Atlanta’s housing authority is scheduled to vote on a settlement later this week that could end a costly, acrimonious and lengthy dispute over more than 75 acres of public land.
At stake is one third of the vacant property under the authority’s control and the potential resolution of a contentious legal battle former Mayor Kasim Reed opened against Egbert Perry, whose Integral Group holds purchase options on the land.
Under the settlement terms, the housing authority would sign away control of the disputed acreage for millions less than what its leaders estimate it is worth.
In exchange, Integral and its partners would allow the housing authority to subsidize some 20% of the apartments and houses the developer would build on the properties for those who make too little to buy or rent them at full price, it states.
Still, many of the discounted units would remain too pricey for the low-income clients that the city’s housing authority typically serves.
Atlanta Housing board chair Dr. Christopher Edwards declined comment on the proposed settlement, which would give Integral control of the disputed land for nearly $22 million. The authority would also pay up to $1.8 million towards the developer’s legal fees.
In a written statement, Integral blasted former Mayor Reed, whom Perry blames for the dispute. Reed was in office when the lawsuits began.
Opponents of the deal are mounting “a public relations campaign based on intentionally false and misleading information designed to manipulate public support to vote an agreement that was fairly negotiated, at a cost of millions of dollars to Atlanta taxpayers in AHA legal fees,” said the statement, sent through Integral’s lawyer Wayne Kendall.
“The AHA Board should approve the settlement terms because they are in the best interests of the City’s residents notwithstanding the obstructive efforts of the former mayor and his proxies,” it said.
The outcome of Friday’s scheduled vote is uncertain. The U.S. Department of Housing and Urban Development would also have to approve any deal before it went into effect.
Affordability questioned
A settlement would lay to rest an ugly, expensive and complex legal battle between the authority and Integral. Atlanta Housing's bills have soared into the millions of dollars. Reed and Perry publicly accused each other of wrongdoing and a flurry of additional lawsuits followed.
A ceasefire could also impact Mayor Keisha Lance Bottom’s ability to follow through on her campaign promise to invest $1 billion in affordable housing. Even if Atlanta Housing gives over control of the disputed properties to Integral, it still has other land. A settlement could free the agency up to work on developing those parcels.
But the proposal also fails to serve low-income residents at the core of Atlanta Housing’s mission, said Georgia State University housing expert Dan Immergluck.
Much of the affordable housing the agreement would create is for people at 80% to 120% of the area’s median income. Atlanta Housing typically serves those who make 40% or less.
“You basically could fill up a building with kids making decent salaries right out of college,” said Immergluck. “It’s not really where the need is.”
Options date to redo of public housing
The disputed 2011 agreements gave Integral the option to purchase land located around the public housing sites where Capitol, Carver, Grady and Harris homes stood before they were torn down. Integral helped demolish and redevelop these crumbling public housing projects under Renee Glover, who led the agency for about a decade.
The demolitions were part of a sweeping change in the 1990s and 2000s in how Atlanta’s housing authority subsidized homes for low-income residents. Glover pioneered the use of public-private partnerships with Integral and other developers to finance and build new affordable housing under the U.S. Department of Housing and Urban Development’s HOPE VI program.
Gone were nearly all of Atlanta’s public housing projects, which at one time were home to a greater proportion of city residents than any other system in the nation.
In their place rose apartment complexes where low-income residents live side-by-side with those who paid market rent. Others who were displaced by the change moved to the Housing Choice Voucher Program, previously known as Section 8.
Some of the disputed parcels that would be sold are in intown neighborhoods where luxury construction is booming, and rents are skyrocketing. Others are in places that have lagged behind the boom or are just beginning to revitalize.
When Perry tried to exercise the 2011 options during Reed’s second term, Atlanta Housing balked. New leadership thought the deal would be a step back for an agency struggling to keep up amid intown gentrification and an affordable housing crisis.
The options gave no guarantee that Integral would build any affordable housing on the land. Integral and its development partners would also acquire control over the properties at a deep discount, Atlanta Housing’s new leadership argued.
Integral rejected Atlanta Housing’s arguments. Perry said Integral was entitled to the options because of earlier agreements where the authority agreed to split the risk of developing the sites. He added that mixed-income developments he helped build on the sites made the land more valuable.
A lesson in partnerships
The proposed settlement requires Atlanta Housing to finance the nearly $22 million deal for three years. The authority values the estimated 90 acres at more than $60 million; Integral says the total acreage is 79 acres.
Atlanta Housing would also pay to subsidize rent and down-payment assistance on the affordable units, the settlement states. It would give the authority 50% interest of companies that hold parcels, but Integral would control the companies’ affairs.
The proposal also includes new provisions that would protect affordable housing if Integral and its partners decide to sell, but none that states Atlanta Housing’s board could vote to block a sale. There is no deadline for when the affordable housing would be built.
Whether or not the authority votes to approve the settlement, the legal dispute is an example of how difficult it is to partner with a private developer, Immergluck said. It may have made sense two decades ago, when intown development was considered risky, but Atlanta Housing may have given away too much.
“There’s a historical lesson here, which is that public-private partnerships are dangerous,” he said.
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