The Reed administration has launched a new salvo in its acrimonious feud with a prominent developer over public housing land.
On Friday, the city of Atlanta sued Integral Group co-founder and CEO Egbert Perry and the former head of the Atlanta Housing Authority, accusing them of colluding in a racketeering scheme to defraud the city of property that could be used for low-income housing.
Perry and former housing authority CEO Renee Glover joined forces to give Perry and his business partners the option to purchase control of one quarter of AHA’s vacant land, the civil suit says. In return, the suit alleges, Perry helped Glover join the board of directors at Central Atlanta Progress, the powerful downtown improvement group, and home finance giant Fannie Mae, which Perry chairs.
“The sheer magnitude of the projected spoils of Defendants’ concerted activity relating to the parcels and developments at issue in this lawsuit — if left unchecked — shocks the conscience and seethes of illegality,” the suit states.
Matt Maguire, Integral’s lawyer, said in a written statement that the suit is a waste of taxpayer dollars.
“It is an ongoing smear campaign orchestrated by Mayor Kasim Reed to damage the reputation of Egbert Perry and Integral,” the statement said. “It appears his motivations are personal, with his future business interests in mind.”
Glover said that she expected the courts to dismiss the city’s suit, which she called “frivolous.”
“It is truly a sad day for Atlanta, its citizens and American democracy when tactics designed to publicly malign and disparage are substituted for a fair and impartial ruling on the facts,” Glover said.
The city’s filing provides no witness statements other evidence detailing an arrangement between Glover and Perry.
“Its tough to prove quid-pro-quo right now, and ultimately we’ll go through the discovery process, but it’s very curious that they (Perry and Glover) followed each other on numerous corporate boards,” said Atlanta city attorney Jeremy Berry.
The city seeks at least $100 million in damages and wants a judge to block the options deal that Glover brokered with Perry and his partners in 2011.
The suit also noted that Fannie Mae’s Office of Inspector General is inquiring into the disputed agreement. A senior official at the watchdog agency requested a copy of the authority’s lawsuit against Integral this fall, AHA’s emails show.
Housing authority has also sued Integral
The filing is only the latest legal maneuver in an ugly battle between Mayor Reed and Perry over the property In March, The Atlanta Journal-Constitution reported that a 2011 options deal would have the housing agency for the poor subsidize the development of market-rate homes for the well-to-do.
Glover was the housing authority’s CEO when her agency signed off on the deal. By then, she had worked with Integral for more than a decade to demolish and replace Atlanta’s crumbling public housing projects with mixed-income developments.
The deal contained no guarantee that the land would be used for affordable housing.
The options could sell off control of the land at the former Capitol, Carver, Grady, and Harris public housing projects for $120 million less than what it's worth, according to an AHA analysis reviewed by the AJC. The city gave redevelopment projects at these sites millions in funding and tax breaks, the suit says.
Perry has argued that the land was supposed to be developed into market rate housing to avoid recreating the pockets of poverty made by public housing. He also called AHA's current leadership "clowns."
But with the city facing an affordable housing crisis, AHA and Reed want out of the deal. AHA filed suit in late August asking a judge to kill it, saying it "actively subverts" the authority's ability to provide housing for low-income residents.
In October, Reed urged Perry to resign his board chairmanship at Fannie Mae over the options deal, calling it “unlawful” and “unethical.”
Weeks later, Perry accused senior members of the Reed administration of threatening him in 2014 that he would never do business in Atlanta again unless he and his business partners gave up control over land that the city wanted. The $24.4 million Martin Luther King Jr. Recreation & Aquatic Center opened on the disputed site late last month.
The latest suit gave few details about the alleged racketeering scheme, but it did accuse Glover of emailing Perry confidential information from AHA’s attorney regarding a separate deal, three days before the disputed options agreements were signed. It also said that she designed the options deal so that it would be extremely difficult for a successor to renege on it.
