFC and the DMC either ignorantly or willfully makes claims about properties under their PILOT program that are misleading and/or false. 1. The Assignment and Assumption of Lease document between Madison Hotel Memphis LLC (as Assignor) and 1 South Main LLC (as Assignee) and joined by MCCRFC dated June 24, 2016 clearly states the following:

A. Assignor has obtained the proper consent from the MCCRFC to assign it’s interest under the PILOT Lease to Assignee, and that the Property is unencumbered except for the matters set forth on Exhibit B.

B. Exhibit B clearly lists the following as encumbering the property: - Master Deed of Declaration of Covenants, Conditions and Restrictions of the One South Main Condominiums - The Lease between Henry Turley and V. Kuglin as evidenced by Memorandum of SubLease dated March 31, 1993 - clearly giving the rights of ownership of Unit 2 of the Condominiums to V. Kuglin (and her assign C. Reyes). - Revolving Credit Deed of Trust executed by V. Kuglin as to Unit 2.

2. The Landlord’s Estoppel between MCCRFC (the Lessor) and 1 South Main LLC (the Lessee) and PFP Holding Company IV LLC (Lender) also dated June 24, 2016 clearly states the following (in opposition to the above Lease Assignment):

A. Lessor has agreed to grant certain assurance to Lender.

B. As of the date hereof, there are no deeds of trust or other liens encumbering Lessor’s fee interest in the Demised Premises.

3. In summary, both documents clearly involved the MCCRFC as both of the document are signed by current DMC President, Jennifer Oswalt (former DMC CFO).  The Lease Assignment states that the property is encumbered by the lease agreement granting V. Kuglin ownership rights to the property as well as Kuglin’s Deed of Trust while the Estoppel states that there are no deeds of trust encumbering the property.

What is the procedure to verify the statements approved and signed off on by the MCCRFC and the DMC?  How can the DMC and MCCRFC warrant that certain claims are true when they are not?  These false statements have clearly been used by 1 South Main LLC against V. Kuglin and C. Reyes to help facilitate a false narrative and steal property from it’s rightful owners. The CCRFC (and DMC) clearly acted against their stated interest in re-establishing the One South Main Condominium Association and re-writing the Master Deed of Declaration of covenants, conditions and restrictions of the One South Main Condominium. 1. On April 27, 2018 at the DMC Board meeting, DMC legal representative James McLaren stated the following: "The one thing I want to point out in the PILOT leases is that they provide for the lessees of the PILOT to run the property. The job [of the Center City Revenue Finance Corp., or CCRFC] is to get the properties renovated, provide that tax abatement [but] really not to run the property. Not to control the property. For example, the PILOT leases themselves provide that the lessees under the PILOT lease have the right to sublease that property without coming back to CCRFC for consent. That's so they can manage the property. They're really the controlling owners of the property."

2. On June 24, 2016 The Master Deed of the One South Main Condominium was re-written by the MCCRFC (as Declarant). This new document contains misleading and controversial statements and facts: 1. Document states that the Declarant (MCCRFC) desired to develop and sell units in a condominium.  A. The new deed changed all of the condominium units to be “commercial property” - while the original deed listed both commercial and “first-class residential” property.  (Unit 2 is defined by the Shelby County Assessor as “residential.”)

Why was the Master Deed re-written?  The DMC’s position is to not interfere with how or what the developers do with their properties as the PILOT program is “merely a formality;” however, this document is clearly evidence to the contrary.  To date we have been given convoluted explanations as to why this was done, and many questions still remain unanswered.

1. All other documents are transferred between PILOT lease holders, and joined by the MCCRFC (as administrators of the PILOT) except for this document.  This document clearly list CCRFC as the sole declarant with a desire to develop and sell condo units.  

Does the CCRFC actually desire to sell condos?   This seems unlikely as the CCRFC helped to facilitate a Pilot Lease transfer of the property on the exact same date.  Further, at the termination of said lease, ownership would transfer to 1 South Main LLC for a nominal fee. Why does this document not follow the same course as the other documents concerning this property (Namely, a transfer from Turley to the Madison Hotel LLC and a transfer from Madison Hotel LLC to 1 South Main LLC)?  This document goes back to the original lease holders rather than from the current lease holders - Any changes being made should clearly have been made by the existing lease holders (Madison Hotel Memphis LLC).   2. In the initial establishing of the One South Main Condominium Units, H. Turley’s intent was clear - to sell (or, because of the PILOT program, convey his “Beneficial Ownership” of) Unit 2 to V. Kuglin (and her assign, C. Reyes).  The DMC was clearly aware of Kuglin and Reyes’ beneficial ownership as was noted on various Recorded Deeds of Trust, Leaseholds, and Property Transfer Documents.  Why then, would owners of said condos NOT be consulted, or at the very least, made aware of changes to their governing documents?   3. Why would the DMC/MCCRFC Re-state the Master Deed and help to establish a Charter Nonprofit Corporation for the benefit of 1 S. Main LLC?  It seems that the only reason to do this would be at the request of a PILOT lease holder, in this case 1 S. Main LLC. The only conclusive reason that the MCCRFC would have re-written this document (instead of the owners re-writing it) would be because the Madison Hotel LLC did NOT have the legal power to transfer the Master Deed (which is clearly listed as an encumbrance on the Lease Transfer) to the new owners, 1 South Main LLC.  Legally, a Condominium Association has to have a legal entity, any scenario where an entity was not established property by H. Turley, or was allowed to lapse by Madison Hotel Memphis LLC, would put the project in default and constitutes a breach of contract.  It would seem that in the establishment of a NEW Nonprofit and Re-stating of the Master Deed that the MCCRFC and DMC were attempting to circumvent a breach.

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