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Chamblee DDA debates waiving environmental indemnity in city-center MOU as bond deadline approaches
Summary
At its Jan. 27 meeting the Chamblee Dowtown Development Authority discussed whether to accept a developer's request to limit indemnity for environmental problems predating sale; counsel urged caution, board members split on risk, and the DDA agreed to seek further guidance and consider a short extension to the Feb. 28 bond-validation deadline.
The Chamblee Downtown Development Authority spent the bulk of its Jan. 27 meeting debating whether to accept language in the city-center memorandum of understanding that would limit the developer's environmental indemnity to matters arising after the sale.
Dan, the DDA's legal counsel, told the board the transaction involves a hierarchy of documents'the purchase-and-sale agreement, the MOU and bond documents'and that the lease will largely govern how the deal proceeds. He warned the board that the key outstanding issue is environmental indemnity and that the proposed language would restrict indemnity to events after the DDA sold the property: "They wanted indemnities [to] extend . . . only for any such violation relating to any period after the sale of the leased land by the issuer to the company," he read to the board.
Counsel and board members debated risk and trade-offs. An advisor who reviewed environmental work for the project said the Phase I/II work to date has "not shown particularly significant issues" beyond removed underground storage tanks, and that "by all measures, we have no indications that there is significant environmental issues with the site." Several board members said that if the DDA has completed reasonable due diligence, it may be commercially reasonable to expect the buyer to assume responsibility after purchase. One board member argued: "If we've done our due diligence . . . it's time for them to assume responsibility."
Board members also noted bank and financing pressures tied to a bond-validation schedule. The meeting record shows Amendment No. 4 and the MOU reference a Feb. 28 date for bond validation; counsel said the DDA could ask the developer (identified in the record as Greystar) to agree to push that deadline if more time is required to resolve wording. The board discussed authorizing the acting vice chair to agree to an extension if necessary and planned a possible special-called meeting to approve bond documents on Feb. 3.
No formal vote was taken on changing indemnity language at the Jan. 27 meeting. Instead, counsel asked for guidance and proposed the board either leave an existing resolution in place that authorizes the chair (or acting chair) in consultation with counsel to finalize documents or adopt a new resolution authorizing an extension. The acting chair asked members to email their position by 2 p.m. the next day so the vice chair could represent the board at a scheduled attorney call.
What happens next: the DDA will reconvene or use the vice chair's authority to negotiate language and, if needed, seek an extension of the Feb. 28 bond-validation date before the Feb. 3 special meeting. The board did not adopt new indemnity language at this meeting.
