Atlanta could be on hook in Perry, Fort McPherson deal

Overview of the Perry deal:

• The purchase of Fort McPherson is a complicated transaction between a civilian authority, the city, filmmaker Tyler Perry and the U.S. Army. The McPherson Implementing Local Redevelopment Authority plans to buy the 488-acre post from the Army for $26 million. It's set to make a $13 million payment at closing, which could happen as soon as April 30th. The second is due in 2018.

• Tyler Perry Studios is set to pay a total of $30 million, in multiple payments, to purchase 330 acres of Fort McPherson from the civilian authority. He's expected to pay $20 million at closing, with the final $10 million to be paid after the Army cleans up and turns over 22 acres of contaminated land, something that could happen as soon as 2016.

• MILRA will retain $7 million of Perry's initial $20 million payment to help pay down debt and prepare land for redevelopment. About $3 million of that would be set aside for a future second payment, planned in 2018.

• The city of Atlanta has been asked to provide a $13 million line of credit to help facilitate the transaction. That credit line is only necessary, the city says, in case the Army doesn't come through with plans to clean up the 22 acres by 2018, which would delay Perry's second installment. In that case, the city would purchase about 35 prime acres that it could resell to MILRA, or private developers.

Atlanta taxpayers could be on the hook for $13 million to help finance the purchase of Fort McPherson, the bulk of which will be sold to Tyler Perry Studios.

On Monday, Mayor Kasim Reed and the civilian authority overseeing the former U.S. Army post’s redevelopment asked the Atlanta City Council to back a letter of credit that could commit the city to buying $13 million worth of land there in coming years. Those funds would come into play only if there are hitches in a planned environmental cleanup that could affect Perry’s payment schedule.

Reed said the Army requires such a letter before it’s willing to close on the deal, something that could happen as early as April 30th. Without it, he fears a frustrated Perry could walk away if the sale, already delayed for months, fails to close soon.

“We are at a moment where we need to close, and I’m asking for your help to close on an entrepreneur who believed in south Atlanta when nobody believed in south Atlanta; somebody who is going to put millions in the city’s coffers as a result of that property being on the city’s tax rolls,” Reed said.

Under the original deal, Perry was expected to pay $30 million upfront to purchase land for a movie studio, and the McPherson Implementing Local Redevelopment Authority would use that money to buy the 488-acre post from the Army for $26 million.

The filmmaker would then take ownership of about 330 acres and the authority, which is largely controlled by the city, would retain the rest.

But now, because of concern about 22 acres of contaminated land on the post, Perry will pay just $20 million payment at closing. He’ll pay the remaining $10 million on the transaction after the Army cleans up and turns over the 22 acres to him, something that could be completed as soon as next year, Reed said.

MILRA is scheduled to make the first of two $13 million payments to the Army at closing, with the second due in 2018. But the authority won’t have all of the funds to make that second payment until Perry submits the final $10 million.

And that’s where Atlanta comes in. If the Army fails to turn over the cleaned up acreage by 2018, the city would backstop the authority by purchasing $13 million worth of property on the Army post. The resolution, sponsored by Councilwoman Joyce Sheperd, would allow Atlanta to purchase about 35 acres.

Reed said it’s unlikely that Atlanta’s coffers will be tapped, and that in such an event, the city could sell its land at a profit.

He believes the risk of losing Perry to other suitors is greater. What’s more, if Perry defaults and Atlanta steps in, the city would take ownership of the majority of the post for $13 million, a prospect Reed described as a boon to the city.

Councilwoman Felicia Moore asked for more time to vet the proposal. But many others on the council said the city should move quickly, saying Perry’s planned film studio will transform southwest Atlanta. The filmmaker is expected to invest more than $100 million in a motion picture studio on the property.

“If we can get this done today, we’re close to making something happen at Fort McPherson on the south side of Atlanta,” said Sheperd, who has long worked on plans for Fort McPherson’s redevelopment.

But state Sen. Vincent Fort, D-Atlanta, who appeared at the council meeting on Monday, slammed the proposal as lacking transparency.

“That kind of secrecy, last-minute secrecy, is a continuation of the kind of lack of transparency that has been reflected from the beginning (of the deal)” he said.

The council approved the resolution by a 11 to 1 vote, with Moore voting against it.

An Army spokesman directed comment about financing arrangements to the city and MILRA. But he confirmed that the Army and civilian authority “have reached agreement in principle on the substantive business terms.” Once a conveyance agreement is reached, that agreement will be subject to approval by the Office of the Secretary of Defense.