Fannie Mae Chairman Egbert L. J. Perry — who is also a revered local developer in Atlanta — has four longtime land deals that last year drew the attention of an executive at the Atlanta Housing Authority.
What she found shocked her.
The agency's earlier president had quietly amended the terms of the deals with Perry to allow him to acquire dozens of acres of housing authority land at a steep discount — more than $100 million below market value.
Moreover, the altered agreements allowed Perry to develop the land without building homes for poor and low-income residents — something the burgeoning city desperately needs.
"I thought to myself, this is the craziest thing I have ever seen," said Catherine Buell, the Atlanta Housing Authority's chief executive.
Now, Atlanta Mayor Kasim Reed is leading a fight against what he calls "secret" deals in which the price and terms improved for Perry. He has also demanded that Perry resign from Fannie Mae's board.
"This is wholly inappropriate coming from someone who is the chairman of the board of Fannie Mae," Reed said in an interview. He said that the land constitutes about one-quarter of the Housing Authority's developable property and that the deals badly hamper Atlanta's ability to provide safe, affordable housing to residents.
Renee Glover, the woman who led the agency when the deals were amended, has since emerged as one of 12 directors on Fannie Mae's board, a position that pays her $154,839, according to public filings.
Reed has also asked Glover to resign, suggesting that she received her Fannie Mae post as a quid pro quo for her work with Perry. Glover did not return phone calls seeking comment.
Atlanta's Housing Authority has sued Perry's firm, Integral Group, to dissolve the land deals, and the dispute has attracted the attention of authorities in Washington. A federal watchdog agency, the Office of Inspector General at the Federal Housing Finance Agency, is said to have opened an inquiry.
Perry and Glover had partnered on several nationally recognized redevelopments of public housing. The four deals, representing dozens of acres, inked more than a decade ago appeared to be more of the same.
Glover left Atlanta's Housing Authority under pressure in 2013 but not before she amended the deals' terms to provide Perry with what Atlanta officials consider a sweetheart deal.
That arrangement allowed Perry to acquire the land, valued by the city at more than $120 million, for $17.5 million without any requirement that he build housing there for low- and moderate-income families — a key mission of the agency.
Perry strongly denies the accusations. He issued a statement saying his company won the deals fairly through a public procurement and asked the court to dismiss the city's complaint.
Perry does not recall whether he suggested Glover to a search firm for the Fannie Mae board but "thinks he probably did — and hopes he did. I don't think anyone has questioned her experience, competence and ability," said Billy Linville, a spokesman for Perry.
Perry said his vision for the properties — including housing (affordable and market rate), shopping and community space — fits with plans approved by the city and the U.S. Department of Housing and Urban Development since the contracts were first agreed upon more than a decade ago.
"The uses being discussed today are consistent with the revitalization plans," he said.
Perry has also questioned the motivations and decision-making of the Housing Authority. In an interview with the Atlanta Journal-Constitution, he called agency officials "clowns" who didn't know what was best for the city.
"They were in diapers when I was doing affordable housing," he told the paper.
The falling-out belies a partnership between a company and an agency that reshaped Atlanta and set a national standard for the redevelopment of failed public housing into mixed-income communities.
In the 1980s, Atlanta was home to some of the country's most decrepit and crime-ridden housing projects. In 1993, as the city prepared to host the 1996 Summer Olympics, the Housing Authority teamed up with Integral and another developer to land the first grant under the federal government's HOPE VI program.
The result was Centennial Place, a mixed-income community built north of Atlanta's downtown in the place of two badly blighted housing projects. Urban policy experts lauded the work, and other cities rushed to copy "the Atlanta model."
Glover in particular won praise for reimagining the city's housing for the poor. During her 19-year tenure, the Housing Authority demolished and replaced nearly all of its old housing projects — more than 10,000 units. A Brookings Institution paper said that under her leadership, "a new kind of public housing program has evolved as well as a new kind of public housing authority."
Perry also has spent his career rebuilding some of Atlanta's poorest neighborhoods, constructing about 4,000 units in the area for low- and moderate-income residents and becoming one of the nation's leading African American developers, with offices in Dallas, Denver, Los Angeles and San Francisco.
A former director of the Federal Reserve Bank of Atlanta, he is also a mainstay of the city's philanthropic efforts, serving on the boards of prominent schools, the city's civil rights museum and the Carter Center peace advocacy group.
Perry joined the board of Fannie Mae in December 2008, shortly after the mortgage finance giant — hobbled by the housing crisis — was placed under federal conservatorship.
Although Fannie Mae's balance sheet has since improved, the company still answers to the Federal Housing Finance Agency, which is reviewing the Atlanta dispute. Reed, Buell and other Atlanta officials said the city has begun to receive inquiries and document requests from the agency's inspector general.
The inspector general's office declined to comment, but the Federal Housing Finance Agency issued a statement lauding Perry for serving on the board for almost nine years "in an exemplary manner and with the utmost integrity" and complimenting Glover's work there, as well.
"Our preliminary review suggests no connection between the service of these members on the Fannie Mae board and this contract dispute about matters that do not involve Fannie Mae," the agency said. It said it is reviewing the matter.
Reed said Fannie Mae may not have been a partner in the deals, but ensuring access to affordable housing is a core tenet of the organization's mission. On Oct. 23, he wrote to Perry complaining about what he called a "secret deal" and saying the allegations pose "an undeniable and substantial conflict of interest."
"Fannie Mae, and all those who rely on its important work, would benefit from your immediate resignation," Reed wrote, copying the other members of Fannie Mae's board.
Perry, in a statement, said he regrets calling Housing Authority representatives "clowns" to the Atlanta newspaper but said that "Mayor Reed's tenure is cluttered with dubious actions." Several contractors and the city's former chief purchasing officer have pleaded guilty in a corruption scandal. Reed, who will leave office in January because of term limits, has denied wrongdoing.
Tom Forrester, a former chief financial officer for Progressive Insurance who served on the Fannie Mae board with Perry until leaving last year, rebutted any suggestions that Perry was unethical and said the developer was "incredibly committed to affordable housing."
"Egbert Perry's moral compass is true north," Forrester said in an interview. "He does his homework, he's really smart, and he listens. You couldn't find a finer human being."
When Buell looked into the amended deals in the summer of last year, she said, she couldn't believe the city had agreed to sell the properties at such a low price and forgo so much control over what is built there.
As in other big cities, the cost of housing in Atlanta has soared, with single-family home prices in the area rising 42 percent over the past five years. Typical rent for a one-bedroom Atlanta apartment rose from $1,100 a month in 2012 to $1,457 today, according to Zillow, challenging the budgets of moderate- and low-income families in particular.
The properties under contract to Integral are largely in once-impoverished neighborhoods that are seeing a revitalization, thanks in part to the efforts of Integral and other firms.
One of the properties, on the site of the former Capitol Gateway projects, is near a booming area of East Atlanta and the Georgia State Capitol. Another, the former Harris Homes, is close to Morehouse College and the Atlanta Beltline, a loop of trails built along a former rail line that is attracting apartment developers and new restaurants.
Developing the four sites represents a chance for Integral to capitalize on years of work turning the neighborhoods around.
The company says that it still plans to build units for low- or moderate-income earners on the properties but that it would be backward "to re-create communities of concentrated poverty in the city," even if they are mixed among market-rate units and new shops.
Atlanta officials say that with housing costs rising in these neighborhoods, the need for affordable units is much greater than anyone could have anticipated when the projects were demolished. In addition to cost increases the city has experienced, about 15,000 units in Atlanta are expected to have rent caps lifted in the next 10 years, according to the city.
"To the extent that we can place our residents near transit and near job centers, they have a better opportunity to become a part of the economic success the city is enjoying right now," Reed said.
In its suit, the Housing Authority asks for the agreements to be invalidated. Reed said the city plans to sue Perry and Glover individually, as well. Anything, he said, for the city to get control of its land back: "We don't intend to let this stand at all."