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Franconia Associates Wins Section 515 Case

MINNEAPOLIS-Besides owners of affordable housing, a US Supreme Court decision is expected to have a broader impact in other industries that conduct business with the federal government.

By Jim McCartney | Updated on June 10, 2002

MINNEAPOLIS-The US Supreme Court ruled Monday that private owners of Section 515 affordable housing have the right to enforce their contracts with the US government and seek compensation for lost income. In its decision, the high court applied the same principles of law to the US government as it applies to citizens in ruling owners could enforce contracts they entered into with the Farmer’s Home Administration as long as 30 years ago.

The 9-0 decision was a victory for Franconia Associates, a Taylors Falls, MN-based housing firm, whose attorneys argued owners should have the right to reclaim lost income from the date they decided to prepay their government mortgage and were denied the opportunity to do so. It rejected the 1988 effective date of Congress’ Emergency Low Income Housing Preservation Act, which made it more difficult for owners to opt out of the program.

Section 515 was designed to create rental housing in rural areas through private development and ownership.

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