Overview of the deal:
The McPherson Implementing Local Redevelopment Authority (MILRA), the civilian agency overseeing the post’s redevelopment, is set to purchase the 488-acre former Army post for $26 million from the federal government. Closing on the sale could happen in mid-May.
MILRA, which is largely controlled by city of Atlanta representatives, will then sell 330 acres to filmmaker Tyler Perry for $30 million. Perry will make multiple payments on the land, with $20 million this year, and the remaining $10 million to be paid after the U.S. Army cleans and turns over 22 environmentally contaminated acres.
MILRA, which is making two separate payments of $13 million to the Army, is set to make its final payment in 2018.
The Atlanta City Council agreed to a deal last week that it will purchase $13 million worth of land on the post by 2018 if Perry’s final $10 million has not been paid.
Mayor Kasim Reed said that pledge involves no cash upfront, and that even in the worst case scenario, taxpayers would win as Atlanta would take control of the post for $13 million should Perry default.
Fort McPherson timeline
1885: Fort McPherson is founded and named for James McPherson, a major general for the Union killed during the Battle of Atlanta during the Civil War.
2005: The fort is designated for closure as part of the Base Realignment and Closure (BRAC) program to streamline the military.
2011: Fort McPherson officially closes. An original master plan for the site, developed over a period of several years, calls for a science and technology park, mixed-use development and the preservation of historic buildings and green space.
June 2014: Mayor Kasim Reed announces plans to sell the bulk of Fort McPherson to filmmaker Tyler Perry.
August 2014: Perry appears before the McPherson Implementing Local Redevelopment Authority to present his vision of a studio facility with up to 16 sound stages. The civilian authority says it hopes to close on the sale by Oct. 15.
October 2014: A judge dismisses a lawsuit challenging the Perry-to-Fort McPherson agreement, not for cause, but for jurisdiction because the issue essentially wasn't ripe for a decision as the sale of the land hadn't been completed.
December 2014: The Perry proposal is threatened as the filmmaker indicates he's out of the deal, frustrated by delays. Mayor Kasim Reed asks Gov. Nathan Deal to approve his request to remove a civilian authority board member and appoint two more of Reed's choosing. Negotiations resume.
April 20: The Atlanta City Council passes a measure agreeing to back a $13 million letter of credit to be used as a backstop in the complicated purchase of the fort from the Army. On April 23, Reed said that expects the sale to close in May.
The long-delayed sale of Fort McPherson land to Tyler Perry could be just weeks away, according to Mayor Kasim Reed, bringing to a close months of high-level negotiations and ushering in what could be the largest investment the southside of Atlanta has seen in decades.
In an interview with The Atlanta Journal-Constitution, Reed said last week that he expects the sale to happen within 20 days, which would put the anticipated closing in mid-May. Though the mayor acknowledged the process has been far more difficult than expected, he said it’s already paying off.
“Mr. Perry’s interest has sparked a level of interest that did not exist in the previous five years at all,” Reed said, adding that more development announcements could soon follow.
Getting to this point, however, hasn’t gone exactly as scripted.
After Reed announced plans last June to sell Perry the majority of Fort McPherson, the deal hit multiple snags. Some residents protested plans for a film studio. A competing movie company filed a lawsuit challenging the sale. An October deadline to close came and went, and in December, Perry threatened to walk away. Environmental concerns have thrown a wrench into the deal's financing.
To keep the deal alive, the mayor has met with President Obama and Pentagon officials, revamped the civilian board tasked with redeveloping the fort and persuaded the Atlanta City Council to back a $13 million letter of credit.
Explaining to the council last week why the city’s pledge of financial support was necessary, a weary Reed shared just how tenuous the talks have been.
“This deal is getting ready to fall apart because of the amount of time it has taken to get done. It’s nobody’s fault. Working with the Army is very hard,” Reed told the council, later adding: “While this might look easy, it’s not. Keeping other parties at the table has been really hard.”
The terms of the deal — which Reed originally hoped would close last October — call for the McPherson Implementing Local Redevelopment Authority to purchase the 488-acre land for $26 million, and in turn, sell 330 acres to Perry for $30 million. The city and the authority would retain about 144 acres.
Buckhead Councilman Howard Shook, like most council members, supports the Perry proposal as it could mean the area generates new property tax revenue.
He has little doubt Perry could walk if the parties fail to close soon. Reed has noted waiting suitors in Douglas County and beyond, eager for Perry to bring business to their areas.
“This is the new Hollywood up for grabs,” Shook said.
Hurdles
Buying and redeveloping a shuttered military installation is never easy.
Fred Bryant, who heads the civilian-led effort to redevelop Fort Gillem in Clayton County into a logistics hub, knows its complexities first-hand.
Bryant worked on transferring the Gillem property to his community’s redevelopment agency for years. The Gillem authority finally closed on a purchase of an initial 770 acres in last June, eight months from after its original October 2013 date.
Part of the delay was due to widespread environmental issues involving toxic chemicals that consume a large swath of Gillem’s 1,100 acres of developable land and have since migrated underneath nearby homes.
By comparison, Fort McPherson’s environmental troubles are painted as relatively minor and on a much smaller part of the post. They include a former incinerator and a shooting range.
Bryant said the delay isn’t due to just bureaucracy, but prudence, noting the Army wants to establish responsibilities for environmental cleanup and a plan to create jobs before the sale.
The Army also wants a guarantee it will get its money. Gillem officials had to provide a similar local government commitment to a line of credit that Atlanta did last week in case of a financing hitch, Bryant said.
Like Fort McPherson, the Fort Gillem transaction involved a simultaneous closing with an anchor tenant, in that case, grocery giant Kroger. The closing involved thousands of pages of documents and lawyers in Atlanta, Cincinnati and Washington, D.C., he said.
“It wasn’t like everyone comes together in Atlanta with a pen and signs the documents,” Bryant said.
Brian Hooker, executive director of the McPherson civilian authority, said only a few steps remain before closing.
Hooker also said the Army has already laid out its environmental remediation timeline and begun cleaning up the property ahead of schedule.
In a signal that a mid-May closing may be ambitious, Army spokesman Dave Foster said the military has pledged to “use its best efforts” to complete the transfer within 30 days of a signed economic development conveyance agreement.
Test ahead
Though the closing between the Army and the civilian authority is in sight, the real test for Fort McPherson could come after the ink is dry.
Reed has touted Perry’s plan as one that will kick-start development and energize the city’s tax rolls. The plan also would include 8,000 jobs, including temporary construction work, he has said.
At a meeting of the authority’s board on Thursday, boosters described efforts to redevelop neighborhoods outside the former post, including transit-oriented development at a nearby MARTA station.
Clark Dean, a commercial real estate executive with Transwestern, said even with the momentum, the redevelopment of Fort McPherson isn’t simple. Compared to denser neighborhoods, it’s isolated.
The key, Dean said, is having an anchor development that will create a “gravitational pull” to attract other businesses. He praised Perry’s studio plans as a smart use of the sprawling post, but said whether it will create that pull remains to be seen.
“Even with Tyler Perry, there are a lot of challenges and a lot of question marks around its viability,” he said.
Shook, the Buckhead councilman, has faith, crediting the mayor for delivering on his real estate pledges.
Reed has already scored major redevelopment wins including City Hall East — now emerging as a hub for office and high-end retail — and the sale of Underground Atlanta to a South Carolina developer.
Speaking after the council approved backing the $13 million letter of credit last week, Shook said: “He has the right to say: ‘You might not like my style. You might feel rushed, but these have all turned out to be good deals for the city.’”
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