Brookhaven ordered to pay $6M over failed mixed-use project

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A DeKalb County jury has ordered Brookhaven to pay roughly $6 million over a failed project.The jury found the city intentionally derailed a 226-unit project along Buford Highway because the developer wouldn’t participate in what they called a pay-to-play kickback.The jury also awarded the developer attorney’s fees and ordered Mayor John Ernst and City Manager Christian Sigman to pay $200,000 each in punitive fees. .Simon Bloom, the developer's attorney, argued the city officials abused their positions of power and ignored multiple conflicts of interest.Burke Brennan, the city’s spokesman, said the City Council will consider its options to appeal the ruling

Jury found mayor, city manager owe extra money as punishment for their involvement

A development deal gone wrong will cost Brookhaven millions of dollars.

On Monday, a DeKalb County jury ordered the city, its mayor and city manager to pay more than $6 million in damages to a real estate developer and two homeowners for purposefully stalling a townhome development project.

The jury found the city intentionally derailed the 226-unit project along Buford Highway because the developer, Atlanta-based The Ardent Companies, wouldn’t participate in what they called a pay-to-play kickback.

“Ardent’s experience with Brookhaven serves as a cautionary tale to any developer trying to get in on Brookhaven’s hot redevelopment market,” the lawsuit, filed in 2017, said. “Brookhaven will give a developer the governmental approvals it needs, as long as the developer pays to play.”

Burke Brennan, the city’s spokesman, told The Atlanta Journal-Constitution the City Council will consider its options to appeal the ruling. The city has 30 days to appeal.

“The mayor, the city manager, the city attorney and all involved have a great respect for the jury and appreciate their responsibility,” Brennan said. “However, the city disagrees with the verdict.”

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The genesis of the lawsuit began in 2017 when Ardent struck a deal with more than 20 homeowners to purchase about 17 acres along Bramblewood Drive. The sale hinged on Ardent rezoning the properties and buying Bramblewood Drive, a dead-end neighborhood road.

Todd Terwilliger, a founder and partner of Ardent, told the AJC it was “the most obscure rezoning process we’ve ever been a part of.”

According to the lawsuit, Brookhaven obstructed Ardent’s rezoning efforts and refused to sell Bramblewood Drive for less than $3 million — despite never having the road’s value appraised. Ardent said their own appraisal valued the 0.2-mile stretch of pavement at $250,000, a twelfth of Brookhaven’s asking price.

While the rezoning application was pending, Ardent alleged city leaders tried to strongarm the company into selling six parcels that span about three acres to the city. The city was considering using the property for a public safety center, a project that’s now under construction at a different location along the Peachtree Creek Greenway.

In return for a hefty $30-million tax abatement for the developer, the lawsuit claimed Brookhaven tried to require Ardent to pay the city a portion of its profits if the property was sold within four years. Ardent called the request a pay-to-play kickback. The city argued at the time the deal fell through due to disagreements over incorporating affordable housing into the development.

Simon Bloom, Ardent’s attorney, argued the city officials abused their positions of power and ignored multiple conflicts of interest.

“(Cities) always want a concession... that’s normal and part of the everyday process,” he told the AJC. “If that’s all we had here, there would be no case. But once they started to compete with us for the six houses at the top of the road (and ) when they wanted $3 million for the road, that was simply too far.”

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Who pays the bill?
The City of Brookhaven, its mayor and city manager were ordered to pay fines totaling more than $6.6 million.
SOURCE: Simon Bloom's legal team

The city denied an Ardent zoning request in September 2018, unraveling the developer’s deals for homeowner properties. Ardent and two of the homeowners, Jon and Courtney Wheeler, filed their lawsuit three months later.

On Friday, a jury agreed with the developer and Wheelers and ruled the city owed them about $5.8 million. The jury declined to tack on another $12 million, the estimated amount of profits Ardent expected to make if they finished the townhome development.

On Monday, the jury also awarded them attorney’s fees and ordered Mayor John Ernst and City Manager Christian Sigman to pay $200,000 each in punitive fees. Bloom asked for $4 million apiece. The jury did not find councilmembers’ actions warranted punitive damages, and local government’s can’t be given punitive fines, since that would mean taxpayers would have to foot the bill.

“It’s our position that the city hasn’t done anything wrong,” Brennan said. “But are there things that we could have done better, I’m sure upon further examination, we would say yes, there’s things we could have done better.”

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