The Kroger Co. - AGG Successfully Handles Complicated Environmental and Real Estate Issues

Challenge

Grocery giant The Kroger Co. sought to acquire approximately 250 acres of Fort Gillem, a former U.S. Army base in Forest Park, Ga., in order to build a distribution center of more than 1 million square feet. The fort was closed under the Base Closure and Realignment Act (BRAC). The Army sold 750-plus acres to the City of Forest Park Urban Redevelopment Authority (URA), which then immediately conveyed a portion to the client. As part of the transaction, Kroger agreed to a future sale/leaseback arrangement with the City in exchange for a bond issuance. The site had special environmental contamination issues that had to be addressed. Arnall Golden Gregory was enlisted to handle complicated environmental and real estate issues for Kroger.

Approach

AGG conducted negotiations with Georgia EPD and the United States EPA regarding the state Hazardous Site Inventory, the National Priorities List (Superfund), No Further Remedial Action (NFRAP) status and the Brownfields program. AGG also participated in negotiations with the Department of the Army, the City of Forest Park and the URA regarding acquisition documents, loan documents, reciprocal easements, restrictions and covenants, a development agreement, confidentiality agreements, indemnities, bond documents and a lease. This transaction was the first disposition of property at a closed military base in metro Atlanta.

Result

Groundbreaking for the distribution facility took place in August 2014. Gov. Nathan Deal said at the ceremony that Kroger’s project is anticipated to be the first of several similar projects at the site. Local officials hope the former military base will become a major distribution hub serving metro Atlanta and the Southeast.