BRADENTON, Fla. — Atlanta Mayor Kasim Reed says a plan by the city to help the historically black Morris Brown College emerge from bankruptcy and help find a new Atlanta Falcons stadium site has been rejected.
The 132-year-old private, nonprofit college filed for Chapter 11 bankruptcy in August 2012 after investors holding $13 million of bonds called for payment, threatening foreclosure. The bonds were sold on behalf of the college by the Fulton County Development Authority.
Morris Brown’s total debt exceeded $34 million before filing for bankruptcy, and the college requested the city’s help to “determine a path to resolve the college’s bankruptcy and enable its survival,” long before Atlanta became involved in negotiations for a new $1 billion National Football League stadium, Reed said Friday.
Though the Falcons have entered a deal in which $200 million of tax-exempt bonds backed by a local hotel-motel tax would go toward the stadium’s cost, its location has become controversial. The team, personal seat licenses, and the National Football League would fund the remaining $800 million cost of the new facility. Two sites are being considered for the stadium but both depend on purchasing property owned by churches. One site is north of the existing Georgia Dome, where the team currently plays.
The favored church site is south of the Dome, which Reed supports, because it is close to train and bus transit. The Falcons and Georgia World Congress Authority, owner of the Dome, recently called off talks to buy the south-side site after failing to reach a purchase agreement with the church.
Reed unveiled Friday how Morris Brown’s plight became connected to the new stadium.
He said the city entered negotiations to help the college and offered a proposal that would resolve the college’s debt, allow the city to take title to the campus debt free, and lease Morris Brown the necessary property to continue operating. The remaining land would be leased or sold by the city.
In separate stadium negotiations between the city and the south-side church, Reed said that church officials indicated recently that they would relocate to two parcels of land on Morris Brown’s campus if purchased by the city. That generated push-back from Morris Brown alumni.
Reed said that college officials rejected the city’s offer in late May, and said “that they had a better plan with a different partner.”
Meanwhile, documents filed in bankruptcy court indicate that Morris Brown’s property may still be in play.
The trustee for the bondholders has asked the federal judge overseeing the case to end the exclusivity period, which gives the college the sole right to propose a disclosure statement and plan of reorganization.
During an Aug. 1 hearing, the college “orally withdrew its plan” and the judge granted another of several time extensions to submit a proposal.
“The indenture trustee respectfully requests the court enter an order terminating the debtor’s exclusivity period to allow any interested party to file a plan,” U.S. Bank N.A. said in a filing Aug. 8.
U.S. Bank said among the reasons to end the college’s exclusivity period is that “the imputed value of the debtor’s property may continue to precipitously decline if a plan is not confirmed in the near term.”
The trustee said it is public knowledge that negotiations are ongoing related to the location of the Atlanta Falcons’ stadium and that “location is critical to the value of Morris Brown’s real property.”
“In order to maximize the benefit from these ongoing negotiations taking into consideration what is referred to as the ‘south’ site for the stadium … all interested parties should be immediately given the opportunity to submit alternative plans,” U.S. Bank said.
The federal judge, Barbara Ellis-Monro, has scheduled a hearing on U.S. Bank’s request for Aug. 26.
Ellis-Monro has also agreed to consider a motion by Morris Brown to approve a $1.5 million emergency loan from the African Methodist Episcopal Church Inc. to fund ongoing operating and administrative expenses while a plan of reorganization is being prepared.