Creekside Ltd. P'ship v. Alaska Hous. Fin. Corp.
| Decision Date | 12 March 2021 |
| Docket Number | Supreme Court No. S-17517 |
| Citation | 482 P.3d 377 |
| Parties | CREEKSIDE LIMITED PARTNERSHIP; Creekside-Alyeska, LLC; and Community Development, Inc., Appellants, v. ALASKA HOUSING FINANCE CORPORATION, Appellee. |
| Court | Alaska Supreme Court |
Taylor B. McMahon, Law Offices of Royce & Brain, Anchorage, for Appellants.
Cynthia L. Cartledge and Megan N. Sandone, Jermain, Dunnagan & Owens, Anchorage, and Stefan A. Saldanha, Assistant Attorney General, Anchorage, and Kevin G. Clarkson, Attorney General, Juneau, for Appellee.
Before: Bolger, Chief Justice, Winfree, Maassen, and Carney, Justices. [Borghesan, Justice, not participating.]
A project developer that had used state-allocated federal tax credits for a low-income housing project sued the state housing authority, asserting an option to eliminate a contractual obligation to maintain the project as low-income housing for 15 years beyond the initial 15-year qualifying period. The superior court granted summary judgment in favor of the housing authority, and the developer appeals several aspects of the court's ruling. We conclude that the court correctly interpreted the relevant statutes and contract documents and correctly determined there were no material disputed facts about the formation of the parties' agreements. We therefore affirm the court's grant of summary judgment in the housing authority's favor.
The federal government created a low-income housing tax credit (LIHTC) program as part of the Tax Reform Act of 1986.1 The program incentivizes development and rehabilitation of affordable rental housing by providing tax credits to developers of qualified low-income housing projects.2
Tax credit allocation involves both the federal and state governments.3 The federal government allocates LIHTCs to states based on population.4 State housing agencies then are responsible for allocating tax credits to low-income rental housing developers under their state's qualified allocation plan,5 which must meet certain requirements.6 For example, all allocation plans must prioritize projects serving the lowest-income tenants and remaining affordable for the longest periods.7
The Internal Revenue Code establishes rules about the length of time a project must maintain affordability requirements to receive tax credits.8 The Code provides that developers must make "an extended low-income housing commitment" to receive credits, requiring the project to maintain affordability for an "extended use period."9 The extended use period lasts 15 years beyond the initial 15-year compliance period, for a total of 30 years, unless otherwise specified by the state agency's agreement.10
The Code provides two possibilities for ending the affordability restrictions prior to the extended use period's end.11 First, the extended use period may end prematurely if the project is acquired from the developer by foreclosure (or instrument in lieu of foreclosure).12 Second, the extended use period may end prematurely under what is known as the "qualified contract" option.13 Under this option a developer may remove the project from the program if, after the initial 15-year compliance period, the state housing agency cannot find a buyer for the project that will continue operating it as low-income housing.14 But a state may exclude the qualified contract option; the Code provides that the qualified contract option "shall not apply to the extent more stringent requirements are provided in the agreement or in State law."15
Alaska Housing Finance Corporation (AHFC) is a public corporation16 responsible for administering Alaska's LIHTC program.17 AHFC's Greater Opportunities for Affordable Living Program Rating and Award Criteria Plan (GOAL program) serves as the agency's allocation plan.18 In August 1999 AHFC announced its GOAL program for fiscal year 2000. The program sought "to encourage the responsible development of housing for lower-income persons and families through the allocation of GOAL program funds." AHFC stated that it would use the GOAL program criteria to distribute the program funds, including tax credits. The GOAL program established how AHFC would score applications. The second criterion, titled "Extended Low-Income Project Use," stated:
Creekside Limited Partnership initially consisted of general partner Alpine Partners, Ltd., a for-profit developer, and limited partner Anchorage Mutual Housing Association (AMHA), a non-profit organization.19 Creekside applied for tax credits under the 2000 GOAL program in October 1999. Creekside proposed to construct a 30-unit, low-income housing project in Girdwood. Creekside awarded itself six additional qualifying points in its application for "Extended Low Income project use," stating the project would "maintain affordability for a 30 year period."
AHFC sent a December 1999 notice of intent to award tax credits to Creekside for its project. AHFC indicated it would send Creekside a "reservation agreement" that, along with other documents, would "outline specific project requirements in accordance with representations made ... in [Creekside's] application, as well as federal and/or state programmatic requirements which may be applicable." Creekside's representative signed the acceptance letter attached to the award letter.
AHFC subsequently sent Creekside the 2000 LIHTC reservation agreement, which provided: One of these "characteristics" was that "100% of the residential rental units are reserved for families at or below 60% of the median income." Creekside's representative signed the reservation agreement.
Creekside entered into a land use restrictive agreement with AHFC in December 2001.20 Creekside agreed to "lease one hundred percent (100%) of the residential rental units in the [c]omplex to individuals or families whose income is sixty (60) percent or less of area median gross income"; it also agreed to do so for 30 years, beginning when the apartment complex became a qualified low-income housing project. Notwithstanding this 30-year requirement, the agreement provided that "the extended use period for any building which is part of the [project] shall terminate: [o]n the date the building is acquired by foreclosure or instrument in lieu of foreclosure."
In January 2018 Creekside requested to exercise the qualified contract option described in the Internal Revenue Code to terminate the project's affordability restrictions.21 AHFC denied this request on the ground that Creekside had committed to maintaining the affordability restriction for the full 30 years without a qualified contract option.
Creekside sued AHFC in April 2018, seeking declaratory judgment that Creekside had "not waived [its] right to exercise the qualified contract option." The parties filed cross-motions for summary judgment.22 Creekside argued that it could exercise the qualified contract option because it had never waived the right to do so. Creekside stated that it believed it was merely complying with federal law when it claimed the six points for a 30-year extended project life in its application and asserted that AHFC did not communicate to applicants that claiming the six points "would be construed as a waiver." AHFC responded that Creekside chose to accept Alaska's "more stringent requirements" by claiming the six points on its application and that the land use restrictive agreement reflected this aspect of the project agreement.
The superior court held oral argument on the motions in March 2019. Later in March the court issued an order granting AHFC's summary judgment motion and denying Creekside's summary judgment motion. The court later denied Creekside's reconsideration motion.
Creekside now appeals both the superior court's grant of AHFC's summary judgment motion and denial of Creekside's reconsideration motion.
"We review grants of summary judgment de novo."23 We will affirm "if the record presents no genuine issue of material fact and if the movant is entitled to judgment as a matter of law."24
"Questions of contract interpretation are generally questions of law which [are] reviewed de novo."25 But factual questions exist "when the meaning of contract language depends on conflicting extrinsic evidence."26 Finally, "[t]he question of the meaning of a written contract, including a review of the extrinsic evidence to determine whether any of the extrinsic evidence is conflicting, is a legal question which we review de novo."27
"We review the denial of a motion for reconsideration for abuse of discretion."28 An "[a]buse of discretion will be found ‘when the decision on review is manifestly unreasonable.’ "29
As discussed above, under federal law there are two ways a developer using tax credits for a low-income housing project can end affordability restrictions prior to 30 years: (1) foreclosure of the project property, or (2) the qualified contract option.30 The qualified contract option does "not apply to the extent more stringent requirements are provided in the agreement or in State law," but there is no such exception for foreclosure.31
When granting summary judgment for AHFC, the superior court concluded that Creekside had "agreed to an affordability requirement that is more stringent than the federal baseline." Applying basic contract...
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