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Generation Atlanta's Fate Clouded In Legal Uncertainty

Could a spat between the Atlanta Housing Authority and Integral Group be jeopardizing plans by another developer to start an anticipated Downtown Atlanta apartment project?

Kaplan Residential
Rendering of the planned Generation Atlanta apartment building in Downtown Atlanta

Kaplan Residential sued the AHA and Integral in Fulton County Superior Court, alleging that the city's housing authority is interfering in the sale of 377 Centennial Olympic Park Drive, a parcel next door to the new Downtown W and EY's (formerly Ernst & Young) regional headquarters at 55 Allen Plaza owned by Integral.

Now, Kaplan is looking to Fulton County Superior Court to force both parties to sell the site to Kaplan after it spent some two years and $2M in preparing for Generation Atlanta, an $83M, 336-unit apartment complex geared toward millennial renters with rents that could be below those being fetched by new developments in neighboring Midtown.

“We're ready to build this project,” Kaplan Residential CEO Morris Kaplan said. “That's really why we have to file this.”

Officials with Integral did not return calls seeking comment.

Kaplan Residential
Kaplan Residential CEO Morris Kaplan at a 2017 Bisnow event

According to the lawsuit filed by Kaplan last month, a nonprofit affiliate of the Atlanta Housing Authority, called Renaissance Affordable Housing Inc., has yet to sign off on a previously agreed-to sale of the property between Integral and Kaplan. Despite Integral's assurances to Kaplan, the developer was blocked by RAH from selling the land to Kaplan at the start of the year, Kaplan attorneys said in the lawsuit.

Kaplan told Bisnow he believes the sale is being held hostage by Atlanta Housing Authority's dispute with Integral over a land deal a previous housing administration head struck with its leader, Egbert Perry. That deal has the city and the AHA claiming Perry has the right to purchase AHA properties well below their current market values, a right that could have the developer reap "a windfall profit at the expense of Atlanta's low-income families," a city spokesperson previously told The Atlanta Journal-Constitution.

Perry has previously fired back at those allegations, saying the alleged “windfall” is being shared with the Atlanta Housing Authority as well as other developers equally. Perry also said half the units to be built on the sites would be set aside as affordable.

That dispute is tied up in Fulton County Superior Court.

“AHA is involved in separate litigation against Integral’s affiliate and appears to be exercising undue and inappropriate influence on RAH to obtain some manner of leverage against Integral’s affiliate in the separate lawsuit,” Kaplan attorneys claim in the lawsuit.

Kaplan's lawsuit also seeks damages against both Integral and AHA if the deal is to fall through.

“We finally received the appropriate note, albeit late, and are working diligently to assess the deal, and consent to the terms of the deal,” Reed Smith Managing Partner Scott Bolden said in an email to Bisnow. Bolden represents the AHA. “The pending litigation is unwarranted and unnecessary and is not the best way to close the deal. But that is where we are, and that is where Kaplan and Integral are, and have chosen, to further delay the closing of the deal.”

When reached by phone Bolden said there are several issues that are being discussed amongst the parties, and they continue to push for a sale. He declined to say whether the AHA is pushing for Kaplan to include more affordable units in its proposed deal. The developer is currently proposing that 5% of its more than 300 units be designated affordable, Kaplan said.

Affordability in the city has become a hot-button issue in recent months, with both the AHA and The BeltLine Inc. pushing for more affordable units on new residential developments within the city.

“The parties are in agreement with the goal. It's a matter of getting comfortable, and it's a matter of getting it done,” he said.