Art of the failed deal: How Murphy Crossing development fell apart

The Beltline’s vice president of housing policy and development, Dennis Richards Jr., said Culdesac dramatically changed the shape of the project, reducing by almost one-third the number of affordable housing units in the first phase of development and asking for an “excessive” $38 million in public incentives over the six phases of the project.

But in a complaint filed March 6 in Fulton County Superior Court against Invest Atlanta, the city’s economic development authority, Culdesac alleges the authority, through its agent Atlanta Beltline Inc., breached the purchase and sale agreement by failing to disclose temporary and permanent Georgia Department of Transportation easements.

Additionally, Culdesac claims the city benefited from its predevelopment activities and is seeking $3.8 million in damages, in addition to lost profits.

Mayor Andre Dickens’ press secretary Michael Smith referred a request for comment to Invest Atlanta and said he could not comment on the ongoing case. Invest Atlanta spokesperson Matt Fogt and Beltline spokesperson Meghann Gibbons said the case is under review but could not comment on pending litigation. Atlanta Beltline is not a named defendant in the case but is referred to as Invest Atlanta’s “designated special agent.”

Richards said in a Feb. 5 interview that the temporary easement is for construction staging for work on a bridge at Murphy Crossing, and the permanent easement at Murphy Avenue covers an area with a guardrail that extends over the Westside Trail. Richards said GDOT wants to make public safety improvements to the rail and repairs to the bridge.

In statements to The Atlanta Journal-Constitution in January, Richards and Beltline officials downplayed the Georgia Department of Transportation easements. One official, speaking on background, called them a “nothingburger.” Meanwhile, in a Jan. 13 statement to the AJC, Beltline officials said they “didn’t impact the deal.”

Culdesac’s complaint against Invest Atlanta, as well as internal emails and documents, suggest the opposite.

They show officials knew the GDOT easements could undermine the developer’s financing arrangements for the project and tried to smooth things over. According to the developer’s lawsuit, the parties made six amendments that “were necessitated at least in part by the existence of the discrepancies in the title records” for the land.

Beltline officials offered to carve out the land with the GDOT easements and reduce the purchase price for the first phase of the development. They also sought to assuage the developer’s concerns by limiting GDOT’s construction work to the end of 2025.

Credit: Olivia Bowdoin

Credit: Olivia Bowdoin

How the deal unraveled

The termination of the agreement on Dec. 30, 2024, was the culmination of a monthslong and painstaking back-and-forth between Beltline officials and Culdesac, a developer that has built a car-free, walkable community in Tempe, Arizona, and two townhome communities near the Westside Trail in Atlanta.

Beltline records and emails obtained by the AJC reveal an impasse starting in August 2024 centered on the easements, reduced housing density, delays and disagreements over which party — developers or the city — should take on the most financial risk.

“I don’t think Culdesac has money or a real plan to obtain the proper investments. I think (Atlanta Beltline Inc.) has provided adequate concessions to Culdesac and has proven to be a partner in this matter. However, Culdesac continues to push the line,” Nichole James Vickers, a supervising attorney with the law firm Johnson & Freeman, wrote in a Nov. 12 email to Richards, Beltline President and CEO Clyde Higgs and other officials.

Even so, Culdesac often cites the easements as a roadblock. In emails, Culdesac Chief Investment Officer Caroline Lerner Perel said the developer only became aware of them through its own title review — after it had signed the purchase and sale agreement on March 22, 2024.

According to the lawsuit, the easements were granted to GDOT just 14 days earlier, on March 8, and without the developer’s knowledge. The easements were recorded on March 20, 2024, the complaint says. At no point did Beltline officials disclose the existence of the easements during negotiations, according to Culdesac.

“While Atlanta Beltline Inc. has attempted to minimize the physical impact of those easements on the project, which is significant, ABI also fails to recognize the financial and legal implications,” Perel said in a statement to the AJC before the dispute landed in court.

Perel said the permanent GDOT easement meant the state could make changes to the Murphy Crossing intersection indefinitely, which “adversely impacted” planning at the site. It created an obstacle to “closing financial arrangements that were premised on Culdesac obtaining clear, unburdened title to the property from ABI,” she said.

Culdesac’s attorney Elizabeth Carpenter encapsulated the problem in a letter to Beltline officials on Oct. 8, 2024: “The construction easements allow the Georgia Department of Transportation to prevent development of the easement property, including mandatory utilities and infrastructure, and tear down any improvements that are constructed on or underneath the easement property during the duration of the construction easements, which, for the permanent easement, is forever.”

In February, Richards reframed the Beltline’s initial statements to the AJC and tacitly acknowledged that the easements did, in fact, play a role. However, this time, he said they would have had “no impact” on density at the site and blamed Culdesac for making unreasonable demands and delaying predevelopment activities.

According to Richards, the easements are on a sliver of the land, or less than 0.5%, and would have only interfered with the developer’s plans to build a plaza. He said the Beltline was under no obligation to disclose the easements before or after the developers signed the deal.

“Given Culdesac’s lack of progress, GDOT’s rights to perform construction work would have expired before Culdesac ever broke ground on the site. Finally, if the GDOT easement was as impactful as alleged, Culdesac had the ability to immediately terminate its purchase and sale agreement with the Beltline,” Richards said.

Credit: Atlanta BeltLine, Inc.

Credit: Atlanta BeltLine, Inc.

Richards said the developer kept shifting the goalposts, expanding the project from an initial two development phases to six, and slashing the first phase of residential units from 310 to 105.

“The developers requested excessive and unreasonable public incentives, including, for example, an ambiguous request for $38 million across all phases of the project, which would have been in addition to the discounts and favorable terms on the land and certain real estate tax incentives the project could have been eligible for,” Richards wrote in an email to the AJC.

Even though Beltline officials offered Culdesac $10 million for the first phase of the project, the developer shrank the footprint of residential units and asked for $12 million in public incentives, according to Richards. He said that when the developers could not secure enough capital funding for the project, the city “offered generous financing options, grants, and other public monies to the developers to help them get the project started.”

“However, the developers failed to submit an application to either Invest Atlanta or the Atlanta Urban Development Corporation to secure any of those funds,” Richards said in a statement.

He said the Beltline planned to accelerate the redevelopment project and hoped to break ground by the end of 2026.

Beltline spokesperson Gibbons added in an interview that Murphy Crossing remained the “people’s project” and the agency would continue an open dialogue with stakeholders in the surrounding neighborhoods.

“We serve as the fiduciary executor, and we take it as our responsibility to make sure that we’re carrying out the community’s vision,” Gibbons said. “We want to make sure that we’re delivering on the promises that are made and staying true to the goals that are set.”

At a public meeting on March 11, and in an interview with the AJC, Beltline officials laid out their plans for the project, which would include the Beltline taking on the role of master developer and adopting a piecemeal approach — awarding contracts to developers with specific expertise in areas such as residential or retail.

Community stakeholders living near Murphy Crossing were cautiously optimistic that Culdesac would get the project across the finish line after another deal with Atlanta developer Place Properties and South Carolina developer WST fell apart in 2020, after two years of negotiations.

The AJC first learned about potential title issues through community activist Matt Garbett, who lives minutes from the Westside Trail and can see the old canning factory at Murphy Crossing from his house.

In an interview, he said the easements came up at the recent public meeting but Beltline officials provided little clarity on how they changed the complexion of the deal. He noted there was no opportunity to ask follow-up questions at the meeting, which he attended in person.

Garbett was baffled when he learned the Beltline had granted the easements just before the deal was signed.

“I don’t feel like they have a plan, and it’s disappointing to the neighborhoods,” he said.

Credit: Olivia Bowdoin

Credit: Olivia Bowdoin