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Chamblee DDA weighs environmental indemnity in city-center MOU as bond deadline nears
Summary
Counsel told the Chamblee DDA that remaining negotiations on the city-center MOU center on transferability and environmental indemnity; members debated whether to require a developer to indemnify the DDA for prior environmental releases and discussed authorizing an extension of a Feb. 28 bond-validation deadline.
The Chamblee Downtown Development Authority spent the bulk of its Jan. 27 meeting debating environmental indemnification language and transferability provisions in a city-center memorandum of understanding connected to a bond-financed development.
Dan McCray, the board’s counsel, told members the transaction involves a “hierarchy of documents” — the purchase-and-sale agreement, an MOU, a lease and bond documents — and that the lease terms will govern operations after bond closing. He flagged transferability clauses and a developer proposal that would limit indemnities for environmental releases to periods after sale: "[T]hey wanted to read, indemnities extend to any actual or alleged violation of a noncompliance with any environmental laws and the release of hazardous materials at, under, or from the leased land, but only for any such violation relating to any period after the sale of the leased land by the issuer to the company." (Dan McCray).
Board members and staff said Phase II testing has not revealed significant environmental problems beyond previously removed underground storage tanks, but they acknowledged that accepting a developer’s limitation on prior-period indemnity would shift risk to the DDA. Members discussed the practical timetable as well: an amendment to the MOU sets a Feb. 28 target for MOU approval and counsel recommended either authorizing the acting chair to agree to a short extension with the developer or delaying final action until the board can convene a special meeting to approve bond documents.
The board did not adopt a final position on indemnity at the meeting; members agreed to exchange views by email and asked the acting chair or vice chair to report the sentiment at a counsel conference call scheduled the next day. Counsel reminded the board that email exchanges are not votes under the Open Meetings Act and are subject to public-records rules.
