United States of America v. 300 Units of Rentable Housing, located on approximately 57.81 acres of Eielson Air Force Base et al
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ALASKA
UNITED STATES OF AMERICA,
Case No. 4:06-cv-0023-RRB
300 UNITS OF RENTABLE HOUSING,
located on approximately 57.81
acres of Eielson Air Force
Base, fairbanks, Alaska, and
POLAR STAR ALASKA HOUSING
Before the Court are the United States ("Government") and
Polar Star Alaska Housing Corporation ("Polar Star"), respectively
Plaintiff and Defendant in this eminent domain proceeding.
property at issue consists of 300 units of military family housing
located on Eielson Air Force Base near Fairbanks, Alaska.
The following motions are pending before the Court:
ORDER RE PENDING MOTIONS - 1
(1) Polar Star’s Motion in Limine to Establish January 6,
2007, as Expiration Date of Ground Lease at Docket 43, and the
Expiration Date of the Land Lease at Docket 47;
(2) The Government’s Motion Opposing Appointment of a
Land Commission for the Determination of Just Compensation at
(3) The Government’s Motion for Preliminary Determination
to Establish the Validity of the Housing Lease’s Renewal at Docket
55, and Polar Star’s Motion in Limine to Bar Evidence of Project
Lease Extension at Docket 57; and
(4) Polar Star’s Motion for Partial Judgment on the
Pleadings at Docket 58.
In April 1984, the United States Air Force issued a
“Request for Proposal” to privately develop 300 units of military
family housing for lease back to the Government.1
Request for Proposal, the winning bidder would enter into an
“Agreement to Lease”2 and a 23-year “Ground Lease”3 of 57.81 acres
of land from the Government
Docket 43, Ex. A.
See id., Ex. B.
See id., Ex. D.
ORDER RE PENDING MOTIONS - 2
to the developer for nominal rent of
The first three years of the Ground Lease would allow for
construction of the units, sidewalks, and roads (“Improvements”).5
Upon completion of the construction, the Developer would execute a
20-year lease of the units to the Government (“Project Lease”).6
The Ground Lease and the Project Lease would expire on
the same date, twenty-three years after the execution of the Ground
Upon termination of the Ground Lease, the Government had
the option of either releasing or purchasing the Improvements.
the Government choose neither option, the developer would be
responsible to remove and relocate the Improvements.
the developer left the Improvements in place after termination of
the Ground Lease, the Government could declare them to be property
of the Government without payment of additional compensation.8
The Request for Proposal included drafts of the Agreement
to Lease, the Ground Lease, and the Project Lease which were
prepared by the Government and which contained blanks for the
commencement and expiration dates.
The exact beginning and ending
See id., Exs. E, D.
See id., Ex. C at 2, ¶ 5.
See id., Ex. A.
Docket 47 at 5-6, & Ex. G.
See Docket 43, Ex. D, ¶ 20.
ORDER RE PENDING MOTIONS - 3
dates of the 23-year term would not be added until the bid was
awarded and the contracts were executed.
Ben Lomond, Inc. (“Lomond”) was the successful bidder.
On January 7, 1985, Lomond and the Government signed the Agreement
to Lease,9 and the Ground Lease.10
Although the form provided for
the Ground Lease contained multiple references to a term of 23
years, the parties filled in the blanks on the form to state that
the Ground Lease extended for a period “beginning 7 January, 1985,
and ending 6 January, 2007.”11
At some point after signing the Agreement to Lease and
the Ground Lease, Lomond determined that construction could be
completed in two years or less, rather than the three years allowed
during the first three years of the Ground Lease.12
1985, the parties amended the Agreement to Lease and the Ground
Lease to reduce the allowable construction period to 21 months and
to authorize phased occupancy of units upon completion.13
November 22, 1985, the Government and Lomond executed an Interim
Id., Ex. B.
Id., Ex. D.
Id. at 1.
Id., Ex. C at 2, ¶ 5.
Id. at 4, & Ex. E; Docket 47 at 6, & Ex. H.
ORDER RE PENDING MOTIONS - 4
Occupancy Lease to enable the Government to lease the housing units
as the units were completed.14
Construction was certified as complete on July 21, 1986,
eighteen months after execution of the Agreement to Lease and
On August 6, 1986, Lomond and the Government
executed the Project Lease, formally leasing all 300 housing units
to the Government “for a period of twenty (20) years commencing on
6 August, 1986 and terminating on 5 August, 2006,”16 after which the
Government had the right to renew for subsequent annual periods.17
Lomond owned and operated the 300 housing units through
1994, when it failed to pay taxes owed to the Fairbanks North Star
Lomond contested the Fairbanks North Star Borough’s tax
assessment at Board of Equalization hearings and in Alaska state
The resulting litigation lasted several years and reached
the Alaska Supreme Court twice.19
Although the litigation dealt
mostly with other provisions of the Leases, when the various courts
Docket 47 at 6, & Ex. J.
Docket 43, Ex. F.
Id., Ex. G.
Docket 47 at 6-7, & Ex. B.
See id., Exs. L, N, O, P & Q.
See Lomond v. Fairbanks N. Star Borough Bd. of
Equalization, 760 P.2d 508 (Alaska 1988) (“Lomond I”); Lomond v.
Fairbanks N. Star Borough Bd. of Equalization, 860 P.2d 1248, 1252
(Alaska 1993) (“Lomond II”).
ORDER RE PENDING MOTIONS - 5
were required to determine the duration of the Ground Lease, the
courts concluded its term was 23 years, even after acknowledging
the inconsistent dates.20
foreclosure provision in its financing obligations to Aetna Life
Insurance Co. (“Aetna”).
interest in the Project.
project to Polar Star.
Aetna in turn foreclosed on Lomond’s
In 1995, Aetna sold its interest in the
Following the foreclosure sale, Polar Star
became assignee of Lomond’s original interest in the Agreement to
Lease and the Ground Lease, as well as owner of the 300 housing
units and the lessor pursuant to the Project Lease.
In 2004, Polar Star and the Government began to discuss
what would happen to the housing units upon termination of the
Congressional authorization and an appropriation of $18 million for
In January 2006, Congress gave authorization to
acquire Polar Star’s entire interest at the expiration of the
Project Lease and appropriated $17.9 million for that purpose.
Congress required that the purchase be at fair market value and
that a notice and economic analysis be sent to Congress if the Air
Force decided to move forward with the acquisition.
Docket 47, Ex. L at 5, 11 n.1 (“The lease term is
throughout the agreement stated to be 23 years. However, the dates
recited, January 7, 1985 to January 6, 2007, cover only 22
ORDER RE PENDING MOTIONS - 6
In March 2006, the parties focused their discussions on
the Government’s acquisition of the housing units pursuant to the
Agreement to Lease, the Project Lease, and the Congressional
Both parties commissioned appraisals.
the negotiation process, however, the Government informed Polar
Star not to assume that the Government would purchase the units,
and asked what plans Polar Star had made to remove the units.21
Despite months of dialogue, the parties were ultimately unable to
agree on a purchase price.
Polar Star asserted that the appraised
purchase value of the units was $26,000,000.
The Government, on
the other hand, believed that the fair market value was $4,500,000.
On May 18, 2006, the Government informed Polar Star by
letter that it intended to renew the Project Lease for a one-year
term, effective August 5, 2006, through August 5, 2007, pursuant to
the option in Article V of the Project Lease.22
Article V required
the parties to renegotiate the rent for the renewal term.23
parties failed, however, to reach an agreement on the amount of
rent for the renewal term, as required by Article V.
belief that it effectively renewed the Project Lease for a full
year, the Government vacated the units by December 28, 2006, in
order to allow Polar Star extra time to remove the units.
See Docket 47 at 10, & Ex. T.
See Docket 56, Ex. C.
Id., Ex. A.
ORDER RE PENDING MOTIONS - 7
October 2006 and January 2007, the Government advised Polar Star in
writing that it could begin removal of the units immediately.24
Because the parties were unable to reach an agreement on
the amount of rent for an extended term of the Project Lease, the
Government decided to “condemn a continuation of the Project Lease
to coincide with the remaining term of the [Ground] Lease,” leaving
it to this Court to determine appropriate compensation.25
28, 2006, the Government filed the present eminent domain action to
take the 300 housing units for a period of five months, from August
6, 2006 through January 6, 2007.26
Both the Complaint and the
Declaration of Taking filed in this suit described the taking as “a
leasehold of 300 units of rentable housing, sidewalks, roads, and
other appurtenances, commencing on August 6, 2006, and ending on
January 6, 2007,” pursuant to the Project Lease.27
condemnation action is “to provide the Air Force with a means of
clearing title to the first five months of the one-year extension
of the [Project] Lease; obtain legal rulings as to the amount of
rent owned under the extension; and if necessary, provide the Air
Docket 47, Exs. Y, Z, & AA.
Docket 43 at 7, & Ex. I.
Id.; Docket 4-1; Docket 43 at 7.
ORDER RE PENDING MOTIONS - 8
Force a period of time in which it could relocate military families
housed in the [housing units].”28
The Ground Lease Terminates on January 6, 2008
The Ground Lease contains inconsistent duration terms on
its face: “for a term of twenty-three (23) years, beginning 7
January, 1985, and ending 6 January, 2007 . . . .”29
for 23 years, the specified date range is only for 22 years.
the error (only recently discovered by the parties) should be
interpreted is a matter of dispute.30
Polar Star argues that the parties deliberately set 6
January, 2007, as the termination date, effectively shortening the
Ground Lease to 22 years, and that this shorter duration reflects
the construction which Lomond completed in less than the allotted
three-year construction period.31
For support, Polar Star points
to principles of contract interpretation.
For example, Polar Star
argues, specific (“6 January, 2007”), rather than general terms
(“23 years”), and typewritten (“6 January, 2007”), rather than preprinted (“23 years”) terms should control, and that the contract
Docket 47 at 11.
Docket 43, Ex. D at 1.
See Dockets 43, 47, 52, & 64.
Docket 43 at 8.
ORDER RE PENDING MOTIONS - 9
Polar Star also points to the course of dealing between
the parties. In correspondence between the parties, the Government
has referred to January 6, 2007, as the termination date.
referenced January 6, 2007, as the termination date of the Ground
It appears that the Government has never, prior to this
lawsuit, stated that the Ground Lease would terminate in 2008.
Individuals involved in drafting and signing the Ground Lease
believed that it would terminate on January 6, 2007.33
The Government argues that the parties intended the
Ground Lease to run for 23 years, and that a plain reading of the
documents shows that “6 January, 2007” is a scrivener’s error which
should be reformed to read: “6 January, 2008.”34
also argues that although the parties did not recognize the
authorities, and potential financiers, that the term was for 23
Id. at 11-13.
Id. at 13-18.
Docket 47 at 13-14, 20-22.
Id. at 22-23.
ORDER RE PENDING MOTIONS - 10
The Court concludes that the Ground Lease terminates on
January 6, 2008, a full 23 years from its execution.
term appears throughout the Ground Lease and is referenced in
In contrast, the date of January 6,
2007, only appears once in the Ground Lease,36 and nowhere in any
of the modifications.
Further, the Request for Proposal called for a 23-year
lease, with blanks to be filled in by the parties for the start and
end dates of the 23-year period.
Although Polar Star argues that
the discovery that Lomond could complete the construction in
shortened time reduced the lease to 22 years,37 this argument is not
supported by the Lease itself which continued to contain multiple
references to the 23-year period, even in subsequent modifications.
If insertion of the expiration date of “6 January, 2007” really
evidenced the parties’ intent to shorten the construction term to
two years, then the parties should/would have crossed out the
inconsistent 23-year term.
That they did not is strong evidence
that the parties intended a 23-year lease and that the “6 January,
2007" term was an error.
Finally, without deciding whether collateral estoppel
applies, the Court also notes that when reviewing the Ground Lease
in relation to other issues, the Alaska Supreme Court twice reached
Docket 43, Ex. D at 1.
Id. at 18.
ORDER RE PENDING MOTIONS - 11
the same conclusion that the Ground Lease had a 23-year lease
term,38 both times after the Superior Court explicitly acknowledged
the conflicting dates.39
The Court therefore GRANTS the Government’s Motion to
Establish January 6, 2008, as the Expiration Date of the Ground
Lease at Docket 52, DENIES Polar Star’s Motion in Limine to
Establish January 6, 2007, as the Expiration Date of the Ground
Lease at Docket 43, and reforms the Ground Lease to reflect
January 6, 2008, as the correct expiration date.
Judicial Discretion to Appointment a Land Commission
In its Answer, Polar Star requests a trial on the amount
of just compensation by a Land Commission appointed by the Court.40
The parties dispute whether just compensation should be determined
by the Court or by a Land Commission.41
Rule 71.1(h) of the Federal Rules of Civil Procedure
states that in an eminent domain action: “. . . the court tries all
issues, including compensation, except when compensation must be
determined: (A) by any tribunal specially constituted by a federal
statute to determine compensation, or (B) if there is no such
See Lomond I, 760 P.2d at 509 n.1; Lomond II, 860 P.2d at
See Docket 47, Ex. L at 5 n.1.
Docket 17 at 8, ¶ 28.
See Dockets 49, 62, 75.
ORDER RE PENDING MOTIONS - 12
tribunal, by a jury when a party demands one within the time to
answer or within any additional time the court sets, unless the
court appoints a commission.”42
The Rule further explains that
“[i]f a party has demanded a jury, the court may instead appoint a
three-person commission to determine compensation because of the
character, location, or quantity of the property to be condemned or
for other just reasons.”43
Polar Star argues that the Court should exercise its
compensation determination will require inspection and valuation of
including roads, sidewalks, interiors, exteriors, and maintenance
improvements, Polar Star argues that fractional interests, severed
damages, the cost of removal, and complicated comparisons between
Polar Star’s property and other properties make the determination
of just compensation so complex as to warrant referral to a highly-
Effective December 1, 2007, the former Rule 71A was redesignated Rule 71.1(h). The Advisory Committee Notes explain that
the purpose of this change was “to make [the rule] more easily
understood” and that “[t]hese changes are intended to be stylistic
Cf. Fed. R. Civ. P. Rule 71A(h)
(pre-Dec. 1, 2007, rule) (verbatim, except for final clause:
“. . . or for other reasons in the interest of justice.”).
Docket 62 at 6-7.
ORDER RE PENDING MOTIONS - 13
skilled Land Commission.45
Polar Star reasons that “[i]t makes no
sense to take this Court away from its other duties to devote the
days required to inspect each of the 300 units of military housing
and ancillary improvements being taken in this case.”46
The Government argues that this is not the type of case
typically referred to a Land Commission and that no exceptional
circumstances warranting the appointment of a land commission are
present.47 According to the Government, “[a] land commission is not
justified when a government land acquisition project involves only
one case in which there is only one owner, a relatively small
parcel, the property is not subject to varied uses, and the
property is located within a reasonable distance from the federal
“Therefore, the Court is the proper adjudicator of
all issues, including just compensation.”49
The Government also argues that Rule 71.1(h) allows
appointment of a Land Commission only where one or both parties
have demanded a jury trial and that since both parties have waived
the right to a jury trial, appointment of a Land Commission is
Id. at 8-10.
Id. at 7.
Docket 50 at 6-8.
Id. at 7.
Id. at 13.
ORDER RE PENDING MOTIONS - 14
This, however, only addresses what happens “if a
party has demanded a jury,” and says nothing about whether the
Court has discretion to appoint a Land Commission where neither
party has made a jury demand.
Commission is a matter of judicial discretion.
Under the facts
hereof, the Court concludes that, utilizing the respective parties’
experts, it can most expeditiously address the valuation issues
without a Land Commission.
Therefore, the Government’s Motion at
Docket 49 Opposing Appointment of a Land Commission is GRANTED.
The Project Lease Was Renewed By The Government
On August 6, 1986, the Government executed the Project
Lease with Lomond, Polar Star’s predecessor-in-interest, for a term
of twenty years commencing on August 6, 1986, and ending on August
Article V of the Project Lease gave the Government a
renewal option and a right of first refusal to purchase the units
upon expiration of the Project Lease.
The parties dispute whether
the Government effectively renewed the Project Lease.51
Article V reads in pertinent part:
Upon expiration of the twenty (20) year lease
term, this Lease may be renewed for subsequent
annual periods at the Lessee’s option.
rent for such subsequent periods must be
Id. at 4.
See Dockets 55, 56, 57, 73, 75, 77, & 79.
ORDER RE PENDING MOTIONS - 15
renegotiated based upon the remaining equity
investment . . . . The statement of intent of
the Lessee to renew the Lease must be mailed
to the Lessor no later than sixty (60) days
prior to the expiration date of the lease
There is no dispute that the Government timely mailed its
statement of intent to renew on May 18, 2006, more than 60 days
prior to the expiration of the lease term.53
which depended only on the Government’s actions, was met.
Government argues that it properly exercised the option, therefore,
because the only undetermined term was the amount of rent for the
renewal period and that where the renewal rent is left for future
determination by arbitration or appraisal, the renewal right is
statement of intent to renew was not valid because the parties did
not successfully renegotiate rent.55
According to Polar Star, the
option to extend the Project Lease was not effective because the
price term was not definite and the methodology provided to
determine the price was not followed.56
Docket 56, Ex. A, Art. V.
See Docket 56 at 5-6 & Exs. C, F; Docket 71 at 5.
Docket 56 at 8-12.
See Dockets 71 & 73.
Docket 57 at 8-12.
ORDER RE PENDING MOTIONS - 16
The provision that “rent for such subsequent periods must
be renegotiated based upon the remaining equity investment”57
not preclude renewal under the circumstances, for the parties have
proven to be completely unable to negotiate or agree on any of
To require the Government to obtain agreement on
this significantly disputed item before it could renew the lease
would be unreasonable.
The Government’s Motion for Preliminary Determination to
Establish the Validity of the Housing Lease’s Renewal Motion at
Docket 55 is therefore GRANTED and Polar Star’s Motion in Limine to
Bar Evidence of Project Lease Extension at Docket 57 is DENIED.
Polar Star’s Motion For Judgment On The Pleadings
The parties dispute whether the Government’s condemnation
of an extension of the Project Lease includes Polar Star’s Project
Lease obligations, such as maintenance and providing insurance.58
Because the Court finds that the Government’s exercise of
the renewal option was effective, the Project Lease was extended
for an annual term beginning on August 5, 2006, and extending
through August 5, 2007. The renewal period encompasses and extends
Government sought to quiet title, or alternatively, condemn. Polar
Docket 56, Ex. A at 5.
See Dockets 58, 71, & 76.
ORDER RE PENDING MOTIONS - 17
Star’s Motion for Partial Judgment on the Pleadings at Docket 58 is
therefore DENIED as moot.
For the aforesaid reasons,
Polar Star’s Motion in Limine to Establish January 6,
2007 as Expiration Date of Ground Lease at Docket 43 is DENIED.
The Government’s Cross-Motion to Establish January 6,
2008 as Expiration Date of the Land Lease at Docket 47 is GRANTED.
The Government’s Motion Opposing Appointment of a Land
Commission for the Determination of Just Compensation at Docket 49
The Government’s Motion for Preliminary Determination to
Establish the Validity of the Housing Lease’s Renewal at Docket 55
Polar Star’s Motion in Limine to Bar Evidence of Project
Lease Extension at Docket 57 is DENIED.
Polar Star’s Motion for Partial Judgment on the Pleadings
at Docket 58 is DENIED as moot.
IT IS SO ORDERED.
ENTERED this 18th day of December, 2007.
S/RALPH R. BEISTLINE
UNITED STATES DISTRICT JUDGE
ORDER RE PENDING MOTIONS - 18
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?