A rebirth deferred

Oft-delayed Westside project hits another snag

A half-century ago, the neighborhood around Hunter Street, in the city's southwest side, was an idea factory. Even after the area's commercial heart had eroded, the roots of black political power held strong here. W.E.B. DuBois taught at Atlanta University. Martin Luther King Jr. studied at Morehouse College and lived on Sunset Avenue. Maynard Jackson Jr., who would become Atlanta's first black mayor, grew up here. The city's first black high school was founded in this neighborhood.

Here, small mom-and-pop businesses — dry cleaners, shoe stores and restaurants — catered to the merchants who owned shops on Auburn Avenue but who came home at night to homes in the Hunter Street neighborhood.

But with integration and the opening of white-owned stores to black customers in the 1960s, commerce on Auburn and Hunter dried up.

Today, businesses along the stretch of Hunter (now known as Martin Luther King Jr. Drive) between Ashby Street and James P. Brawley Drive simply soldier on. The buildings have a dog-eared charm, but when compared to developments on the city's northside, they appear shabby and transplanted from another era.

There are no grocery stores here, no movie theaters. If there's such a thing as upscale, this is down.

The Historic Westside Village aims to change all that, to breathe new life into sagging lungs. The Village is a $130-million, 15-acre development envisioned along MLK with its northern border on James P. Brawley. In this predominantly black neighborhood, most of the development will be handled by black-owned companies, which should get a boost from $9.2 million in federal money delivered through the city's Empowerment Zone.

City officials envision the complex as the site of 91,000 square feet of retail space, a Publix grocery store, 101 apartment units, 66 loft apartments and 60 three-story townhomes. Planners project 1,200 to 1,500 jobs will be created, 600 for Empowerment Zone residents. Put simply, it's the most expensive and ambitious project in southwest Atlanta's history.

"You cannot state the importance of revitalizing that area enough times," says Atlanta City Councilman Michael Bond, whose district includes the Martin Luther King Jr. Drive corridor. "That area is just dripping with history — not just for African-Americans but for all of Atlanta."

But the project has hit snag after snag. The grocery store and office building were supposed to be built by last summer. That was delayed; workers aren't expected to lay the foundation of the buildings until next month. The project's biggest hurdle, though, came this month when the Atlanta Development Authority, the city's economic development arm, realized it had failed to follow federal rules that would allow it to pay off a private loan that jumpstarted the development.

To remedy the problem, the ADA is planning some last-minute legal gymnastics. If they don't work, the plan to build a Publix grocery store, the development's anchor tenant, is thrown into question, and the whole deal could break apart.

But there's more than just economic implications at stake here.

"This area was once the mecca of African-American commerce in the '30s, '40s and '50s in the South," say Atlanta Development Authority officials in an e-mail response to CL questions. "In the '60s, it was the area where the leaders of the civil rights movement met to plan strategy."

And Paschal's, a hotel and restaurant, was at the center.

Black political power "was centered at Paschal's at breakfast time — when a host of politicians and would-be politicians [came] there to eat and interpret the day's news," says Julian Bond, Michael's father who served in the U.S. Congress and is now the chairman of the NAACP's board of directors.

Today, Clark Atlanta University owns the hotel and uses it for student housing. But the restaurant is still there.

If you venture by the Westside Village site today, an impressive artist's rendering of what the development will look like stands over a field of calf-high grass. In a few spots, the ground is orange where dirt has been turned over — the only construction work done so far on the project.

That bulldozing work and other predevelopment costs were paid for by a $3.325-million "bridge loan" from First Union to the ADA. It was intended to "bridge" the gap between when work was supposed to begin and the awarding of federal money from the Atlanta Empowerment Zone to the ADA.

With a private loan, the ADA didn't have to advertise in newspapers, as federal procurement guidelines mandate, for the predevelopment work, according to state sources. Instead, ADA just sent out a flier to a handful of companies. Thrasher Trucking handled the excavating work, which started in the spring of 2000.

(Thrasher Trucking also donated money to Mayor Bill Campbell's 1997 re-election campaign and another $15,000 to a fund created by Campbell to fend off court challenges to the city's affirmative action program. Campbell also is chairman of the ADA board.)

But the plan all along was to repay First Union with federal money. To do that the ADA would receive money — now in the form of a 20-year loan — through the Atlanta Empowerment Zone. Its board OK'd the use of federal money for the Westside Village project in 1998.

But to accept federal money, the ADA had to follow federal procurement guidelines from the beginning, meaning it had to advertise the availability of the site-clearing contract. It didn't, and now the federal money is in jeopardy, and that puts the project in jeopardy.

ADA claims "administrative oversight" caused the procurement problem, says an official familiar with the project who requested anonymity. Somebody didn't pay attention to federal guidelines.

With a June deadline to repay the loan looming, the ADA hopes it has found a way around the problem: create a private, for-profit company that doesn't have to follow procurement guidelines.

As it is currently envisioned, the ADA wants to create a for-profit company, Inner City Development Corporation, with Harold A. Dawson and The Integral Group — the Historic Westside Village's primary developers — that would receive the federal loan. The new limited liability corporation would be run by the ADA. The big question is whether the ADA can legally do it. The loan might depend on the answer.

Some are pretty sure the outcome already has been decided in Georgia courts.

"Does a governmental entity have the authority to create a for-profit? The answer is a categorical, 'No,' " says the official familiar with the project.

"We'd like to have an independent legal opinion, not the ADA's or the city's attorneys; there's not enough arm's length there," says Fred Van Dyck, a former program manager with the state Department of Community Affairs who left the department Monday. "You can't allow the state to facilitate an end-run around procurement regulations by creating a for-profit. We want to make sure this is done legally."

Van Dyck's former boss, Chantal Matthews, the head of the Department of Community Affairs' Business and Financial Assistance Division, takes it a step further. She says the Department of Community Affairs needs an opinion from the state Attorney General's office.

Matthews must sign off on the loan, and with Van Dyck leaving, it isn't likely there will be immediate action.

The other thing the ADA could do is to contact the federal Department of Health and Human Services, which administers the country's Empowerment Zone programs, and see if it will waive procurement requirements.

But that's not likely to happen, says the unnamed official familiar with the project. It might have under Clinton, "but I'm not sure anyone in this administration is going to stick their neck out."

The final wrinkle in this mess is the matter of a second loan still pending with First Union. That loan is supposed to fund the building of Publix's store, but if the first loan isn't being paid off, First Union will not close on the second loan — at least that's what the state has been told. First Union officials could not be reached for comment.

The ADA, though, remains optimistic the deal will go through even if this phase of the federal funding falls apart. Say ADA officials: "It certainly makes it a more difficult deal."