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Summerfield Housing Limited Partnershiop v. United States

December 3, 1999


Before Michel, Circuit Judge, Smith, Senior Circuit Judge, and Schall, Circuit Judge.

The opinion of the court was delivered by: Schall, Circuit Judge.


Summerfield Housing Limited Partnership ("Summerfield") appeals the decision of the United States Court of Federal Claims that granted summary judgment in favor of the United States in Summerfield's suit against the United States for additional compensation and declaratory relief under a lease agreement between Summerfield and the government. The Court of Federal Claims held that an annual Solid Waste Service Charge ("SWSC") assessed by the Department of Environmental Resources ("DER") of Prince George's County, Maryland, is a special assessment tax which Summerfield is obligated to pay under the lease. See Summerfield Housing Ltd. Partnership v. United States, 42 Fed. Cl. 160 (1998). We affirm.




The pertinent facts are not in dispute. On March 29, 1991, the Department of the Navy ("Navy") issued Request for Proposal ("RFP") No. N6247791RP00017 for the construction of, among other things, 1,242 family housing units in Prince George's County, Maryland. The RFP provided that the successful offeror would be required to build the units and then lease them to the government for a 20 year period. The RFP further provided that the maximum annual rental for the project set forth in the RFP did "not include utility consumption and property maintenance costs, which will be paid by the Government." The RFP stated:

The fixed rent includes the successful offeror's return, debt service, property taxes, and insurance. The Government will pay the successful offeror 100 percent of all increases in property taxes and insurance premiums after the second year of full occupancy. The Government will manage and maintain the units and pay all utility consumption costs directly.

The RFP also stated that the offeror would contact a local private waste collection firm to incorporate the requirements for a solid waste collection system in its project design. According to the RFP, upon issuance of a "certificate of acceptance for the entire premises by the government, selection of a private waste collection firm for these [solid waste collection] services (including rental of the dumpsters) will be contracted by the government under the maintenance contract for this project." The RFP also included a copy of the actual lease, which was to take effect once the government accepted the construction work.

On May 24, 1991, the Navy issued written responses to questions submitted by potential offerors. The first question and answer read:

Q. Will tax increases incurred by the Government after the second year of the Lease include special assessments and taxes for special services?

A. The Government will pay increases in the general real estate taxes after the second full year of occupancy. General real estate taxes as defined in Article III.D., page H-7, of the Lease Agreement, are taxes which are assessed on an ad valorem basis against all taxable real property without regard to the benefit to the property, for the purpose of funding general governmental services. A "special assessment" is generally a one-time assessment for improvements or a requirement for approval of the development and does not meet the definition of a "general real estate tax" as used in this Lease Agreement. Therefore, the Navy does not have the authority or obligation to pay such a fee. (emphasis added).

The term "special assessment" is not defined in the RFP or the lease.

The contract was awarded to the Hunt Building Corporation ("Hunt") on September 26, 1991. Hunt assigned its interest in the lease to Summerfield on December 1, 1995. In due course, the government contracted with a private firm for solid waste collection services.

The lease, which remains in effect, incorporates the terms and conditions of the RFP and Hunt's proposal. Article III of the lease, dealing with "RENT," provides, in pertinent part, as follows:

C. Rent reflects the cost of ownership to the Lessor for newly-constructed facilities provided to the Government over the term of the lease including, but not limited to, the cost of land, improvements, property taxes, utility connection fees, insurance, the cost of borrowing money, and profits earned thereon. Rent shall be fixed for the lease term with the exception of general real estate tax and insurance increases after the ...

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