Airport Road Associates, Ltd. v. United States

Under 42 U.S.C. 1485, the USDA's Rural Housing Service (RHS) makes loans for construction of affordable rental housing. From 1972-1982, each of 10 limited partnerships (with a common general partner, Olsen) entered into a 50-year loan agreement that stated that each borrower could pay off the loan and convert its properties to conventional housing after 15 or 20 years. The 1987 Emergency Low Income Housing Preservation Act, 42 U.S.C. 1472(c)), provided that before accepting prepayment, the USDA must attempt to enter into an agreement with the borrower. In 2002, Olsen was negotiating to sell to a nonprofit organization. He notified the RHS of “intent . . . to convert [some] units into conventional housing” and sought approval to pay off the mortgages. RHS responded with a checklist. Olsen did not proceed; the potential acquirer decided against purchasing the properties. In 2011, Olsen submitted more definite prepayment requests. RHS responded with an incentive offer concerning four properties, which Olsen accepted, remaining in the program. For three other properties, RHS informed Olsen that prepayment was not an option. Olsen purportedly believed that pursuing prepayment on any properties was futile. He did not submit additional applications. In 2013, the partnerships sued, alleging that the government, through the 1987 enactment or the 2011 correspondence, violated their prepayment rights. The Federal Circuit reversed the Claims Court's dismissal. The 2002 correspondence did not trigger the RHS’s duty to accept prepayment; RHS did not take any steps inconsistent with prepayment. The government did not breach its contractual obligation in 2002. Because the alleged breaches occurred no earlier than 2011, the contract claims are not barred by the six-year limitations period. The Claims Court implicitly premised the dismissal of takings claims on the same erroneous rationale. View "Airport Road Associates, Ltd. v. United States" on Justia Law