Saratoga Development Corp. v. U.S.

• Decision Date: 15 April 1994
• Docket Number: 92-5020 and 92-5026,Nos. 92-5019,s. 92-5019
• Citation: 21 F.3d 445
• Parties: , 39 Cont.Cas.Fed. (CCH) P 76,649 SARATOGA DEVELOPMENT CORPORATION, Appellant, v. UNITED STATES of America, et al. SARATOGA DEVELOPMENT CORPORATION, Appellant, v. UNITED STATES of America, et al. MINORITY BUSINESS ENTERPRISE LEGAL DEFENSE AND EDUCATION FUND, INC., et al., v. UNITED STATES of America, et al.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 445

21 F.3d 445

305 U.S.App.D.C. 351, 39 Cont.Cas.Fed. (CCH) P 76,649

SARATOGA DEVELOPMENT CORPORATION, Appellant, v. UNITED STATES of America, et al.

SARATOGA DEVELOPMENT CORPORATION, Appellant, v. UNITED STATES of America, et al.

MINORITY BUSINESS ENTERPRISE LEGAL DEFENSE AND EDUCATION

FUND, INC., et al., v. UNITED STATES of America, et al.

Nos. 92-5019, 92-5020 and 92-5026.

United States Court of Appeals District of Columbia Circuit.

Argued Dec. 3, 1993.

Decided April 15, 1994.

Appeal from the United States District Court for the District of Columbia (Civil Action Nos. 90-02366, 90-00474 and 90-00544).

Bruce A. Baird argued the cause for appellant. With him on the briefs were Wesley S. Williams, Jr. and Alan A. Pemberton.

Richard N. Reback, Asst. U.S. Atty., argued the cause for the federal appellees. With him on the brief were J. Ramsey Johnson, U.S. Atty. at the time the brief was filed, John D. Bates and R. Craig Lawrence, Asst. U.S. Attys. Madeleine Schaller entered an appearance.

Howard B. Possick argued the cause for appellees Federal Triangle Corporation and Delta Partnership. With him on the brief was David L. Kelleher.

Before: WALD, BUCKLEY, and WILLIAMS, Circuit Judges.

Opinion for the Court filed by Circuit Judge WILLIAMS.

Dissenting opinion filed by Circuit Judge WALD.

STEPHEN F. WILLIAMS, Circuit Judge:

The Federal Triangle Development Project will produce a federal office complex second in size only to the Pentagon. The appellant, Saratoga Development Corporation, sought to be selected as the project's developer, but the government picked the Delta Partnership instead. Saratoga sued in district court, complaining that the Pennsylvania Avenue Development Corporation ("PADC")--which was in charge of selecting the developer--had failed to follow generally applicable federal procurement law. The PADC claimed that it had not violated those rules, but, more pertinently, it argued that Congress had in fact specified a different set of procurement rules for the project--namely, those the PADC had historically used in competitions for private development under PADC supervision. The district court accepted Saratoga's theory as to the applicable rules and found them violated, but held that the violations inflicted no harm on Saratoga. It thus granted summary judgment for the government. Saratoga Dev't Corp. v. United States, 777 F.Supp. 29 (D.D.C.1991). We agree with the PADC as to the applicable rules, and find no violation.

I. Background

A. The Pennsylvania Avenue Development Corporation Act of 1972

Pennsylvania Avenue connects the Capitol and the White House in Washington, D.C. In 1972, finding that the area adjacent to this stretch of the avenue was "blighted" and was not being used "in a manner suitable to its ceremonial, physical, and historic relationship to the legislative and executive branches of the Federal Government", see 40 U.S.C. Sec. 871, Congress created the PADC as a wholly owned government corporation. See id. Sec. 872. Congress directed the corporation to devise an overall development plan for the area, id. Sec. 874, and gave it two different sorts of authority to implement this plan. Not only could the PADC carry out publicly funded construction and rehabilitation projects, see, e.g., id. Sec. 875(16), but it could also regulate private development of the PADC area. See, e.g., id. Sec. 875(8). Indeed, all private development in the PADC area had to be approved by the corporation. Id. Sec. 876(b). Thus, the PADC acts both as a developer in its own right and as a sort of specialized zoning commission.

Acting in its first capacity, the PADC has built new parks, widened and repaved the sidewalks along Pennsylvania Avenue, reconstructed the street itself, and installed amenities such as street furniture and trees. As of 1988, the PADC had spent approximately $100 million in public funds for such projects. Joint Appendix ("J.A.") 425.

But this public spending was intended largely as seed money, designed "to create an entirely new setting for private development". Indeed, from 1977 (when Congress gave the PADC the go-ahead) until the project at issue in this case was launched, the great bulk of the money flowing into the PADC area was private rather than public. See id. (reporting that as of 1988 the PADC's $100 million investment had "attracted $1.4 billion in new private investment throughout the development area"). The principal goal of the PADC's actions as a developer in its own right, then, was to attract private development to be guided by the PADC in its capacity as a zoning commission.

Acting in this latter capacity, the PADC has superintended two different sorts of private development: private development initiated by the developer, and private development initiated by the PADC itself through a "development competition". The PADC has set forth procedures for its role in these two types of private development in a document called Development Policies and Procedures, originally adopted in 1980 and amended in 1982 and 1984. See Administrative Record ("A.R.") tab 20. The sections of this document covering the two types are captioned "Policy and Procedures Regarding Development of Privately Owned Sites" and "Policy and Procedures Regarding Development Competitions".

For the first sort of private development, the PADC's zoning role is relatively conventional. In essence, people who own land in the area and who want to develop it must submit detailed proposals to the PADC for approval; if they receive that approval they can build their projects without going through a development competition. (The PADC sometimes helps them assemble the parcels necessary to complete their projects, though they must bear all the costs.)

The second sort of private development superintended by the PADC is initiated by the corporation itself. The PADC acquires whatever parcels are necessary in addition to the ones it already owns. It then holds a "development competition" to decide who will develop them. Assuming both parties can hammer out the details, it sells or leases the parcels to the winner, who then proceeds with the project. Though initiated by the PADC, private development conducted under this procedure is privately financed and produces property that is privately owned.

B. The Federal Triangle Development Act of 1987

By August 1987, the PADC had conducted four "development competitions" for multi-million dollar projects. In 1978 it selected the developer for "National Place", a complex that includes a shopping mall, a hotel, and the National Theater. That same year, the PADC also selected the developer who would refurbish the Willard Hotel. In 1984 came the development competition for Market Square, which combines residential and retail space. Finally, in 1987 the PADC selected the developer for an apartment complex called Lansburgh's.

Congress apparently was quite pleased with this track record. Though federal procurement law generally provides that only the General Services Administration ("GSA") can construct public buildings, the Federal Triangle Development Act of 1987 bypassed the normal mechanisms and entrusted the Federal Triangle Development Project to the PADC, subject to various consultation requirements. See 40 U.S.C. Secs. 1101-09. The statute transferred the title for the development site from the GSA to the PADC, id. Sec. 1102, and directed the PADC to come up with logistical plans and design criteria for the federal building complex that Congress envisioned, id. Sec. 1103. Once these plans and criteria cleared a legislative-veto procedure, cf. Immigration & Naturalization Serv. v. Chadha, 462 U.S. 919, 103 S.Ct. 2764, 77 L.Ed.2d 317 (1983), the statute instructed the PADC to select the site's developer through a competition "conducted in accordance with the existing policies and procedures of the Corporation for a development competition." 40 U.S.C. Sec. 1104(a)(3).

Although the ultimate cost of the Triangle Project would be borne by taxpayers, Congress arranged not to pay development costs up front. Instead, the PADC and the winning developer would enter into a "development agreement" under which the developer could hold title to the building for up to 35 years after the date on which construction began. Id. Sec. 1104(b). The developer would be obliged to lease the building to the GSA, id., at a rental rate calculated to amortize the development costs over the term of the lease id. Sec. 1105(b)(2). At the end of the lease term, when all the development costs would have been paid, title to the building would be transferred from the developer to the GSA, which would also regain title over the land on which the building was built. Id. Secs. 1104(b)(2), 1102(a)(2).

C. The PADC's Implementation of the 1987 Act

In November 1988, acting under its statutory mandate, the PADC issued a prospectus inviting entrants for its "development competition". The prospectus indicated that the PADC would evaluate proposals according to eight selection criteria, and announced that the PADC "will select the developer whose submission, in its sole judgment, best satisfies all of the selection criteria". J.A. 452.

Most of these criteria--like the applicant's responsiveness to the PADC's development program, the estimated cost of the applicant's proposal, the capability and experience of the development team's members, the track record of the applicant's construction manager, the applicant's ability to adhere to the PADC's schedule, and the proposed architectural design--were rather obvious. But the remaining two criteria were less predictable. Because the federal government would not be paying the development costs up front, the PADC recognized that some form of financing would be necessary, both for the construction period and for the remaining years during which the government was paying rent. Since the cost of the financing would affect the government's rental rate,...