Franconia Associates v. United States, 536 U.S. 129, 8 (2002)

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136

FRANCONIA ASSOCIATES v. UNITED STATES

Opinion of the Court

By 1987, Congress had again become concerned about the dwindling supply of low- and moderate-income rural housing in the face of increasing prepayments of mortgages under 515.2 A House of Representatives Committee found that owners were "prepay[ing] or . . . refinanc[ing] their FmHA loans, without regard to the low income and elderly tenants in these projects." H. R. Rep. No. 100-122, p. 53.

Responsive to that concern, Congress passed ELIHPA, which amended the Housing Act of 1949 to impose permanent restrictions upon prepayment of 515 mortgages entered into before December 21, 1979. This legislation, enacted on February 5, 1988, provides that before FmHA can accept an offer to prepay such a mortgage,

"the [FmHA] shall 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 involved for not less than the 20-year period beginning on the date on which the agreement is executed." 42 U. S. C. 1472(c)(4)(A) (1994 ed.).

The legislation further provides that the FmHA may include incentives in such an agreement, including an increase in the rate of return on investment, reduction of the interest rate on the loan, and an additional loan to the borrower. 1472(c)(4)(B) (1994 ed. and Supp. V).

Under ELIHPA, if the FmHA determines after a "reasonable period" that an agreement cannot be reached, the owner who sought to prepay must offer to sell the housing to "any qualified nonprofit organization or public agency at a fair market value determined by 2 independent appraisers." 1472(c)(5)(A)(i) (1994 ed.). If an offer to buy is not

2 In 1986, Congress had passed a temporary moratorium that precluded 515 prepayments in most cases. The moratorium originally was to expire in 1987, but it was extended into 1988 by another temporary measure. See note following 42 U. S. C. 1472, p. 163 (1994 ed.).

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