AIRPORT ROAD ASSOCIATES, LTD., CLIFFORD E. OLSEN--DELTA SQUARE, OAKDALE ASSOCIATES, LIMITED, SERENITY VILLAGE, A PARTNERSHIP IN COMMENDAM, SOUTHEASTERN ASSOCIATES, LTD., A LOUISIANA LIMITED PARTNERSHIP, SOUTHSIDE APARTMENTS, LTD., Plaintiffs.
UNITED STATES, Defendant-Appellee BAYOU DES GLAISES, LTD., BLOOMFIELD PARTNERSHIP II, A LOUISIANA PARTNERSHIP IN COMMENDAM, CLIFFORD E. OLSEN-- COLLEGE TOWNE, CLIFFORD E. OLSEN-- COLLINS SQUARE, A LOUISIANA PARTNERSHIP IN COMMENDAM, CLIFFORD E. OLSEN-- HAMMOND TOWNE, CLIFFORD E. OLSEN-- JEFFERSON SOUTH, CLIFFORD E. OLSEN--OLD MAN RIVER, CLIFFORD E. OLSEN--WALKER PARTNERSHIP, CLIFFORD E. OLSEN 1977-B, CYPRESS COVE ASSOCIATION, Plaintiffs-Appellants
from the United States Court of Federal Claims in No.
l:13-cv-00152-NBF, Senior Judge Nancy B. Firestone.
Blando, Eckland & Blando LLP, Minneapolis, MN, argued for
plaintiffs-appellants. Also represented by Jeff Howard
Eckland, Vince Reuter.
Matthew Paul Roche, Commercial Litigation Branch, Civil
Division, United States Department of Justice, Washington,
DC, argued for defendant-appellee. Also represented by
BENJAMIN C. MlZER, ROBERT E. Kirschman, Jr., Franklin E.
Prost, Chief Judge, LOURIE and TARANTO, Circuit Judges.
seeking to exit a federal housing program through loan
prepayment appeal from the decision of the United States
Court of Federal Claims ("Claims Court") dismissing
their claims against the United States
("government") for lack of subject matter
jurisdiction. We reverse and remand.
are ten limited partnerships that took loans from and entered
into housing development agreements with the Rural Housing
Service ("RHS") of the United States Department of
Agriculture ("USDA") to provide affordable rental
housing in Louisiana. They all share a common general partner,
Clifford E. Olsen, and wish to prepay their loans and thereby
exit the federal affordable housing program.
§ 515 of the Housing Act of 1949, ch. 338, 63 Stat. 413,
amended by the Senior Citizens Housing Act of 1962, Pub. L.
No. 87-723, § 4(b), 76 Stat. 670, 671 (codified as
amended at 42 U.S.C. § 1485), the RHS makes loans to
private, nonprofit entities to construct affordable rental
housing for elderly and low- or middle-income people. Between
1972 and 1982, each Appellant entered into a fifty-year
§ 515 loan agreement with the RHS. The loans all include
a "prepayment" provision stating that each
Appellant had the option of paying off the remaining loan
balance and converting its properties to conventional housing
any time after the first fifteen or twenty
years. See, e.g., J.A. 52
("Prepayments of scheduled installments, or any portion
thereof, may be made at any time at the option of the
Borrower." (emphasis added)).
1987, however, Congress was concerned that § 515
borrowers were choosing to prepay too often, which threatened
the availability of affordable housing under the program.
See Franconia Assocs. v. United States, 536 U.S.
129, 136 (2002) (citing H.R. Rep. No. 100-122, at 53 (1987),
reprinted in 1987 U.S.C.C.A.N. 3317, 3369). In
response, it passed the Emergency Low Income Housing
Preservation Act of 1987 ("ELIHPA"), Pub. L. No.
100-242, 101 Stat. 1877 (1988) (codified as amended at 42
U.S.C. § 1472(c)). Important to this case, ELIHPA
provides that before accepting an offer to prepay a §
515 loan, the USDA Secretary ("Secretary") must
"make reasonable efforts to enter into an agreement with
the borrower under which the borrower will make a binding
commitment to extend the low income use of the assisted
housing and related facilities." 42 U.S.C. §
1472(c)(4)(A). The Secretary can offer the borrower
incentives with such an agreement. Id. §
1472(c)(4)(B). And generally, if an agreement cannot be
reached, the borrower must offer to sell the housing to
"any qualified nonprofit organization or public agency
at a fair market value determined by 2 independent
appraisers." Id. § 1472(c)(5)(A)(i). If no
nonprofit organization makes an offer to buy within 180 days,
then the Secretary "may accept the borrower's offer
to prepay." Id. § 1472(c)(5)(A)(ii).
April 2002, the time relevant to this appeal, the RHS had
regulations in place at 7 C.F.R. § 1965 Subpart E,
implementing ELIHPA. Under these regulations, the RHS
outlined "the chronological order for the actions to be
taken" on a request for prepayment. 7 C.F.R. §
1965.204(a) (2002). The regulations specified that
"[p]rior to initiating a formal prepayment request,
borrowers considering prepaying their loans should meet with
the [RHS] ... to discuss the prepayment request and the
requirements of this procedure. The borrower will be provided
with exhibit C of this subpart, to aid in completing the
prepayment request package." Id. §
1965.205(a). Sections 1965.205 and 1965.206 set forth the
requirements for submitting a formal prepayment request.
Notably, for a prepayment request to be considered complete,
the regulations required borrowers to make the request at
least 180 days before the anticipated prepayment date and to
provide, among other things, "[a] written request to
prepay ... on a specified date"; information
"needed to develop an incentive offer"; and
"[documentation of the borrower's ability to prepay
under the conditions specified in the prepayment
request." Id. § 1965.205(c). If the agency
received a prepayment request that was not "complete,
" it would "return the request to the borrower
specifying the additional information needed."
Id. § 1965.206(a).
appeal relates to correspondence between Mr. Olsen, on behalf
of Appellants, and the RHS in April 2002. A nonprofit
organization at the time had expressed interest in acquiring
some of Appellants' properties. On April 2, 2002, during
those negotiations, Mr. Olsen sent the RHS a letter notifying
the agency of these Appellants' "intent ... to
convert [some] units into conventional housing" and
seeking approval of their "request to pay off the
mortgage(s)" on certain properties. J.A. 31. The letter
stated in its entirety:
We ask that you approved [sic] our request to pay off the
mortgage(s) on the above-captioned developments. We desire to
retain a few of the developments and we have an arrangement
with a local and national non-profits [sic] to acquire the
rest of the developments. Our intent is to convert these
units into conventional housing. As we understand the
nonprofits' motive, they, too, are ...