Haddon Housing Associates, Ltd. Partnership v. United States

711 F.3d 1330, 2013 WL 1165273, 2013 U.S. App. LEXIS 5810
CourtCourt of Appeals for the Federal Circuit
DecidedMarch 22, 2013
DocketNos. 2012-5046, 2012-5060
StatusPublished
Cited by18 cases

This text of 711 F.3d 1330 (Haddon Housing Associates, Ltd. Partnership v. United States) is published on Counsel Stack Legal Research, covering Court of Appeals for the Federal Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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Haddon Housing Associates, Ltd. Partnership v. United States, 711 F.3d 1330, 2013 WL 1165273, 2013 U.S. App. LEXIS 5810 (Fed. Cir. 2013).

Opinion

O’MALLEY, Circuit Judge.

The United States (“the government”) appeals two decisions of the United States Court of Federal Claims (“Claims Court”). The first is an order denying the government’s motion to dismiss a portion of Ap-pellees’ breach of contract action on statute of limitations grounds. Pennsauken Senior Towers Urban Renewal Assoc. v. United States, 83 Fed.Cl. 623, 624 (2008). The second issued following a three-day trial, finding the United States liable for breaching its contract with Appellees during 2001, and each of the years 2003-2006. Haddon Hous. Assoc. v. United States, 99 Fed.Cl. 311 (2011).

Rohrer Towers II Apartments (“Rohrer Towers II”) is a housing facility for low-income elderly residents in Haddon Township, Camden County, New Jersey. Had-don Housing Associates, Limited Partnership leased Rohrer Towers II to Housing Authority of the Township of Haddon (collectively “Haddon”), which, in turn, entered into a housing assistance payments contract (“HAP Contract”) with the United States Department of Housing and Urban Development (“HUD”) to provide low-income housing under the Housing Act of 1937 (“Housing Act”). See Housing and Community Development Act of 1974, Pub. L. No. 93-383, 88 Stat. 633, 662-66 (1974). Haddon filed suit on September 4, 2007 alleging that HUD breached the HAP Contract in each of the years from 2001-2006 by, among other things, requiring rent “comparability studies” to be submitted along with requests for annual rent adjustments and adopting a one-percent reduction of the annual adjustment factors for units occupied by the same tenant(s) from the previous year (“non-turnover units”). The Claims Court agreed and ordered rent adjustments for all relevant years other than 2002.

The government appeals the Claims Court’s ruling and contests the earlier denial of its motion to dismiss Haddon’s claim for damages for the 2001 rent year on statute of limitations grounds. The government also appeals the Claims Court’s decision that regulatory imposition of a mandatory one-percent (1%) rent reduction for non-turnover units was arbitrary, and thus beyond HUD’s authority. Haddon appeals the Claims Court’s failure to order a rent adjustment for 2002. Finally, Haddon appeals the Claims Court’s refusal to set aside the government’s post-contract imposition of a requirement that rent adjustment requests be submitted sixty (60) days prior to the HAP Contract anniversary date. All appeals are timely. This court has jurisdiction pursuant to 28 U.S.C. § 1295(a)(3). For the reasons below, we affirm-in-part and reverse-in-part.

I.

Section 8 of the Housing Act created a housing assistance program through which HUD subsidizes the rents of low-income individuals and families living in privately-owned homes and apartments. See 42 U.S.C. § 1437f. Building owners enter into HAP Contracts that obligate HUD to pay rent subsidies on behalf of low-income occupants. Id. Each HAP Contract establishes the maximum monthly rent, otherwise known as the “contract rent,” that a building owner is entitled to receive for a particular housing unit. 42 U.S.C. § 1437f(c)(l); 24 C.F.R. § 880.201. The tenants are obligated to pay a portion of the established monthly rent based on particular income guidelines, see 42 U.S.C. § 1437a, while the government pays a subsidy to the building owner to bridge the [1333]*1333difference between the tenant obligation and contract rent. See 42 U.S.C. § 1437f.

The maximum monthly rent is tied to the fair market rental value of the housing. The “fair market rental” value for an area is published in the Federal Register and is based on the most recent available data of rents for existing or newly constructed rental units of various sizes and types in the market area. 42 U.S.C. § 1437f(c)(l). Once a baseline rent is established, the Housing Act also provides for at least yearly adjustments of the contract rent. 42 U.S.C. § 1437f(c)(2)(A). The upward rental adjustments are to “reflect changes in the fair market rentals established in [a] housing area for similar types and sizes of dwelling units or, if the Secretary determines, on the basis of a reasonable formula.” 42 U.S.C. § 1437f(c)(2)(A).

HUD uses Automatic Annual Adjustment Factors (“AAAF”) to calculate the amount of the upward rental adjustments. 24 C.F.R. § 888.201. HUD publishes the AAAFs in the Federal Register at least annually. 24 C.F.R. § 888.202. Yearly increases, however, are subject to an overall limitation to ensure that “[ajdjustments in the maximum rents ... shall not result in material differences between the rents charged for assisted and comparable unassisted units of similar quality, type, and age in the same market area, as determined by the Secretary.” 42 U.S.C. § 1437f(c)(2)(C).

Congress twice modified the administration of HAP Contracts, in 1989 and 1994. In 1989, Congress amended the Housing Act to enforce the overall limitation by providing that the Secretary will establish regulations for conducting “comparability studies.” See Department of Housing and Urban Development Reform Act of 1989, Pub. L. No. 101-235, 103 Stat. 1987, 2057-59 (codified at 42 U.S.C. § 1437f(c)(2)(C)). A comparability study compares private market rents against Section 8 rents of units of comparable size and type in a particular area. See Cisneros v. Alpine Ridge Grp., 508 U.S. 10, 14, 113 S.Ct. 1898, 123 L.Ed.2d 572 (1993). HUD, prompted by the amendment requirement, began to create the studies to enforce the overall limitation in rental markets where the Secretary believed application of the AAAFs to the contract rents would generate materially higher rents for assisted units compared to similar unassisted units. Id. After a challenge by building owners, the Supreme Court concluded that the HAP Contracts authorized HUD to conduct such comparability studies. Id. at 21, 113 S.Ct. 1898. Congress was not yet finished amending the statutory framework of Section 8.

In 1994, Congress revised the Housing Act and shifted the burden to building owners to prove that the adjusted rents (ie., the maximum rents plus a particular year’s AAAFs) do not exceed rents of comparable unassisted units.

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711 F.3d 1330, 2013 WL 1165273, 2013 U.S. App. LEXIS 5810, Counsel Stack Legal Research, https://law.counselstack.com/opinion/haddon-housing-associates-ltd-partnership-v-united-states-cafc-2013.