A family who lived in a building on Memphis’ Main Street are being evicted from their home of 25 years and fined more than $100,000 after out-of-town owners bought the building and turned it into a hotel.
The Memphis Flyer reported that Christopher Reyes, Sarah Fleming and their two children are to be evicted from the Madison Hotel, which is now owned by the Chicago-based Aparium Hotel Group.
Along with evicting the family prior to the hotel’s slated fall 2018 re-opening date, a judge also ordered Vernice Kuglin, Reyes’ mother, to pay the company $102,397 due to a complicated ownership case that dates back to 1992.
That year, Kuglin struck a deal with real estate developer Henry Turley, who owned the property that was at the time vacant and in disrepair. Kuglin and her son took out a $55,000 mortgage on the hotel, which has since been paid off.
“But the time,” the Flyer reported, “the property was under the auspices of a Payment In Lieu Of Taxes (PILOT) program, so the deed to the property was ultimately held by the Center City Finance Corporation, a board affiliate of the Center City Commission, (now called the Downtown Memphis Commission) with Turley listed as lessee and Kuglin’s interests covered under a sub-lease.”
“Under the agreement struck at that time,” the report continued, “Kuglin and Reyes would have the option to buy the property outright for $1 once the PILOT program expired in December 2001.”
Reyes moved in, did extensive renovations on the building, and ran a number of businesses out of of the hotel, including a culture website named “Live from Memphis.” Before the expiration of the PILOT program, their lease term was extended for 15 years, and in 2006, “Turley sold the building to 79 Madison LLC, owners of the then-new Madison Hotel.”
After meeting with Madison Hotel owner Mohammed Hakim, Reyes and Kuglin claim that the owner stopped billing them for property taxes and gave Reyes control of maintenance for his condo in the building. The building was then sold to Aparium and New York-based equity firm G4 in 2016 while still under the auspices of the PILOT program.
The program expired on December 15, 2017, but Reyes and Kuglin were unaware of the date and thought it expired at the end of the month — only to get served with an eviction notice on December 29.
“No one informed us when the PILOT expired,” Fleming told the Flyer.
“The company claimed that Kuglin and Reyes were in breach of their lease and sued to evict the family,” the report noted, and added that Aparium also “demanded operating costs, monetary defaults, building improvements, and lawyer fees totalling $102,397.”