McDONOUGH, GA-After agreeing to downsizing its planned mixed-use South Point Mall here to 630,000 sf from 1.2 million sf, as GlobeSt.com previously reported, Cincinnati-based North American Properties Inc. now faces a second hurdle--rejection of the entire project by the influential Atlanta Regional Commission.

The 39-member, 10-county agency has issued a preliminary 30-page report that states South Point's planned development doesn't meet the ARC's own development guidelines, agency staffers confirm for GlobeSt.com. The ARC has asked North American and the City of McDonough, which is the county seat, to respond to the report. The commission plans to issue a final report by Oct. 26, sources in a position to know tell GlobeSt.com.

South Point would be Henry County's first mall. Without the backing of the Atlanta Regional Commission, however, the estimated $100-million project could be shelved, sources familiar with the planned development tell GlobeSt.com.

North American officials are confident they can satisfy the ARC's concerns. "North American Properties has a strong relationship with ARC and the City of McDonough," Ralph Conti, the company's partner and vice president of development, tells GlobeSt.com. "We will continue meeting and working with both parties to ensure South Point meets the needs of the community."

North American's corporate partners in South Point are Atlanta-based Cousins Properties Inc. and Simon Property Group Inc. of Indianapolis. The developers had planned to open South Point's first phase by 2007.

The plans call for 570,000 sf of retail, 60,000 sf of office and nine outparcels. A residential component, included in the earlier planned 1.2-million-sf center, has been eliminated. Kohls and J.C. Penney are expected to be anchor tenants but North American has not announced any formal lease signings.

The Atlanta Regional Commission reviews all developments of regional impact and is the federally designated agency for dealing with development issues that cross city and county lines. Among those issues are transportation, land use, air and water quality.

The agency's membership includes the chairs of 10 county commissions, Atlanta's Mayor Shirley Franklin and one city council member, the mayors of 11 other cities in the 63-city region, 15 citizen members and a representative of the Georgia Department of Community Affairs. The 10-county area includes Cherokee, Clayton, Cobb, DeKalb, Douglas, Fayette, Fulton, Gwinnett, Henry and Rockdale.