OTRS/Wikimedia CommonsWhich is worse: committing to sell off public land at millions below its market value, or not remembering you'd made that commitment in the first place?
That's the question the Atlanta Housing Authority (AHA) is no doubt asking itself as it tries desperately to get out of a deal it made to sell $138 million of land to a property development company for the recession-era price of $17 million.
The company, Integral, claims it was promised the $120 million discount by former AHA chief Renee Glover in a 2011 agreement. AHA's current president, Catherine Buell, says she knew nothing about the 2011 deal until Integral tried to make good on it in late 2016, and that the terms are wholly inappropriate.
"The Atlanta Housing Authority is not a land bank for private developers to purchase land at rock bottom prices," saysBuell. Her agency is now suing to stop the deal, calling it "unconscionable," "secret," and a violation of federal and state regulations.
This particular episode has its roots in "revitalization agreements" made between AHA and Integral at the turn of the century, whereby Integral promised to convert several of Atlanta's low-income public housing projects into mixed-income developments. For its trouble, Integral was awarded some $114 million in AHA loans, funded through Department of Housing and Urban Development's HOPE VI program.
In 2011, then-president Glover amended these revitalization agreements to give Integral the option of buying some of the vacant land surrounding the mixed-income communities it had developed at severely depressed land valuations. According to the lawsuit, Glover made this multi-million-dollar commitment without the consent of either the AHA board of directors or HUD, both of whose sign-off was required.
AHA Communications Director Cecilia Taylor tells Reason that no meeting minutes or records show any vote being taken by the authority's board of directors on the 2011 deal, and two board members have said they have no memory of it.
There is also no record of any review or approval from HUD, which is responsible for funding and supervising revitalization agreements.
In March the Atlanta Constitution-Journal requested records of whatever approval HUD gave for Glover's 2011 deal. None were provided to the newspaper. Taylor tells Reason that HUD has yet to provide AHA with any such records either.
This would not be the first time HUD has failed in its oversight of HOPE VI funds. A 2007 GAO report found that the department had no standard means of enforcing the terms of grant agreements it made, and that it often failed even to monitor the progress of those grants.
Despite the lack of documentation, Glover has insisted the deal she brokered with Integral went through all the proper channels. So has Egbert Perry, co-founder of Integral. (Both Perry and Glover serve on Fannie Mae's board of directors.) Perry claims not just that the deal was reached within the bounds of the law, but that the massive subsidy his company gets from it is a fair reward for the value his tax-funded investment has brought to AHA land.
"They don't realize what's there is because of what we did," Perry told the Atlanta Constitution-Journal back in March, "not what the authority did. What we did."
That's a pretty rich claim coming from a man whose investment was underwritten by federally funded AHA loans, and who still owes some $29 million in interest on those loans. AHA describes the likelihood of that money being repaid at "moderate-to-low."
The argument has also gotten short shrift from Atlanta housing advocates such as Tim Franzen of the Housing Justice League, who told the Journal-Constitution, "This is a government giveaway. This is the government giving a gift to a private developer who seeks to withdraw as much wealth as possible."
Sadly, government giveaways are a natural consequence when an agency tries to play at being both a developer and a financier of low-income housing.