Land deal could be $120M boon for de­vel­op­ers

Back­ers of af­ford­able hous­ing fight pos­si­ble sale by At­lanta agency.

The Atlanta Journal-Constitution - - FRONT PAGE - By Wil­loughby Mar­i­ano wmar­i­ano@ajc.com

A con­tro­ver­sial deal to re­quire the city’s low-in­come hous­ing au­thor­ity to sell prime parcels of va­cant land to a de­vel­oper would hand them over at a $120 mil­lion dis­count, ac­cord­ing to es­ti­mates ob­tained by The At­lanta Jour­nal-Con­sti­tu­tion.

If the sale goes through, it could amount to a king-sized sub­sidy to­wards the con­struc­tion of highend, mar­ket-rate homes, and harm the city’s ef­forts to cre­ate more af­ford­able hous­ing, pub­lic hous­ing of­fi­cials and af­ford­able hous­ing ad­vo­cates said. At­lanta Hous­ing Au­thor­ity would give up con­trol of one-third of its va­cant land, or about 100 acres, ac­cord­ing to agency es­ti­mates, and there is no re­quire­ment that af­ford­able hous­ing be built on it.

The 2011 deal be­tween the AHA and In­te­gral Group came un­der scru­tiny in March af­ter the AJC raised ques­tions about its terms.

The deal gave In­te­gral sev­eral years to ex­er­cise op­tions to pur­chase the prop­er­ties, and pric­ing was to be de­ter­mined by a com­pli­cated for­mula weighted to­ward val­ues that were years out of date.

In­te­gral Chair­man and CEO Eg­bert Perry told the AJC pre­vi­ously that he in­tended to sell homes he builds on the land at mar­ket prices.

AHA CEO Cather­ine Buell, who in­her­ited the op­tion deal with In­te­gral, said mov­ing for­ward with it would be bad hous­ing pol­icy for the city.

“Af­ford­able hous­ing is dis­ap­pear­ing at alarm­ing rates, and al­low­ing a pri­vate de­vel­oper to pur­chase our land to build con­dos for the wealthy ex­ac­er­bates the hous­ing cri­sis and pushes low-in­come res­i­dents even fur­ther to the mar­gins of our city,” Buell said in a state­ment to the AJC.

In­te­gral spokes­woman Shauna Grov­ell saidin a writ­ten state­ment that she could not say whether AHA’s es­ti­mate is valid.

“With­out a for­mal ap­praisal, frankly, no one can be cer­tain of those val­ues,” Grov­ell said.

Ex­pert’s anal­y­sis: land worth $138 mil­lion

Perry pre­vi­ously ar­gued that hede serves the dis­count be­cause the prop­er­ties were worth noth­ing un­til he and AHA re­de­vel­oped nearby parcels with mixed-in­come apart­ments. He in­formed AHA of In­te­gral’s in­ten­tion to ex­er­cise its op­tions late last year.

Un­der Buell’s lead­er­ship, AHA fi­filed suit in Au­gust ask­ing a judge to kill the se­ries of com­pli­cated con­tracts, which were signed as then-agency head Re­nee Glover faced pres­sure to leave her post. AHA would re­tain par­tial own­er­ship of the prop­er­ties, but In­te­gral would have con­trol over their devel­op­ment.

“The At­lanta Hous­ing Au­thor­ity is not a land bank for pri­vate de­vel­op­ers to pur­chase land at rock-bot­tom prices,” Buell told the AJC.

An ex­pert hired by AHA gave a Septem­ber es­ti­mate for the land’s value at $138 mil- lion, ac­cord­ing to­more than two dozen pages of records ob­tained by the AJC that de­tail the cal­cu­la­tions and method­ol­ogy.

In­te­gral Prop­er­ties would pur­chase the parcels for about $ 17.5 mil­lion, the records state.

Whether or not AHA’s price es­ti­mate is ac­cu­rate, thecity’s af­ford­abil­ity cri­sis makes it a bad time to lose con­trol of acres of pub­lic land that could beused for homes, said hous­ing ex­pert Dan Im­mer­gluck, a Ge­or­gia State Univer­sity pro­fes­sor.

“On its face, it’s con­cern­ing,” Im­mer­gluck said of the es­ti­mates. “Where there is room for hous­ing, weshould be build­ing af­ford­able hous­ing, that’s for sure.”

The deal has sparked out­rage among lo­cal af­ford­able hous­ing ad­vo­cates with the Hous­ing Jus­tice League. The league’s mem­bers protested out­side a speak­ing en­gage­ment by Perry on af­ford­able hous­ing at the Cen­ter for Civil and Hu­man Rights in Septem­ber. They also launched a pe­ti­tion drive that gar­nered1,200 sig­na­tures and de­manded that the de­vel­oper im­me­di­ately stop the deal.

“I am hor­ri­fied,” said or­ga­nizer Tim Franzen. “We’re not in a cri­sis of re­sources. We’re in a cri­sis of moral au­thor­ity. This deal shows us this.”

Op­tioned parcels in hot neigh­bor­hoods

The deal now un­der dis­pute ar­ranged for AHA to hold the prop­erty at the for­mer Carver, Capi­tol, Grady, and Har­ris homes tax-free as In­te­gral de­cided whether to pur­chase it. The terms spec­i­fied that sales prices would be based in part on much lower prop­erty val­ues that date to when In­te­gral and the AHA fi­first built mixed-in­come hous­ing on these sites in the late 1990s and 2000s.

AHA de­mol­ished nearly all of its pub­lic hous­ing projects dur­ing those years as part of its na­tion­ally rec­og­nized, two- decade efffffffffff­fort to re­place low-in­come hous­ing through the fed­eral HOPE VI pro­gram. It en­cour­aged pub­lic hous­ing au­thor­i­ties to form part­ner­ships with pri­vate de­vel­op­ers to build mixed-in­come hous­ing.

AHA board mem­bers who served at the time of the deal told the AJC that they did not ap­prove the op­tions, and there is no ev­i­dence in U.S. Hous­ing and Ur­ban Devel­op­ment doc­u­ments ob­tained by the AJC through a Free­dom of In­for­ma­tion Act re­quest of a 2011 ap­proval.

The Septem­ber pric­ing es­ti­mates, made by a real es­tate ex­pert hired by the au­thor­ity, are not for­mal ap­praisals. In­stead, the anal­y­sis uses his­tor­i­cal sales records, hold­ing costs and other data tomake com­pli­cated cal­cu­la­tions of sales prices for more than 100 au­thor­ity parcels scat­tered across the city.

These plots in­clude some of AHA’s most cov­eted prop­er­ties. Some are lo­cated blocks fromthe Old Fourth Ward’s pop­u­lar bars and restau­rants. Oth­ers are near the for­mer Turner Field, which is slated for re­de­vel­op­ment, or along to the south­ern leg of the mas­sive Belt­line project, where prices are ex­pected to sky­rocket.

Land val­ues have climbed since the early 2000s at all of the sites in­volved in the op­tions deal. At the for­mer Grady and Capi­tol sites they have nearly dou­bled, the March AJC in­ves­ti­ga­tion found.

Perry said pre­vi­ously that he might be open to build­ing af­ford­able hous­ing, but ar­gued that there is al­ready too much of it at these sites.

Hous­ing agency CEO Cather­ine Buell, who in­her­ited the deal, said it is bad pol­icy.

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