How huge water bills drown redevelopment in Atlanta

Thousands of dollars in unpaid water bills must be paid before work can even begin

Vacant and crumbling, Chappell Forest Apartments in northwest Atlanta is so decayed that its last tenant was a film crew seeking authentic urban blight for the Arnold Schwarzenegger shoot-'em-up film Sabotage.

Despite its good location near the Atlanta Beltline, at least two redevelopment plans for the long-troubled site at 425 Chappell Road have been sunk, the owner says, by an unpaid water bill of nearly $1.3 million. Similar massive water liens lurk behind several blighted properties throughout Atlanta, leaving some of the investors too burdened to redevelop or sell the land.

"You have all these properties in the city of Atlanta with these water liens, and all that redevelopment money's gone," Chappell Forest owner Ed Mitchell tells CL. "That's why, if you drive around, you see all those vacant properties. Owners can't get out of them."

The city's Department of Watershed Management is keenly aware of the tens of millions of dollars such complexes owe — and the bigger picture of how those unpaid bills can stall redevelopment. Mohamed Balla, the department's interim deputy commissioner for finance, tells CL he often negotiates bills down in the greater interest of moving rehab forward. "If you come to the city, we'll try to work out something that's reasonable and fair," Balla says.

One of several recent successes: an apartment complex on Campbellton Road, where the city accepted a $185,000 payment in exchange for the owner's rehabbing and making upgrades to the property's water pipes.

Balla's bigger concern is properties where no individual owner can be found to negotiate with — including the city's No. 1 unpaid water bill of nearly $2.1 million owed at 1991 Delowe Drive in southwest Atlanta. In such cases, deeds may be filed under corporation names only, or ownership frequently switched over to them to avoid bills, he says.

Complexes with big water liens often also have unpaid taxes and aging infrastructure — leaky pipes are the main reason for the gigantic water bills, Balla says. To tackle such problem properties, the city aims to form a multi-department task force as soon as next month.

"We want to establish a task force that really addresses and looks at these multifamily complexes that have lots of issues," Balla says. "We want to start looking at a picture of informing residents and owners ... to come to the table and find a solution."

With Watershed Management now reeling from reports of equipment thefts and unauthorized pay raises, it's unclear whether that search for a solution is moving ahead. Mayor Kasim Reed's office did not respond to CL's questions.

Negotiations have stalled with Mitchell, who blames a combination of mutual screwups and what he alleges is a conspiracy for Chappell Forest's limbo status.

Mitchell has a history of run-ins with city officials. The former Atlantan says he moved to Las Vegas in the 1990s in disgust after being arrested for code violations at a house he was attempting to rehab while controversially evicting an elderly woman.

He ran into similar problems at Chappell Forest, where he says he ended up being the owner after a falling out with various investors, including his brother, in what he claims was supposed to be a quick fix-and-sell deal in 2012. But according to AJC reports, the property fell into disrepair and was followed by a lengthy eviction process. Last year, code violations landed him in court again. Activists demanded action from the Atlanta City Council and Reed, leading the city to pay to relocate evicted tenants.

Mitchell says the investors planned on paying off back taxes and a water bill. But he says they didn't know the tab was more than $1 million because most of it was attached to a nonexistent second address that didn't turn up in real estate records. Balla admits the department created the address for meter-reader convenience, but says the bill was sent to the owners.

Faced with the surprise bill and recent developments in the watershed department, Mitchell says he fears that the city is plotting to seize his property. Balla says the city has no interest in owning the land.

The unpaid water bill killed a 2013 sale, Mitchell claims, and will kill another one that's pending unless it is lowered. He says he offered $250,000 to settle the water bill, but the city wanted much more. Balla says Mitchell has not yet made a formal offer in writing.

"We've got someone willing to buy the property, put $4 million into it, get it back up, and redevelop the area," Mitchell says. "Nobody's trying to make money. We just want our money back. I'm stuck."