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City takes on $13 million financial risk to keep Fort McPherson deal alive

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Tyler Perry's efforts to buy the bulk of Fort McPherson and build a massive movie studio have not gone smoothly. The Atlanta filmmaker's deal to buy hundreds of acres of the former military base has faced some public backlash, a negotiation process complicated by the U.S. Army, and other issues. But with a closing date now in sight, the film mogul received the city's financial backing to help stabilize the deal enough to move forward.

At a lengthy meeting on Monday night, the Atlanta City Council voted 11-1 to co-sign on a future $13 million payment needed to finalize the Fort McPherson sale. Brian Hooker, executive director of the state-established McPherson Implementing Local Redevelopment Authority, tells CL the Tyler Perry Studios deal could be finalized later this month.

How would the complex deal work? Perry would pay $30 million to MILRA for approximately 330 acres of land. MILRA would then pay the Army $26 million for Fort McPherson, which would give the authority another 144 acres facing Lee Street and Campbellton Road that it would redevelop into a commercial mixed-used development with retail, restaurants, and a hotel. Perry has agreed to give MILRA $20 million at closing but won't pay the remaining $10 million until the Army finishes environmental cleanup work on 22 acres of contaminated land — a project that could take at least one year to complete.

According to Hooker, MILRA would pay the Army half of the full sale price upon closing the deal. The Army wants the city to extend what's essentially a $13 million line of credit to back the second payment that's due in approximately three years, he says. No public cash would be spent if Perry makes his second payment.

"The Army is much more comfortable with Atlanta being on the hook for making this happen," Hooker tells CL, adding that the Army doesn't directly enter into these kinds of deals with commercial entities. "The city is stepping in to address this unlikely scenario."

With the clock ticking, Mayor Kasim Reed, Hooker, and MILRA Board Chair Felker Ward asked for Council's approval on a key financial component of the Fort McPherson deal. Standing before councilmembers, Reed urged the legislative body to approve a measure that he said would help a fragile deal get closer to completion. He said a $13 million letter of credit from the city would help fix a "timing issue" with the deal.

If the deal goes through, Reed said, it would place the site on the property tax rolls, eventually generate more than 600 new jobs, boost southwest Atlanta's sluggish economy, and give the city 144 acres at no cost to taxpayers. Should the transaction fall apart, Reed said, the city would potentially be faced with buying the entire Fort McPherson site, plus pay for the base's annual costs that run upwards of $3.6 million. Reed said TPS now has other options in metro Atlanta such as his 1,000-acre site in Douglas County or a former General Motors plant in Doraville that developers want to include a studio complex.

"We're no longer the only suitor in town," Reed said. "...If you sense some urgency, that's because there's urgency."

Prior to the Council meeting, Councilwomen Mary Norwood and Felicia Moore had called for a special-called meeting to give officials time to properly understand the measure's importance to the complex transaction. The mayor insisted they make an immediate decision to send the right signal to the involved parties.

"It's unusual to get something like that doesn't go through the Finance Committee, isn't vetted at the Finance Committee, or with a work session," Norwood told CL prior to Council's meeting. "This is a very big redevelopment project for the city. We're all anxious for this part of southwest Atlanta to have wonderful revitalization and the renaissance that they deserve. We want to make sure that we, as stewards of the city's funds, are making the right decisions in the way that these transactions are handled."

Council eventually went into executive session to further discuss the deal. When they came back, Councilwoman Joyce Sheperd pushed for an immediate vote. Eleven councilmembers voted in favor of the line of credit. Moore was the lone dissenting vote due to the rushed process.

State Sen. Vincent Fort, who spoke against the deal during public remarks at Council's meeting, tells CL the rushed measure should have received the vetting of Council, nearby community residents, and taxpayers, rather than behind closed doors. He said the letter of credit was the latest in a long line of decisions lacking transparency with the Fort McPherson sale.

"This is a corrupt bargain," Fort says. "This is a corrupt way of doing things. If Council signs off on this today, it's proof positive that they are a nod squad. What they might as well just let the mayor come down on Council's floor and push their buttons. To do this in this way is unconscionable."

With Council's approval of the measure, Hooker says MILRA can now move forward toward closing the Fort McPherson deal by a target date on April 30. MILRA also agreed to provide an update at an upcoming Council Community Development/Human Resources committee.



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