Damages Allowed for Midyear Section 8 Rent Adjustments

Facts: A New Jersey public housing authority (PHA) and an owner of private housing sued the United States for breaching its obligations under a housing assistance payments (HAP) contract for a housing project. The PHA claimed that the federal government didn't provide rent increases from 2001 to 2007. The PHA sought damages for the portion of the year beginning on Sept. 4, 2001. The federal government argued that rent adjustments take place only on the anniversary date, so no damages should be awarded for any portion of that year. The government also argued that a statute of limitations under the Tucker Act rules out damages for midyear Section 8 rent adjustments.

Decision: The U.S. Court of Federal Claims ruled for the PHA and private owner.

Reasoning: The court noted that the HAP contract was worded ambiguously, so it was unclear whether rent adjustments could be made during an anniversary year or only at the beginning of the year. However, according to HUD regulations, a PHA may claim rent adjustments for a portion of a particular anniversary year after the anniversary date of that year, the court said. And a claim based on HUD's failure to make rent adjustments for the period beginning on Sept. 4, 2001, was not barred by a statute of limitations under the Tucker Act, the court ruled.

• Pennsauken Senior Towers Urban Renewal Associates v. United States, September 2008