Thanks to what the Atlanta Housing Authority is now calling a “backroom deal” that went down in 2011, a developer may be able to scoop up AHA land for dirt cheap with the intention of building non-affordable housing on sites set aside for low-income buyers, according to a report by The Atlanta Journal-Constitution (AJC).

In 2011, AHA — under the direction of former president Renee Glover — entered a deal with The Integral Group (Integral), a community development, commercial real estate and property management company. As part of that deal, Integral, co-founded by leading developer Egbert Perry, was given seven years to decide whether to purchase 100 parcels of AHA’s land.

According to documents obtained by AJC, the original deal didn’t specify sales prices, deadlines or requirements for what could be built on the land. Furthermore, there was no specified interest rate for the 100-percent financing the AHA promised for a three-year term.

The deal allows Integral to purchase the land at decade-old market value prices, not at its market value today, since that was the time when redevelopment on these sites began. And now before the deadline expires, Perry has decided to buy up the lots.

On Sept. 14, the AHA filed a lawsuit to stop Integral from purchasing AHA’s land and using it to develop and sell homes at market value.

“The Atlanta Housing Authority is not a land bank for private developers to purchase land at rock-bottom prices,” said AHA President and CEO Catherine Buell in a press release. “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.”

If the lawsuit fails to stop the deal, Integral could purchase the land for $17 million, which is $121 million less than its actual value, and build high-priced properties with monies originally set aside for Atlanta’s low-income communities.

Graphic from AJC

Former AHA president Glover and Perry say current AHA leadership has no legal standing to nix the deal since they received approval from the AHA board and the U.S. Department of Housing and Urban Development (HUD).

“People really don’t understand how much work goes into aligning the interests of the public and the private sector,” Glover told the AJC when defending the plan. “Government partnerships with private developers don’t work unless both parties think they’re getting a good deal.”

Glover also pointed to previous successful mixed-income development projects done in conjunction with Integral to alleviate any concerns:

“I wouldn’t have a problem living at these properties,” Glover said in the interview. “And I always say that if you wouldn’t want your family living there, or you wouldn’t live there, then somehow, we haven’t quite gotten the standards right.”

Current AHA leadership says the deal Glover made is anything but good, and they’re determined to turn it over.

“The backroom deal is unenforceable in many ways, and shows a complete disregard for the mission of AHA, which is to provide housing to individuals and families, many of whom are single mothers, who are working hard and yet struggling to find affordable housing in the city of Atlanta,” said AHA board Chairman Robert Rumley.

“While The Integral Group and previous AHA leadership played a vital role in alleviating concentrations of poverty, current market values have more to do with market trends and where people choose to live,” added Rumley.

The AHA says there is no documentation from HUD about where the agency approved the deal or why the deal was made. Two board members have come forward to say they never approved the plan, AJC reported.

Email Marian McPherson.

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