Tree Farm Development Corp. v. United States

585 F.2d 493, 218 Ct. Cl. 308, 1978 U.S. Ct. Cl. LEXIS 284
CourtUnited States Court of Claims
DecidedOctober 18, 1978
DocketNo. 173-77
StatusPublished
Cited by56 cases

This text of 585 F.2d 493 (Tree Farm Development Corp. v. United States) is published on Counsel Stack Legal Research, covering United States Court of Claims primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Tree Farm Development Corp. v. United States, 585 F.2d 493, 218 Ct. Cl. 308, 1978 U.S. Ct. Cl. LEXIS 284 (cc 1978).

Opinion

Kashiwa, Judge,

delivered the opinion of the court:

This contract case is before this court on cross motions for summary judgment. There is no genuine issue as to any material facts. After a careful review of the briefs, numerous exhibits, and oral argument of the parties, we grant defendant’s motion.

The case concerns the procedure for obtaining a federal guarantee for the financing of the development and construction of a new community, "Tree Farm,” to be located near Pensacola, Florida. Plaintiff, Tree Farm Development Corporation (hereinafter sometimes referred to as Tree Farm or plaintiff), filed an application with the New Community Development Corporation (hereinafter referred to as NCDC), a corporation within the Department of Housing and Urban Development (hereinafter referred to as HUD), seeking assistance in the form of a guarantee of loans Tree Farm might obtain to finance the project. Communication between Tree Farm and NCDC and consideration of Tree Farm’s application continued over a period of time until it was announced that the Secretary of the Department of Housing and Urban Development had suspended all consideration of proposals for loan guarantee assistance. The suspension has not been lifted, and plaintiff has filed suit in this court alleging breach of an implied contract and seeking damages in the amount of $729,000, representing its preparation and maintenance costs as well as the application fee paid when it submitted its proposal.

The facts necessary for an understanding of the issues involved are stated in the briefs filed by the parties. In essence, Congress passed the New Communities Act of 1968, Title IV of the Housing and Urban Development Act of 1968, 42 U.S.C. §§ 3901-14 (1970), to foster the planned development of new communities as a means of improving general living conditions as well as increasing the supply of housing. One of the forms of assistance authorized by Title [311]*311IV was a guarantee by the Secretary of HUD, backed by a pledge of the full faith and credit of the United States, of payment of the principal and interest of obligations issued by private new community developers. 42 U.S.C. § 3902 (1970). This assistance was a response by Congress to the difficulties encountered by developers in obtaining adequate financing at moderate costs.

Title IV was largely supplanted in 1970 by the enactment of Title VII of the Housing'and Urban Development Act of 1970, Pub. L. No. 91-609, 84 Stat. 1791, codified at 42 U.S.C. §§ 4501-32 (1970). Section 729 of Title VII created within HUD a corporate body known as the Community Development Corporation (hereinafter referred to as CDC). The CDC, later renamed the New Community Development Corporation (NCDC),1 was to carry out its functions under the direction and supervision of the Secretary of HUD. In addition to stating that CDC would perform such "functions, powers and duties as the Secretary may prescribe from time to time,” section 729 provided that the CDC was to exercise the "functions of the Secretary with respect to guarantees and loans in aid of new community development.”

Under section 712 of Title VII, 42 U.S.C. § 4513(a) (1970), a program for the development of a new community is eligible for assistance only if the Secretary determines that the program:

(1) will provide an alternative to disorderly urban growth, helping preserve or enhance desirable aspects of the natural and urban environment or so improving general and economic conditions in established communities as to help reverse migration from existing cities or rural areas;
(2) will be economically feasible in terms of economic base or potential for economic growth;
(3) will contribute to the welfare of the entire area which will be substantially affected by the program and of which the land to be developed is a part;
(4) is consistent with comprehensive planning, physical and social, determined by the Secretary to provide an adequate basis for evaluating the new community development program in relation to other plans (including State, local, and private plans) and activities involv[312]*312ing area population, housing and development trends, and transportation, water, sewerage, open space, recreation, and other relevant facilities;
(5) has received all governmental reviews and approvals required by State or local law, or by the Secretary;
(6) will contribute to good living conditions in the community, and that such community will be characterized by well balanced and diversified land use patterns and will include or be served by adequate public, community, and commercial facilities (including facilities needed for education, health and social services, recreation, and transportation) deemed satisfactory by the Secretary;
(7) makes substantial provision for housing within the means of persons of low and moderate income and that such housing will constitute an appropriate proportion of the community’s housing supply; and
(8) will make significant use of advances in design and technology with respect to land utilization, materials and methods of construction, and the provision of community facilities and services.

Further, section 716(a) of Title VII, 42 U.S.C. § 4517(a) (1970), provides:

No guarantee or loan shall be made under this part unless the Secretary has determined that the new community development program represents an acceptable financial risk to the United States, taking into consideration (1) the financial and security interests of the United States, including the manner in which the developer proposes to finance and schedule land acquisition, land development, and marketing, and (2) the public purposes of this part and the special problems involved in financing new communities, including (i) the large amount of initial capital required to finance sound new communities, (ii) the extended period before initial returns can be expected, and (iii) the irregular pattern of cash returns characteristic of this type of development.

On March 19, 1971, and effective March 1, 1971, the Secretary delegated to the CDC his functions, duties, power, and authority with respect to assistance under Title VII. 36 Fed. Reg. 5304 (1971). In general, Title VII was administered much as Title IV had been; and since many of the new forms of assistance authorized by Title VII were never implemented, the main emphasis remained on Government guarantees of developers’ obligations.

[313]*313On July 31, 1971, HUD published proposed regulations for implementation of the Title VII program. 36 Fed. Reg. 14205 (1971). The proposed regulations attempted to establish preapplication and application procedures designed to obtain sufficient information to make the determinations required by sections 712 and 716, supra.

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Bluebook (online)
585 F.2d 493, 218 Ct. Cl. 308, 1978 U.S. Ct. Cl. LEXIS 284, Counsel Stack Legal Research, https://law.counselstack.com/opinion/tree-farm-development-corp-v-united-states-cc-1978.