Morris Brown land sale still faces hurdle of Clark Atlanta’s rights

By Maria Saporta

The $14. 6 million offer from Invest Atlanta and Friendship Baptist Church to buy most of the Morris Brown College property is being held up by an objection from Clark Atlanta University.

During nearly a three-hour hearing before U.S. Bankruptcy Judge Barbara Ellis-Monro Thursday, the arguments circled around whether Morris Brown actually had the right to sell the property it has been using over the decades.

The judge said she will issue her ruling on whether the sale can go through at 2 p.m. on Wednesday, June 18. If she gives the deal a green light, the Invest Atlanta board would vote the next morning and the sale would be scheduled to close on June 23.

But first Clark Atlanta’s objection would need to be resolved.

Fountain Hall on the Morris Brown campus would remain as part of the college under the proposed sale to Invest Atlanta and Friendship Baptist Church

Fountain Hall on the Morris Brown campus would remain as part of the college under the proposed sale to Invest Atlanta and Friendship Baptist Church

About 17 of the 36 acres of the property originally were owned by Clark Atlanta University. The deeds to the land stated that if Morris Brown were to quit using the property for educational purposes, it would revert back to Clark Atlanta.

Under the proposed sale agreement, the property that Friendship Baptist Church would buy (Middleton Towers, a parking lot and the gym) was never owned by Clark Atlanta. But most of the property that Invest Atlanta would be buying are subject to Clark Atlanta’s reversionary rights.

“Clark Atlanta does not object to the sale of properties to Friendship Baptist Church,” said David Wender, an attorney with Alston & Bird, which is representing Clark Atlanta.

But Wender went on to say that Clark Atlanta does object to Morris Brown selling land to Invest Atlanta that are part of the reversionary agreement. In other words, it can not sell property that it does not own, he told the court.

Lawyers representing Morris Brown, however, said that the sale to Invest Atlanta would not impact the ownership interests of Clark Atlanta. They also said that Morris Brown would continue to operate as an educational institution through a ground lease so the property would not have to revert back to Clark Atlanta.

During the hearing, Scott Cullen, an executive vice president of Jones Lang LaSalle (JLL) – which had been hired to market the property, testified that they had received seven offers to buy the property.

Three of the offers were for only portions of the land, while four were for all or most of the property. But only two of those four were considered viable bids — the Invest Atlanta-Friendship bid and another one submitted by a developer. Although Cullen did not disclose who that was, Pope & Land had publicly said that they had entered a bid for the property.

But Cullen did say that “after the Invest Atlanta bid was disclosed, they backed out.”

Stanley Pritchett, president of Morris Brown College, testified that the sale was necessary to keep the doors open of the Christian-based institution that has operated continuously for 133 years.

“At this time I feel the sale is in the best interest of the institution,” Pritchett said from the stand. He added that the plan would be to regain accreditation so it would be able to receive federal and state financial aid for its students.

At the end of May, Pritchett said the institution had 11 students staying in its dorm with 33 to 35 students enrolled. If the property were to be sold, Pritchett said Morris Brown was projecting an enrollment of 50 to 75 students in the fall. The school is offering three majors: organizational management and leadership; business administration; and general studies.

Earlier during the hearing, Judge Ellis-Monro did express concern that the sale documents that she had seen did not address the rights of Clark Atlanta. She told the lawyers to take a 10 to 15 minute break to correct that.

“I don’t see a mention of that in the closing documents right now, and that is troubling to me,” she said. “There is something there (referring to the reversionary rights). I’m not going to cut off whatever rights they have.”

When the lawyers returned, there was some amended language inserted in to the bill of sale, but Clark Atlanta’s Wender did not seem satisfied that his client would be protected once the property had been transferred to a new owner.

He spent much of his time asking whether Morris Brown would be using all the property that the city would be buying. The obvious conclusion to his line of questioning was that if that property were not to be used for educational purposes, then it would have to revert back to Clark Atlanta.

Invest Atlanta has not disclosed what it intends to do with the Morris Brown property. Atlanta Mayor Kasim Reed has just said that the land is too valuable to the future of that part of the city — being located only a few blocks west of the new Atlanta Falcons football stadium — to not be able to control how it will be developed.

Morris Brown College, which has been in financial straits for several years, entered into Chapter 11 bankruptcy in 2012 with about $30 million in debt. The institution has said it needs to sell this property so it can continue to operate during the next academic year.

Maria Saporta, Editor, is a longtime Atlanta business, civic and urban affairs journalist with a deep knowledge of our city, our region and state.  Since 2008, she has written a weekly column and news stories for the Atlanta Business Chronicle. Prior to that, she spent 27 years with The Atlanta Journal-Constitution, becoming its business columnist in 1991. Maria received her Master’s degree in urban studies from Georgia State and her Bachelor’s degree in journalism from Boston University. Maria was born in Atlanta to European parents and has two young adult children.

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