# Franconia Associates v. United States

> United States Court of Federal Claims · August 30, 2004 · 61 Fed. Cl. 718

URL: https://www.frixlaw.com/law-library/cases/6653027

## Case

- **Full name:** FRANCONIA ASSOCIATES v. United States
- **Court:** United States Court of Federal Claims
- **Decided:** August 30, 2004
- **Citations:** 61 Fed. Cl. 718; 2004 U.S. Claims LEXIS 232; 2004 WL 1941215
- **Precedential status:** Published
- **Opinion:** Opinion of the court by Allegra
- **Judges:** Allegra
- **Cited by:** 70 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/6653027

## How later opinions describe it (automated extraction)

- noting that cases followed the lead of Omnia Commercial Co., Inc. v. United States, 261 U.S. 502, 510, 43 S.Ct. 437, 67 L.Ed. 773 (1923
- rejecting, in a case with analogous facts, the plaintiffs’ Fifth Amendment takings claim because (1) the government’s infringement of the plaintiffs’ contractual right to prepay the balance of their loans was remediable through a breach-of-contract claim, and (2) Congress, in …

## Opinion text

OPINION
ALLEGRA, Judge.
“The United States are as much bound by their contracts as are individuals.” 1
“You can check [in] any time you like, but you can never leave.” 2
Following a remand from the Supreme Court, this contract case is before the court after a trial held in Des Moines, Iowa. Plaintiffs are various property owners that entered into mortgage contracts with an agency of the United States in exchange for providing low- and moderate-income rural housing. While these loan contracts allowed for prepayment, without restriction, Congress, concerned with the loss of rural housing due to such prepayments, subsequently enacted laws that significantly restricted the exercise of this right. Plaintiffs claim that this legislation constituted a breach of their mortgage contracts and seek damages on account of that breach. Alternatively, they seek just compensation under the Fifth Amendment, alleging that the passage of this legislation effectuated a taking of their property. Based on the evidence provided and the findings based thereupon, and for the reasons that follow, the court concludes that the legislation in question, indeed, effectuated a breach of the mortgage contracts, entitling most — but not all — of the plaintiffs to damages.
TABLE OF CONTENTS
I. Findings of Fact ..........................................................722
A. General Facts Regarding the Plaintiffs, the Section 515 Program and Congress’ Modifications Thereof.......................................722
B. Application of the Legislation to the Plaintiffs..............................725
C. The Options Available under ELIHPA....................................725
D. Procedural History of this Case..........................................728
II. Discussion................................................................729
A. Liability..............................................................729
1. Breach of Contract..................................................729
a. Prima facie liability.............................................729
b. The unmistakability doctrine.....................................733
2. Takings...........................................................737
3. Redux.............................................................740
B. Damages..............................................................740
1. Mitigation.........................................................740
2. Expectation Damages — Restitutio in Integrum.........................746
a. Proximate result — Causa Próxima non Remota Spectatur...........747
b. Foreseeability — Providentia.....................................751
c. Reasonable certainty — Certum Probabiliter Scire...................753
i. The calculation period.......................................754
*722 ii. Projected revenue..........................................757
iii. Expenses..................................................761
iv. Discount factor.............................................762
d. Other potential adjustments......................................767
3. Determination of the Amount of Damages .............................769
III. Conclusion...............................................................769
Fact Appendix A..........................................................772
Fact Appendix B..........................................................781
I. FINDINGS OF FACT
Based on the record herein, the court finds as follows:
A. General Facts Regarding the Plaintiffs, the Section 515 Program and Congress’ Modifications Thereof.
Plaintiffs currently own and operate properties as affordable housing projects financed by mortgage loans issued by the Farmer’s Home Administration (“FmHA”), an agency within the Department of Agriculture, pursuant to sections 515 and 521 of the Housing Act of 1949, 42 U.S.C. §§ 1485 , 1490a (2000). These sections of the Housing Act were “enacted to ameliorate housing shortages for the elderly and other low-income persons in rural areas.” Parkridge Investors Ltd. P’ship v. Farmers Home Admin., 13 F.3d 1192 , 1195 (8th Cir.1994). Originally, only non-profit entities could participate in this program, but the complexion of the program changed in 1972, when the FmHA began offering loans to private for-profit owners.
Under sections 515 and 521, the FmHA makes direct loans to private entities to develop or construct rural housing designed to serve the elderly and low- or middle-income individuals and families. 3 Section 515 loans require the borrower, inter alia, to execute various loan documents, including a loan agreement, a promissory note, and a mortgage or deed of trust. Each plaintiff in this case entered into a loan agreement with the FmHA, in which it certified that it was unable to obtain a comparable loan in the commercial market. In addition, each plaintiff agreed to various provisions designed to ensure that its project was affordable for persons and families with low incomes, among them, restrictions on the owner’s “return on investment,” limiting the profit that an owner could earn while in the program to a maximum of eight percent of its “initial investment,” i.e., down payment. 4 Other restrictions defined eligible tenants and the rents plaintiffs could charge, as well as requirements regarding the.maintenance and financial operations of each project. Each loan agreement also specified the length of the loan, which was generally 40 or 50 years.
The promissory notes executed by plaintiffs required payment of the principal on each mortgage in scheduled installments, plus interest. They also contained the following prepayment provision: “Prepayments of scheduled installments, or any portion thereof, may be made at any time at the option of the Borrower.” No other provision of the loan documents directly addresses prepayment. 5 This prepayment option served *723 as a major inducement for recruiting property owners into the program: the option not only benefited the program participants, who viewed the program as a way to acquire equity in a building that would eventually be converted to market rents, but also the FmHA, which through these participants was able to provide needed housing. Indeed, consistent with statutory and regulatory requirements, the original contracts in the program required owners to prepay their loans upon FmHA demand as soon as commercial financing on similar terms became available, so that the moneys derived through prepayment could be invested by the agency in other properties. See 42 U.S.C. § 1472 (b)(3) (1982); 7 C.F.R. § 1865.2 (e) (1979). 6
Over time, however, this funding model began to founder, as the owners prepaying their mortgages far exceeded new entrants in the program. In 1979, Congress found that the increasing number of section 515 participants prepaying them mortgages threatened the continued availability of rural low- and moderate-income housing and amended the National Housing Act to stem the loss of low-cost rural housing due to prepayments. H.R.Rep. No. 96-154, at 43 (1979), U.S.Code Cong. & Admin.News 1979, p. 2317. Specifically, in the Housing and Community Development Amendments of 1979, Pub.L. No. 96-153, 93 Stat. 1101, Congress prohibited the FmHA from accepting prepayment of any loan made before or after the date of enactment unless the owner agreed to maintain the low-income use of the rental housing for either a 15-year or 20-year period from the date of the loan. § 503(b), 93 Stat. 1134 -1135. That requirement could be avoided only if the FmHA determined that there was no
longer a need for the low-cost housing or if Federal or other financial assistance provided to residents would no longer be available. Id.
In 1980, Congress further amended the National Housing Act to eliminate retroactive application of the Section 515 prepayment changes enacted in the 1979 legislation. Section 514 of the Housing and Community Development Act of 1980, Pub.L. No. 96-399, 94 Stat. 1614, provided that the prepayment restrictions included in the 1979 legislation would apply only to loans entered into after December 21, 1979, the date of enactment of that legislation. 94 Stat. 1671 -1672. For loans subject to this legislation, new owners were required to agree to operate their properties as low-income housing for a minimum of 15 or 20 years. Id. The 1980 Act also required the Secretary of Agriculture to report to Congress about any adverse effects of the repeal upon the availability of low-income housing. Pub.L. No. 96-399, § 514 , 94 Stat. 1671 -1672.
After repeal of the 1979 legislation, prepayments by owners under pre-1979 contracts resumed. By 1987, Congress again grew concerned about the dwindling supply of low- and moderate-income rural housing in the face of increasing prepayments of mortgages under section 515. 7 A committee of the House of Representatives found that owners were “prepay[ing] or ... refinanc[ing] their FmHA loans, without regard to the low income and elderly tenants in these projects.” H.R.Rep. No. 100-122(1), at 53 (1987), U.S.Code Cong. & Admin.News 1987, pp. 3317, 3369. In response, Congress *724 passed the Emergency Low Income Housing Preservation Act of 1987, Pub.L. No. 100-242,101 Stat. 1877 (ELIHPA), which amended the Housing Act of 1949 to impose permanent restrictions upon the prepayment of section 515 mortgages that were entered into before December 21, 1979. That legislation, enacted on February 5, 1988, requires that before FmHA can accept an offer to prepay a mortgage entered into before December 21, 1979-
the [FmHA] shall make reasonable efforts to enter into an agreement with the borrower under which the borrower will make a binding commitment to extend the low income use of the assisted housing and related facilities for not less than the 20-year period beginning on the date on which the agreement is executed.
Pub.L. No. 100-242, § 241 , 101 Stat. 1886 (codified at 42 U.S.C. § 1472 (c)(4)(A)). ELIHPA further provides that, to persuade an owner to keep its property in the program, the FmHA may offer incentives, including an increase in the rate of return on investment, reduction of the interest rate on the loan, and an additional loan to the borrower. § 241, 101 Stat. 1886 -1887.
Under ELIHPA, if the FmHA determines after a “reasonable period” that an incentive agreement cannot be reached under the aforementioned provisions, the Secretary “shall” require the owner to offer to sell the housing to “any qualified nonprofit organization or public agency at a fair market value determined by 2 independent appraisers.” Pub.L. No. 100-242, § 241 , 101 Stat. 1887 (codified at 42 U.S.C. § 1472 (c)(5)(A)(1)). If an offer to buy is not made by a nonprofit organization or agency within 180 days, the FmHA may accept the owner’s offer to prepay or request refinancing. Id. The offer-for-sale to a non-profit requirement does not apply if the FmHA determines that housing opportunities for minorities “will not be materially affected” by prepayment and either: (i) the tenants will not be displaced by prepayment or (ii) there is an “adequate supply” of “affordable” housing in the market area and “sufficient actions have been taken to ensure” that such housing “will be made available” to displaced tenants. Id. at § 241, 101 Stat. 1889 .
The FmHA promulgated regulations to implement ELIHPA on April 22, 1988, and the regulations became effective on May 23, 1988. 53 Fed.Reg. 13,245 (1988), codified at 7 C.F.R. § 1965.90 (1989). These establish a process by which the FmHA considers prepayment requests, including detailed procedures and requirements regarding whether housing opportunities for minorities will be affected by prepayment and whether other housing has been made available for tenants displaced by prepayment. 7 C.F.R. § 1965.90 (1989). In 1993, the FmHA modified its regulations to require that borrowers seeking to prepay be offered incentives not to do so. 58 Fed.Reg. 38,931 (1993), codified at 7 C.F.R. § 1965.210 , 213 (1994). Under the regulations, the FmHA first “develop[s] an incentive offer,” making “[a] reasonable effort ... to enter into an agreement with the borrower to maintain the housing for low-income use that takes into consideration the economic loss the borrower may suffer by foregoing prepayment.” 7 C.F.R. § 1965.210 (2003). In addition, the regulations make clear that the determinations required by 42 U.S.C. § 1472 (c)(5)(A) before prepayment can be accepted — regarding the effect on minority housing opportunities, the displacement of tenants, and the supply of affordable housing in the market — will not be made unless and until the FmHA is unable to reach an agreement with a borrower on extending the borrower’s participation in the section 515 program. 7 C.F.R. § 1965.215 (a) (2003).
In 1992, Congress passed the Housing and Community Development Act of 1992 (the HCDA). Pub.L. No. 102-550, 106 Stat. 3672 (codified in relevant part at 42 U.S.C. § 1472 (c) (1994 & Supp. V.1999)). That legislation extended ELIHPA’s restrictions to loans that were made from December 21, 1979, through 1989. Pub.L. No. 102-550, § 712 , 106 Stat. 3841 . Thus, beginning in 1992, loans made after December 21, 1979, but before 1989, were subject to the same provisions of ELIHPA adopted for older complexes.
*725 B. Application of the Legislation to the Plaintiffs.
Plaintiffs collectively own 42 multi-family complexes in one or more of the following states: Iowa, Kansas, Minnesota, New Hampshire, North Carolina, North Dakota, South Dakota, Virginia, West Virginia and Wisconsin. As noted above, all these complexes were constructed with financing obtained from the FmHA under the Rural Rental Housing Program. As illustrated in Fact Appendix A, 34 of the complexes were financed by loans executed prior to December 21, 1979 (hereinafter referred to as the “pre-1979 complexes”), with the remaining seven loans being executed (or assumed) thereafter (hereinafter referred to as the “post-1979 complexes”). 8 As is likewise illustrated in that chart, various plaintiffs have made formal requests to prepay their mortgages, although some of the prepayments request were made after this lawsuit was filed.
The evidence reveals that the reasons these owners wished to prepay without restriction vary and, in some cases, overlap. In virtually all cases, the projects are in a condition or location that permits profitable sales or conversion to apartments, condominiums or nonresidential uses. In some cases, owners seek to leave the program because Congress has eliminated tax benefits previously associated with low-income housing and they have exhausted the tax benefits that remain. And in many, if not all, instances, the owners would prefer to prepay their mortgages simply to sever their ties with the Federal government, frustrated not only with what they perceive as the overregulation of their properties, but also with Congress’ efforts, through statutes such as ELIHPA, to modify unilaterally critical features of the bargains they previously struck with the FmHA. In light of these developments, these owners believe that they can no longer trust the Federal government to honor its obligations, depriving them of the sort of stable long-term relationship they believe is essential to their continued participation in the program.
Based on the record, the court finds that all of the owners would not have signed their contracts absent the prepayment option. In developing their properties, plaintiffs picked locations and completed construction with an eye toward converting to market rents in the future. All of the owners of the pre-1979 complexes intended to prepay as soon as the time was ripe, based on their personal circumstances and market conditions. All of the owners of the post-1979 complexes were required to execute a twenty-year covenant in which they agreed not to seek prepayment; each of the owners intended to prepay as soon as that covenant was satisfied and each of those covenants, indeed, has run. Upon prepayment, the owners planned to raise the rents to market levels and use the proceeds for various purposes, including retirement, investment in other ventures and transfers of wealth to their heirs. It appears that the owners each agreed to enter the program in reliance on the prepayment clause, as part consideration for signing the housing agreements.
C. The Options Available under ELIHPA.
As noted above, under ELIHPA and the HCDA, the FmHA cannot allow prepayment until it has “ma[d]e reasonable efforts to enter into an agreement with the borrower under which the borrower will make a binding commitment to extend the low income *726 use of the assisted housing for at least 20 years.” 42 U.S.C. § 1472 (c)(4)(A) (2000). The FmHA can offer a variety of incentives under this program, including: equity loans, increased annual return on investment, and additional units of rental assistance to tenants. However, these “incentives” to continue in the program come with a toll charge— the owner has to agree to restrict its property to low-income housing for 20 years ( 42 U.S.C. § 1472 (c)(4)(A) (2000)), at the end of which period the owners must reapply for prepayment, with no assurance that they will be allowed out of the program. Availability of various incentives is subject to annual appropriations and the record indicates that those appropriations have consistently been insufficient, causing incentive requests to accumulate from year to year, leading to a substantial backlog. 9 Indeed, no assurances were made to the owners as to when those incentives would actually be received. 10 Finally, the incentive initially offered later can be reduced, evidently even after accepted by the owner: the incentive package must be the “least costly alternative for the Federal Government that is consistent with carrying out the purposes of" the statute, 42 U.S.C. § 1472 (c)(4)(C)(ii), and may be reduced in case of negative impact on tenants. In the latter regard, the incentive has to “fit within comparable rents,” requiring the FmHA to trim an incentive if an increase in rents would be necessary to fund it. Ex. E § IV(A)(3), (c).
As reflected in Fact Appendix A, six of the plaintiffs agreed to extend the low-income use of their housing in exchange for one or more of the above-discussed incentives. These plaintiffs, however, testified that either they experienced considerable delay in receiving the incentives or the FmHA made adjustments in their benefits that offset some of the value of the incentives. For example, among the four individuals who requested equity loans, one, Mr. Morosani, applied for the loan in 1994, but had not yet received it at the time of trial; another, Ms. Perri, had to wait five years to obtain the loan; and a third, Mr. Wells, was forced to forego approximately $100,000 of the $273,635 equity loan for which he was eligible in order to avoid increasing rents. Several plaintiffs received other forms of incentives: Ms. Perri, for example, was offered an increase in her annual return on Palmyra Park II, up $7,428 for a total return of $9,300 annually, and ten additional units of rental assistance. She testified, however, that the ten additional *727 units of rental assistance were taken back “to cover [the] extra rent increase” and that she did not “always get” the increased annual return on her investment. Other recipients of such incentives testified that they had to spend money on upkeep and improvements to their complexes and did not receive the annual return on investment provided for in their contracts, due to reserve account requirements that specify when an owner is allowed to take his contractual return on investment. Due to the uncertainty owners faced regarding whether they could take their contractual return, and to the limits on them ability to do so, the prospect of a slight increase in the return on investment was not an attractive alternative to the owners.
If an owner rejects an incentive offer, the statute provides that the owner must offer for six months to sell the property to a qualified nonprofit organization or public agency. 42 U.S.C. § 1472 (c)(5)(A)(i) (2000). The value of the property is determined by an appraiser selected by the owner, an appraiser selected by the agency, and, if necessary, a third, neutral appraiser selected by the other two appraisers. 7 C.F.R. § 1965.216 (a) (2003). Specifically, the regulations provide:
The value arrived at will result from two appraisals. One appraisal will be the appraisal contracted and paid for by FmHA or its successor agency under Public Law 103-354 that was used to establish the incentives previously offered. The second appraisal will be obtained and paid for by the borrower. Both appraisals will be conducted by qualified independent appraisers in accordance with FmHA ... Instruction 1922-B (available in any FmHA ... office).
If the fair market values arrived at are within 10 percent of each other, the Servicing Office and the borrower will negotiate to arrive at a mutually acceptable value. If the values differ by more than 10 percent, the independent appraisers will be asked to review their appraisals to determine if the values can be reconciled to within 10 percent. If FmHA ... and the borrower are unable to negotiate a mutually acceptable value or the appraisers are unable to reconcile their appraisals within 30 days of the completion of the appraisals, the State Office and the borrower will jointly select a third independent qualified appraiser whose appraisal will be binding on FmHA ... and the borrower . . . . The cost of the third appraisal shall be divided evenly between FmHA ... and the borrower.
Id. The regulations provide that if, 180 days after the owner offered the property for sale to a nonprofit organization or public agency, no qualified purchaser accepted the offer at the appraised fair market value, then the owner may be prepay the loan without restrictions. 7 C.F.R. § 1965.218 (2003).
As an alternative to this sale option, owners can apply for the so-called “G-4” prepayment option, under which, under certain circumstances, they will be allowed to prepay, but are required to continue to provide low-income housing to existing tenants. See 42 U.S.C. § 1472 (c)(5)(G)(ii)(I) (2000). For an owner to be eligible for this option, the FmHA has to determine, first, that prepayment would have no material effect on minorities, either at the project or in the market area. Assuming this condition is met, the owner then has to agree to a restrictive-use agreement, which provides, in part-
No eligible person currently occupying the housing shall be required to vacate prior to the end of the remaining useful life of the project without cause. Rents, other charges, and conditions of occupancy will be established to meet these conditions for these tenants such that the effect will not differ from what would have been, had the project remained in the FmHA program. Existing tenants are protected to ensure that none experience new or increased rent overburden as a result of owner actions until each voluntarily moves from the project. The owner also agrees to keep a notice posted at the project in a visible place available for tenant inspection, for the remaining useful life of the project or until the last existing tenant voluntarily vacates, stating that the project is to be used in accordance with the Housing Act, and that management practices and rental rates will be consistent with those neces *728 sary to maintain the project for low- and moderate-income tenants.
The owner also is required to agree and obtain FmHA approval of any changes to rental procedures different from those in place at the time of the prepayment.
The G-4 option generally is viable only if the hold-over, low-income tenants are able to obtain and consistently hold vouchers from the Department of Housing an Urban Development (HUD) to supplement their rents. If such so-called “section 8” vouchers are not obtained or become unavailable, the property owner is left with a commercial mortgage rate, but below market rents, creating immediate cash flow problems. Based on the expected availability of section 8 vouchers, the G-4 prepayment option was accepted by the two owners of thirteen of the properties at issue. 11 Both plaintiffs, however, owned multiple properties and thus were better able to bear the risk that particular tenants would not obtain vouchers. Their actions notwithstanding, in recent years, the section 8 voucher program has received significant funding cuts, increasing the risk of relying upon such vouchers as a means of making the G-4 option viable.
Finally, if the FmHA determines “that housing opportunities of minorities will not be materially affected as a result of the prepayment,” that “there is an adequate supply of safe, decent, and affordable rental housing within the market area,” and that “sufficient actions have been taken to ensure that the rental housing will be made available to each tenant upon displacement,” 42 U.S.C. §§ 1472 (c)(5)(G)(ii) and 1472(c)(5)(G)(ii)(II) (2000), it may accept the offer to prepay.
D. Procedural History of this Case.
Plaintiffs filed this action in this court on May 30, 1997. The plaintiffs either entered into loan agreements before December 21, 1979 (the pre-1979 complexes), and were, therefore, subject to ELIHPA; or entered into loan agreements after December 21, 1979 (the posW979 complexes), and were, therefore, subject to ELIHPA’s rules via the HDCA. Plaintiffs’ complaint alleged that the prepayment provisions of their promissory notes gave them a “contractual right ... to terminate their contracts by prepaying their [mortgages] at any time at their option.” They claimed that ELIHPA “repudiated the contractual right of [plaintiffs] to terminate their contracts at any time at their option.” Their complaint sought relief on two theories: breach of contract and a violation of the Fifth Amendment’s prohibition against taking property without just compensation.
This court (Judge Gibson) granted the government’s motion to dismiss the claims brought by the owners of the pre-1979 complexes, on the ground that they were barred by the six-year statute of limitations in 28 U.S.C. § 2501 . This court also, sua sponte, dismissed the takings claims of those same plaintiffs, also on statute of limitations grounds. Franconia Assocs. v. United States, 43 Fed.Cl. 702, 715 (1999). The Federal Circuit affirmed this dismissal on timeliness grounds. Franconia Assocs. v. United States, 240 F.3d 1358 (Fed.Cir.2001). The Supreme Court, however, reversed, holding that “ELIHPA’s enactment ... qualified as a repudiation of the parties’ bargain, not a present breach of the loan agreements.” Franconia Assocs. v. United States, 536 U.S. 129, 133 , 122 S.Ct. 1993 , 153 L.Ed.2d 132 (2002). According to the Court, “a breach would occur, and the six-year limitations period would commence to run, when a borrower tenders prepayment and the Government then dishonors its obligation to accept the tender and release its control over use of the property that secured the loan.” Id. at 133 , 122 S.Ct. 1993 . 12 On similar grounds, the *729 Court reinstated plaintiffs’ takings claims. Id. at 149 , 122 S.Ct. 1993 . It remanded this case to the Federal Circuit for further proceedings consistent with its opinion. Id. The Federal Circuit, in turn, remanded the case to this court. See Franconia Assocs. v. United States, 47 Fed.Appx. 565 (Fed.Cir.2002).
The case was set for trial and then, on March 19, 2003, reassigned to the undersigned judge. Trial in this matter was conducted in Des Moines, Iowa, from June 16, 2003, through June 26, 2003. At the trial, the court received over 1,000 exhibits and the testimony of 22 witnesses, including several expert witnesses on damages. On July 16, 2004, in anticipation of issuing this opinion, the court severed the claims of 29 of the 30 plaintiffs (the exception being Franconia Associates), and ordered the clerk to consolidate the new actions with the original action. This opinion deals with all but one of the 30 cases now consolidated; by separate order, the court, today, is dismissing the case involving Dublin Plaza, for lack of jurisdiction, based on evidence that the predecessor to the plaintiff therein failed to comply with the statute of limitations contained in 28 U.S.C. § 2501 .
II. DISCUSSION
The gravamen of plaintiffs’ complaint is that, under the express terms of their promissory notes, they were entitled to prepay their mortgage loans, without restriction and at any time, thereby releasing their properties from the considerable financial restrictions associated with the section 515 housing program. They assert that the United States abridged their rights when Congress passed ELIHPA and the HCDA, which place permanent restraints upon the prepayment of their FmHA loans. Plaintiffs assert that these statutes effected both a repudiation of their contracts and a taking of their property in violation of the Fifth Amendment. They claim damages calibrated to the alleged lost profitability or value of them complexes, owing to what they view as their forced continued participation in the rural housing program.
Defendant mounts a vigorous, multi-faceted counterattack on these contentions, with its initial thrust being that ELIHPA and the HCDA did not significantly alter any contract rights that plaintiffs possessed so as to constitute a repudiation of those rights. In this regard, while defendant does not invoke the so-called “sovereign acts” doctrine, it argues that, under the so-called “unmistakability doctrine,” the FmHA, acting on behalf of the United States, sub silentio reserved the right to modify the statute at any time and to have the amended statute supplant the provisions in plaintiffs’ notes. Among its many other retorts to plaintiffs’ proof, defendant also asseverates that the losses plaintiffs allegedly experienced are self-inflicted and would not have been experienced had plaintiffs taken advantage of various options that Congress offered when it statutorily modified the prepayment rights.
A. Liability.
For reasons that soon will become apparent, the court will consider plaintiffs’ breach of contract and takings claims seriatim.
1. Breach of Contract,
a. Prima facie liability.
To determine whether plaintiffs contractual rights were breached, the court first must determine what those rights were. See San Carlos Irrigation and Drainage Dist. v. United States, 877 F.2d 957, 959 (Fed.Cir.1989); Cuyahoga Metro. Hous. Auth. v. United States, 57 Fed.Cl. 751, 759 (2003). Several interpretational guides mark this decisional path. First, as an overarching matter, the court, in interpreting a contract, seeks to “effectuate its spirit and purpose.” *730 Gould, Inc. v. United States, 935 F.2d 1271, 1274 (Fed.Cir.1991) (quoting Arizona v. United States, 216 Ct.Cl. 221 , 575 F.2d 855, 863 (1978)). Toward that end, contract interpretation “begins with the plain meaning of the agreement.” Gould, 935 F.2d at 1274 ; see also Northrop Grumman Corp. v. Goldin, 136 F.3d 1479, 1483 (Fed.Cir.1998); Barseback Kraft AB v. United States, 121 F.3d 1475, 1479 (Fed.Cir.1997). “[A]n interpretation which gives a reasonable meaning to all parts,” the law provides, “will be preferred to one which leaves a portion of it useless, inexplicable, inoperative, void, insignificant, meaningless, superfluous, or achieves a weird and whimsical result.” Arizona, 575 F.2d at 863 ; see also Fortec Constr. v. United States, 760 F.2d 1288, 1292 (Fed.Cir.1985); Northrop Grumman Corp. v. United States, 50 Fed.Cl. 443, 458-59 (2001).
The promissory notes at issue could not be much clearer in allowing plaintiffs to prepay at any time, indicating unambiguously that “[prepayments of scheduled installments, or any portion thereof, may be made at any time at the option of the Borrower.” In the court’s view, the plain meaning of this language controls and gave plaintiffs the unfettered right to prepay their loans at any time. See Allegre Villa v. United States, 60 Fed.Cl. 11, 15-16 (2004). 13 Reasonably construed, this language imposes a concomitant obligation on the FmHA to accept these prepayments and release the respective owner from its obligations under the section 515 program. As the Supreme Court readily observed in Franconia, “[i]f [plaintiffs] enjoyed a ‘right to prepay their loans at any time,’ 240 F.3d at 1363 , then necessarily the Government had a corresponding obligation to accept prepayment and execute the appropriate releases.” 536 U.S. at 142 , 122 S.Ct. 1993 . The Court further declared that “[a]b-sent an obligation on the lender to accept prepayment, the obligation to allow borrowers to prepay would be meaningless,” rendering the loan contract “illusory.” Id. 14 Moreover, that the notes allowed prepayment at any time, without significant restriction, is confirmed by other contract provisions, 15 and was prominently highlighted by the FmHA in promoting the program. 16
*731 Of course, unlike private contractual undertakings, the contracts here originated in legislation passed by Congress, requiring the court to consider that legislation in construing them. See, e.g., Bennett v. Kentucky Dept. of Educ., 470 U.S. 656, 669 , 105 S.Ct. 1544 , 84 L.Ed.2d 590 (1985); Barseback Kraft AB, 121 F.3d at 1480-81 (construing an agreement in light of the underlying legislation); Cuyahoga, 57 Fed.Cl. at 761 (same). Tellingly, the legislative history of the Housing Act reveals that the prepayment option initially constituted a key aspect of the financing of the program, loans for which were made from a revolving fund that was capped by Congress at a specified appropriation level. Prepayments allowed the FmHA to recoup funds from owners who no longer needed them, freeing up money to make loans to the lengthy list of waiting applicants. The creator of this funding mechanism, Congress, on several occasions prior to 1979, admonished the FmHA for not graduating from the program owners who could obtain alternative private financing, stating, in typical fashion, in one report:
[We] wish to reemphasize to the Administrator of the [FmHA] the necessity for the most careful administration of the ‘credit availability’ test in order that available federal funds can be conserved for definitely eligible borrowers. We encourage the [FmHA] in the further development of methods for utilizing presently available capital to the maximum extent possible.
H. Rep. No. 88-1703, at 23 (1964), U.S.Code Cong. & Admin.News 1964, pp. 3416, 3438-39; see also H. Rep. No. 95-236, at 27 (1977); H. Rep. No. 89-365, at 48 (1965). For decades, then, Congress fully understood and relied upon the fact that under the rural housing program, the owners possessed not only an absolute right, but an obligation, to prepay their loans. 17 Legislative history *732 thereby confirms what the plain language of the notes manifests — that the FmHA was required to accept unconditionally any prepayments made by property owners.
When the number of owners seeking to prepay exceeded those willing to enter the program, thereby reducing the available housing stock, Congress knowingly compromised the same prepayment option it had earlier championed — as one legislator put it, “welching” on the deal previously made to induce participation in the program. 18 Contrary to defendant’s importunings, nothing else in the agreements indicated that the prepayment without restriction option could be limited, in futuro, unilaterally by Congress or the FmHA. Defendant points to language in the loan agreements providing that “any loan made or insured ... will be administered subject to the limitations of the authorizing act of Congress and related regulations.” But, were this “subject to” language to mean that the prepayment option could be limited by Congress or the FmHA virtually at will, the same would hold true of all the government’s obligations under the agreements, rendering these contracts illusory. To the contrary, defendant’s gloss on the quoted language clashes with that part of the loan agreement indicating that it could be modified only “by agreement between the Government and the Partnership,” and of the promissory note stating that it was “subject to the present regulations of the Farmer’s Home Administration and to its future regulations not inconsistent with the express provisions hereof.” Indeed, on at least two oc casions — Smithson v. United States, 847 F.2d 791, 794 (Fed.Cir.1988) and Parkridge, 13 F.3d at 1197 — courts have refused to construe the “subject to” language upon which defendant relies as incorporating the FmHA’s regulations into the rural housing loan agreements, with the Parkridge court specifically concluding that ELIHPA’s procedures “are facially inconsistent with the loan agreements,” 13 F.3d at 1197. Similar government contract language likewise has been construed not to have the “preincorporation” effect defendant urges. 19 Accordingly, this court finds no indication whatsoever that defendant expressly reserved in the program documents the right to modify the prepayment terms of the agreement.
In sum, not even a microscopic reading of the contract documents can escape the con *733 elusion that plaintiffs had an unfettered right to prepay their mortgages. It follows that the passage of ELIHPA and the HCDA repudiated that right. Those statutes “conveyed an announcement by the Government that it would not perform as represented in the promissoiy notes if and when, at some point in the future, petitioners attempted to prepay their mortgages.” Franconia, 536 U.S. at 143 , 122 S.Ct. 1993 ; see also Restatement (Second) of Contracts (hereinafter “Restatement”) § 250, Comment b (1981) (“[A] statement of intention not to perform except on conditions which go beyond the contract constitutes a repudiation”). 20 “[W]hereas under the old scheme FmHA had to accept prepayment from borrowers ... at any time,” the Eighth Circuit observed in Parkridge, 13 F.3d at 1196, “under [ELIHPA], FmHA may accept prepayment only at the end of an intricate six-month long (or longer) procedure ....” 21 This repudiation ripened into an apparent breach of contract either at the time a request for prepayment was made and not honored or, at the latest, when the complaint in this matter was filed. Franconia, 536 U.S. at 142-43 , 122 S.Ct. 1993 ; see also Roehm v. Horst, 178 U.S. 1, 13 , 20 S.Ct. 780 , 44 L.Ed. 953 (1900); Maine Yankee Atomic Power Co. v. United States, 225 F.3d 1336, 1343 (Fed.Cir.2000); Trauma Serv. Group v. United States, 104 F.3d 1321, 1325 (Fed.Cir.1997); Restatement, § 235(2). However, to determine whether this prima facie breach was, in fact, a breach requires this court to consider the government’s principal defense against liability here — that, sub silentio, the government reserved the right to pass ELIHPA and the HCDA under the so-called “unmistakability doctrine.” To this topic, the court now turns.
b. The unmistakability doctrine.
Under the unmistakability doctrine, the “sovereign power” of the United States “is an enduring presence that ... remainfs] intact unless surrendered in unmistakable terms.” United States v. Winstar Corp., 518 U.S. 839, 872 , 116 S.Ct. 2432 , 135 L.Ed.2d 964 (1996) (citing Merrion v. Jicarilla Apache Tribe, 455 U.S. 130, 148 , 102 S.Ct. 894 , 71 L.Ed.2d 21 (1982)); see also Cuyahoga, 57 Fed.Cl. at 763 . Defendant notes that, before this matter was reassigned to the undersigned, Judge Gibson found that this rule of contract construction applied herein and that, in the housing documents, the United States failed to surrender its sovereign powers with the requisite specificity. Defendant argues that this decision is entitled to great deference under the ubiquitous “law of the case doctrine” — that a “ ‘decision should continue to *734 govern the same issues in subsequent stages in the same case.’” Christianson v. Colt Indus. Operating Corp., 486 U.S. 800, 816 , 108 S.Ct. 2166 , 100 L.Ed.2d 811 (1988) (quoting Arizona v. California, 460 U.S. 605, 618 , 103 S.Ct. 1382 , 75 L.Ed.2d 318 (1983)), or, more colloquially, that “a litigant given one good bite at the apple should not have a second.” Perkin-Elmer Corp. v. Computer-vision Corp., 732 F.2d 888, 900 (Fed.Cir.), cert. denied, 469 U.S. 857 , 105 S.Ct. 187 , 83 L.Ed.2d 120 (1984). 22 But, this doctrine is not an inexorable command, and must yield where “controlling authority has intervened” or “the earlier decision was clearly erroneous and would work a manifest injustice.” Id. at 900; see also Christianson, 486 U.S. at 817 , 108 S.Ct. 2166 ; Arizona v. California, 460 U.S. at 618 n. 8, 103 S.Ct. 1382 ; Hughes Aircraft, 86 F.3d at 1566; Mendenhall v. Barber-Greene Co., 26 F.3d 1573, 1582 (Fed. Cir.), cert. denied, 513 U.S. 1018 , 115 S.Ct. 581 , 130 L.Ed.2d 496 (1994). While departures from the doctrine under these exceptions occur “very infrequently,” Perkin-Elmer Corp., 732 F.2d at 900 , such a rare departure is warranted here.
Since Judge Gibson’s ruling, it appears that every court to consider the issue has concluded that the unmistakability doctrine is inapplicable where Congress, rather than exercising its sovereign powers, targets its preexisting contractual obligations. See Gen. Dynamics Corp. v. United States, 47 Fed.Cl. 514 (2000); Coash-to-Coast Fin. Corp. v. United States, 45 Fed.Cl. 796, 802 (2000). Such was the holding of this court in Cuyahoga, supra, which examined the unmistakability doctrine at length. In that case, this court began by tracing the provenance of the doctrine from its roots in early cases involving the application of the Contracts Clause, U.S. Const., art. I, § 10, cl. 1, through more modern Supreme Court cases. Based on this tour d’horizon, this court observed:
A key then is whether [the allegedly breaching] legislation invokes or embodies the types of sovereign power encompassed by the doctrine — those that ‘promote the happiness and prosperity of the community,’ . . . . or involve the health, morals, safety, or economic needs of the citizenry . . . . If such is the case — where, for example, the challenged legislation represents a general exercise of the taxing or police powers — the unmistakability doctrine readily applies. If it is not — where, for example, the challenged legislation represents a bald ‘repudiation’ of a contractual obligation prompted by Congress’ desire to correct what it perceives to be an overly generous deal — the unmistakability doctrine will avail the government naught. It follows, a fortiori, that the unmistakability doctrine is not triggered by the passage of just any legislation — contrary to defendant importunings, the power of Congress to pass legislation under Article I of the Constitution is neither coextensive nor coterminous with the doctrine. Rather, the doctrine is more limited — owing those limitations to its historical roots in the Contract clause ...
57 Fed.Cl. at 769 (citations omitted). Considering the more recent treatment of the unmistakability doctrine in the various opinions in Winstar, this court then concluded that “Winstar confirms that in deciding whether the unmistakability doctrine applies in a given case, the nature of the legislation alleged to have breached the contract in question is truly pivotal.” Id. at 773 . Ultimately, it determined that “Winstar, as well as its progenitors and progeny, teach that the orbit of [the unmistakability] doctrine significantly intersects that of the sovereign acts doctrine — both apply when the Congress acts to protect public safety, morals or the economy; neither applies when the Congress instead targets the government’s contractual obligations in an effort to obtain a better deal.” Id. at 774 . 23
*735 Consistent with this analysis, a number of recent cases specifically hold that the unmistakability doctrine does not shield defendant from liability stemming from the passage of ELIHPA and the HCDA. At the anterior of this phalanx is Kimberly Assocs. v. United States, 261 F.3d 864 (9th Cir.2001), in which the Ninth Circuit opined that “the United States was not acting in a sovereign capacity when it altered its contract[s]” under this legislation. 261 F.3d at 869 . It reasoned-
It is unquestionable that, when it altered the terms of its contract[s] ..., the government was not acting in a ‘public and general’ capacity. The provisions of the 1992 amendments to ELIHPA ... constituted a narrow, targeted piece of legislation aimed at relieving the government from onerous provisions contained in a finite number of specific contracts it had already entered . . . . In the context of federal programs, it appears relatively few loans were affected, perhaps numbering less than 5,000. To prevent enforcement of these private contracts between the third party trustee and the borrowers would be to ‘give the Govemment-as-contractor powers that private contracting parties lack.’ Yankee Atomic Elec., 112 F.3d at 1575 (Fed.Cir.1997). Such a result cannot be countenanced because the government in its private contracting capacity cannot exercise sovereign power ‘for the purpose of altering, modifying, obstructing or violating the particular contracts into which it had entered with private parties.’ Id.
Id. at 870. This court has twice embraced Kimberly. In Grass Valley Terrace v. United States, 51 Fed.Cl. 436 (2002), it reconsidered a prior opinion, see 46 Fed.Cl. 629 (2000), and concluded that ELIHPA and HCDA did not constitute an exercise of sovereign power protected by the unmistakability doctrine. There, it opined that “[t]he impact of ELIHPA and the HCDA legislation fell substantially on the government’s contracting partners” and had the “substantial effect of releasing the government from its own contractual obligations.” 51 Fed.Cl. at 441-42 . More recently, in reaching the same conclusion in Allegre Villa, 60 Fed.Cl. at 16-17 , this court surveyed the recent jurisprudence on the unmistakability doctrine and surmised that its refusal to apply the doctrine to ELIHPA was not “ground-breaking.” See also Adams, 42 Fed.Cl. at 472 (holding enactment of ELIHPA and HCDA was not a “sovereign” act). 24
These cases serve interlocking purposes. First, they lead to the conclusion that the law of case doctrine ought not apply here. While they are not controlling precedent, these cases, together with this court’s treatment of the unmistakability doctrine in Cuyahoga, supra, persuasively indicate that, with all due respect, the prior ruling herein was clearly erroneous. In the court’s view, adherence to that ruling would be manifestly unjust because, inter alia, it would lead some plaintiffs to be dismissed from this ease — oddly, those not subject to the court’s earlier statute of limitations ruling — while leaving others to pursue remedies under the current — and, in the court’s view, correct — formulation of the law. 25 See Agostini v. Felton, 521 U.S. 203, *736 236 , 117 S.Ct. 1997 , 138 L.Ed.2d 391 (1997) (refusing to apply law of the case doctrine where there had been a significant change in Supreme Court jurisprudence). Nothing could be more contrary to the sound development of the law in this important area than to hold this — and that this court will not do.
Of course, these same cases also readily demonstrate that the unmistakability doctrine offers defendant no comfort here. In passing ELIHPA and the HDCA, Congress deliberately targeted the FmHA’s contractual obligations under preexisting notes in an effort to obtain a better deal than the one it and the FmHA used to induce plaintiffs to enter into the program. Cuyahoga, 57 Fed. Cl. at 774 ; see also Coast-to-Coast Fin. Corp., 45 Fed.Cl. at 802 (unmistakability doctrine does not apply where Congress’ act is “designed merely to eliminate an obligation that arose under one of the Government’s contractual relationships”). The impact of that legislation fell not substantially, but exclusively on the government’s contracting partners, limiting their prepayment rights with the obvious intent of forcing them to remain in the section 515 program. To be sure, as defendant emphasizes, this unilateral modification of a preexisting contractual obligation had a general public purpose — to preserve rural housing stock and prevent tenants from being displaced. But, that is not enough to insulate the particular means Congress selected from a range of available options to effectuate that purpose. 26 So ruled the Supreme Court in Winstar, supra, where a plurality of Justices held that a statute that likewise served an important public objective, the Financial Institutions Reform, Recovery and Enforcement (FIRREA), was not protected by the unmistakability doctrine. There, the Court noted that the unmistakability doctrine ought not apply to a “governmental object of self-relief,” explaining that “[s]uch an object is not necessarily inconsistent with a public purpose, of course, and when we speak of governmental ‘self-interest,’ we simply mean to identify instances in which the Government seeks to shift the costs of meeting its legitimate public responsibilities to private parties.” 518 U.S. at 896 , 116 S.Ct. 2432 ; see also Cuyahoga, 57 Fed. Cl. at 776 ; Centex Corp. v. United States, 49 Fed.Cl. 691, 710-11 (2001). In the court’s view, such a shifting — as in Winstar and Cuyahoga, accomplished by targeting preexisting contracts — is exactly what occurred here. 27
*737 Under these circumstances, defendant’s assertion that its actions were protected by the unmistakability doctrine does not bear scrutiny. Defendant plainly has rendered its performance under the section 515 contracts impossible and, accordingly, the court finds that the United States is liable to the owners for breach of those contracts. “Understandable as Congress’ desire to save money may be,” this court previously observed, “the rule for it, like private parties, sometimes is pacta sunt servanda — colloquially, ‘a deal is a deal.’ ” Cuyahoga, 57 Fed.Cl. at 779 . 28
2. Takings.
Plaintiffs alternatively claim that the various amendments to the Housing Act constituted a taking of their property, by regulatory imposition. To be sure, plaintiffs’ situation implicates the underlying purpose of the Fifth Amendment, which, in the oftrepeated words of Armstrong v. United States, 364 U.S. 40, 49 , 80 S.Ct. 1563 , 4 L.Ed.2d 1554 (1960), is “to bar Government from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole.” Moreover, it is well-established that “[rjights against the United States arising out of a contract with it are protected by the Fifth Amendment.” Lynch v. United States, 292 U.S. 571, 579 , 54 S.Ct. 840 , 78 L.Ed. 1434 (1934). 29 Nonetheless, by dint of the following analysis, the court must reject plaintiffs’ takings claim.
The Federal Circuit “has cautioned against commingling takings compensation and contract damages.” Hughes Communications Galaxy, Inc. v. U.S., 271 F.3d 1060, 1070 (Fed.Cir.2001); see also J.J. Henry Co. v. United States, 188 Ct.Cl. 39 , 411 F.2d 1246, 1249 (1969); Detroit Edison Co. v. United States, 56 Fed.Cl. 299, 301 (2003) (“[a] takings claim has limited application when a claimant has a viable breach remedy”); Home Sav. of Am., F.S.B. v. United States, 51 Fed.Cl. 487, 494 (2002) (same). In the Winstar context, the refusal to invoke takings principles has been explained as directly resulting from the availability of contract remedies. As Justice Scalia wrote in his concurrence in Winstar, “[vjirtually every contract operates, not as a guarantee of particular future conduct, but as an assumption of liability in the event of nonperformance: ‘The duty to keep a contract at common law means a prediction that you must pay damages if you do not keep it, — and nothing else.’ ” Winstar, 518 U.S. at 919 , 116 S.Ct. 2432 (Scalia, J., concurring) (citations omitted) (emphasis in original); see also Glendale Fed. Bank, FSB v. United States, 239 F.3d 1374, 1379-80 (Fed.Cir.2001). More recently, in Castle v. United States, 301 F.3d 1328 (Fed.Cir.2002), the Federal Circuit opined that “despite breaching the contract, the government did not take the plaintiffs’ property because they retained ‘the range of remedies associated with the vindication of a contract.’ ” Id. at 1342 (quoting Castle v. United States, 48 Fed.Cl. 187, 219 (2000)). Instead of conferring a right protected from a taking, “the contract promised to either regulate [plaintiffs] consistently with the contract’s terms, or to pay damages for breach.” *738 Id.; see also Baggett Transp. Co. v. United States, 969 F.2d 1028, 1034 (Fed.Cir.1992); Fifth Third Bank of West. Ohio v. United States, 57 Fed.Cl. 586, 588-89 (2003); McNabb v. United States, 54 Fed.Cl. 759, 778-79 (2002).
Yet, other cases analyzing takings claims in analogous breach scenarios have focused not on the nature of the property impacted, but on the nature of the governmental action giving rise to the alleged taking. These decisions spring from the proposition that, in order to effectuate a taking, the government must invoke its sovereign powers for certain purposes. Under this approach, a taking does not arise where the government acts only in a commercial or proprietary capacity or seeks simply to enforce its property rights in court. For instance, in its seminal opinion in Sun Oil Co., 572 F.2d at 818, the Court of Claims held that the denial of permit to install a drilling platform with respect to preexisting lease did not effectuate a partial taking of the lease because the appropriate remedy “must be directed at defendant in its proprietary capacity and not in its sovereign capacity.” 30 Other cases confronting this issue have followed the lead of Omnia Commercial Co., Inc. v. United States, 261 U.S. 502, 510 , 43 S.Ct. 437 , 67 L.Ed. 773 (1923), in which the Supreme Court held that if the government does not appropriate property for “public use,” no taking, in the constitutional sense, occurs. These cases have opined that a variety of actions that affirmatively constituted the breach of a government contract did not meet this “public use” or “public good” requirement, so as to trigger the protections of the Fifth Amendment. 31
Invoking the latter two lines of authority, sometimes interchangeably, courts have readily concluded that passage of legislation targeting the government’s obligations under preexisting contracts does not effectuate a taking. In the most compelling example of this, Home Savings, supra, this court rejected a claim that FIRREA effectuated a taking of plaintiffs’ contract rights, as well as *739 other underlying property interests, reasoning:
Plaintiffs are correct that the Fifth Amendment affords protection to private property, including contract rights . . . . But it is clear that what was missing in cases such as Sun Oil, Castle, and Coast is the same thing that is missing here — an authorized exercise of the government’s power of eminent domain. As the Supreme Court explained in Omnia Commercial Co. v. United States, 261 U.S. 502, 510 , 43 S.Ct. 437 , 67 L.Ed. 773 (1923), the government is only liable for a taking if it uses its power to appropriate a contract for public use — i.e., if it steps into the shoes of one of the contracting parties. That is not what occurred here.
51 Fed.Cl. at 494-95. Notably, while Wins-tar-type cases typically involve situations in which the breach of a contract effectuated by FIRREA resulted not only in the loss of contract rights, but the substantial devaluation (in some cases, total loss) of previously-owned property, none of the decided cases have treated the loss of such independent property as either a categorical or regulatory taking. See, e.g., AG Route Seven P’ship v. United States, 57 Fed.Cl. 521, 535 (2003); First Fed. Savings Bank of Hegewisch v. United States, 57 Fed.Cl. 316, 318-19 (2003) (citing cases). A contrary ruling, indeed, would have no logical limits and mean that “nearly all Government contract breaches would give rise to compensation under the Fifth Amendment.” Hughes Communications, 271 F.3d at 1070 . 32
The foregoing analysis resonates in the case sub judice, in which the central hypothesis is that the government acted in a proprietary capacity in passing legislation that abridged plaintiffs’ prepayment rights. If this is true — and the court holds it is — it follows, a fortiori, that defendant, while repudiating its contracts, did not effectuate a taking. 33 Because this conclusion stems from the nature of the power invoked by Congress in impacting plaintiffs’ property, rather than the nature of the property itself, it applies, with equal force, to plaintiffs’ contract rights and the complexes they acquired under the program. As to the former, it remains that *740 when a contract between a private party and the Government creates the property right subject to a Fifth Amendment claim, the proper remedy for infringement lies in a contract claim, not one for a taking. 34 See Allegre Villa, 60 Fed.Cl. at 18-19 ; Detroit Edison Co., 56 Fed.Cl. at 303 . The same holds true as to the complexes themselves— no regulatory taking occurred because the Congress did not appropriate those properties in its sovereign capacity for public use. 35 Accordingly, the court holds that plaintiffs’ takings claims are not well-taken.
3. Redux.
Based on the foregoing, the court concludes that, in passing ELIHPA and the HCDA, defendant repudiated the FmHA contracts it had with plaintiffs. That repudiation blossomed into a full blown breach of contract upon the later of a specific request for prepayment (a demand for performance) or the filing of this lawsuit. Although, and perhaps because, such breaches occurred, the passage of ELIHPA and HCDA did not effectuate a taking either of plaintiffs’ contract rights or the associated properties.
The court must next determine the damages plaintiffs are owed.
B. Damages.
Attempting to quantify their breach damages, plaintiffs, at trial, presented expert testimony concerning the loss of cash flow they attribute to being precluded from prepaying their loans without restriction during the duration of those loans. Essentially, these analyses projected the cash flows likely to be generated by converting the properties to commercial use, compared them to what would be realized if the properties remained in the program, and treated the difference as expectation damages. Although defendant disputes various aspects of these calculations, its overarching arguments are that plaintiffs failed to mitigate their damages and inadequately demonstrated that the damages claimed were caused by defendant.
1. Mitigation.
Defendant’s centerpiece contention with respect to damages, which it repeats in several tactical variations, is that the provisions passed by Congress in eliminating the absolute prepayment right significantly mitigate any damages owed plaintiffs here. For the reasons that follow, this court disagrees.
We begin with common ground — “a non-breaching -party generally may not recover damages attributable to that party’s failure to take reasonable, non-burdensome steps to avoid its loss.” Koby v. United States, 53 Fed.Cl. 493, 496-97 (2002). Damages that the plaintiffs might have “avoided without undue risk, burden or humiliation” are hence not recoverable. Restatement § 350; see also Middleton v. United States, 175 Ct.Cl. 786, 792 (1966); Sun Cal, Inc. v. United States, 25 Cl.Ct. 426, 432 (1992). “Application of this principle,” this court has stated, “requires the court to consider whether a reasonable person, acting in light of the known facts and circumstances, would have taken steps to avoid certain damages.” *741 Koby, 53 Fed.Cl. at 497 . As stated by the Third Circuit:
Whether or not the buyer’s obligation to mitigate damages has been discharged depends on the reasonableness of its conduct. In this connection, reasonable conduct is to be determined from all the facts and circumstances of each case, and must be judged in the light of one viewing the situation at the time the problem was presented. Where a choice has been required between two reasonable courses, the person whose wrong forced the choice cannot complain that one rather than the other was chosen.
In re Kellett Aircraft Corp., 186 F.2d 197, 198 (3rd Cir.1950); see also Beckman Cotton Co. v. First Nat’l Bank of Atlanta, 666 F.2d 181, 184 (5th Cir.1982); First Nationwide Bank v. United States, 56 Fed.Cl. 438, 444 (2003); Tampa Elec. Co. v. Nashville Coal Co., 214 F.Supp. 647, 652 (M.D.Tenn.1963). “The rule of mitigation of damages may not be invoked by a contract breaker as a basis for hypercritical examination of the conduct of the injured party, or merely for the purpose of showing that the injured person might have taken steps which seemed wiser or would have been more advantageous to the defaulter.” In re Kellett Aircraft, 186 F.2d at 198-99 ; see also Apex Min. Co. v. Chicago Copper & Chem. Co., 306 F.2d 725 , 731 (8th Cir.1962). Rather, the burden is on the breaching party to show that reasonable possibilities for mitigation existed and were ignored. See T.C. Bateson Construction Co. v. United States, 162 Ct.Cl. 145 , 319 F.2d 135, 160 (1963); Home Sav. of Am., FSB v. United States, 57 Fed.Cl. at 729; Westfed Holdings, Inc. v. United States, 55 Fed.Cl. 544, 561-62 (2003); Robinson v. United States, 50 Fed.Cl. 368, 370 (2001).
Burnishing this “undue risk and expense” standard, Williston on Contracts provides that “almost any risk of considerable loss to the injured person if he attempts to mitigate damages should be considered undue.” 11 Samuel Williston, A Treatise on the Law of Contracts § 1353 (3d ed.1968); see also Brazos Electric Power Coop., Inc. v. United States, 52 Fed.Cl. 121, 129 (2002). While reasonable cost-avoiding steps include affirmative efforts to make substitute arrangements compensating for the lack of contract performance, such arrangements need not be entered into if they would expose the party to undue risk or significantly compromise its interests. See Restatement, § 350 cmts. c & g; see also Westamerica Mortgage Co. v. First Nationwide Bank, 1988 WL 76377 at *5 (D.Colo. Jul.15, 1988). Thus, an injured party is not expected to “ ‘exalt the interests of the defaulter to his own probable detriment.’ ” Koby, 53 Fed.Cl. at 497 (quoting In re Kellett Aircraft, 186 F.2d at 199 ); see also Contempo Design, Inc. v. Chicago and N.E. III. Dist. Council of Carpenters, 226 F.3d 535, 554-55 (7th Cir.2000), cert. denied, 531 U.S. 1078 , 121 S.Ct. 776 , 148 L.Ed.2d 674 (2001); John Calamari & Joseph Perillo, The Law of Contracts § 14-15 (3d ed.1987). Accordingly, courts have been reluctant to require parties, under the duty to mitigate, to deal further with the breaching party, especially if the breacher’s alternative terms differ substantially from those of the original contract. Stanspec Corp. v. Jelco, Inc., 464 F.2d 1184, 1187 (10th Cir.1972); Campfield v. Sauer, 189 F. 576, 579 (6th Cir.1911); Koby, 53 Fed.Cl. at 497 . 36 In addition, in particular, a plaintiff is not required to mitigate losses by “accepting an arrangement with the breaching party made conditional on the plaintiffs surrender of its rights under the repudiated contract.” Brazos, 52 Fed.Cl. at 129 ; see also Teradyne, Inc. v. Teledyne Indus., Inc., 676 F.2d 865, 870 (1st Cir.1982); Restatement, § 350, cmt. e.
Defendant asseverates that when Congress modified plaintiffs’ unfettered right to prepayment, it provided suitable substitute transactions. Thus, the property owners could receive one or more of the following incentives in exchange for locking in the low- *742 income use of their properties for twenty years: equity loans, increased annual return on investment, and additional units of rental assistance to tenants. Barring such an agreement, they could sell their complexes to a qualified nonprofit organization or public agency at a fair market value determined by independent appraisers, or perhaps prepay with restrictions under the G-4 option. Finally, the FmHA could still accept an offer to prepay if either no nonprofit entity steps forward to purchase the property after 180 days, or the FmHA determines “that housing opportunities of minorities will not be materially affected as a result of the prepayment,” that “there is an adequate supply of safe, decent, and affordable rental housing within the market area,” and that “sufficient actions have been taken to ensure that the rental housing will be made available to each tenant upon displacement,” 42 U.S.C. § 1472 (c)(5)(G)(ii)(II). Defendant claims that it was unreasonable for plaintiffs not to pursue at least one of these courses to lessen the damages owed on the breach of their original contracts. Per contra.
For one thing, defendant is simply wrong in suggesting that a reasonable person, acting in like circumstances, would have embraced the alternatives offered by Congress. Like Old Dobbins, defendant all but dons blinders to the fact that Congress here repudiated the original contracts not once, but twice, each time modifying the FmHA contracts to suit its purposes. During this same general period, Congress also saw fit to alter other low-income housing contracts, limiting the prepayment provisions in some HUD agreements and modifying the rent increase provisions in others. 37 Frustrated by these developments, various plaintiffs testified that they were unwilling to enter into any other agreements with the FmHA, fearful that Congress subsequently would modify those deals to its advantage, as well. That impression certainly is not unreasonable, given the legislative record here. Nor should it be unexpected. The Supreme Court long ago observed that if the United States repudiates its obligations, it bears “all the wrong and reproach the term implies.” Sinking Fund Cases, 99 U.S. at 718. Among those implications is that defendant cannot reasonably expect plaintiffs to risk a third repudiation of their contracts, particularly while defendant still claims impunity for the first two. 38 Colloquially speaking, the law of mitigation does not require plaintiffs to play the role of the credulous Charlie Brown to the FmHA’s priggish Lucy, in recreating the Sehulzian football-kicking scenario that always finds poor Charlie on his back. 39
Indeed, many of the “incentives” and other options offered by Congress under ELIHPA are either feckless, fruitless or just plain risky Some of these options, such as the equity loans, have historically been underfunded, with appropriations consistently lagging behind requests. 40 As a result, the *743 handful of plaintiffs who elected to pursue equity loans lamented their decisions almost immediately — one, for example, was still waiting for his loan more than a decade after it was promised; another waited five years. Other ELIHPA options pose considerable risks to plaintiffs’ economic well being, threatening to increase, rather than diminish, their losses. For example, while Congress, under the G-4 option, authorized certain property owners to convert their facilities to commercial financing, it requires them to allow existing tenants to remain at reduced rents. Such an arrangement generally is viable, however, only if the hold-over low-income tenants are able to obtain and consistently hold HUD section 8 housing vouchers, themselves subject to annual appropriations and sparsely and intermittently available due to chronic underfunding. If those vouchers are not obtained or later become unavailable, the owner is left with a market rate loan and below market rents, hardly a Keynesian formula for success. Likewise fraught with risk is the statutorily-authorized (or compelled) sale of the affected housing to a nonprofit entity at a price to be determined by appraisals. Most owners correctly perceived this as committing to sell their property before knowing the price and with no assurance that they would realize the value at which the property would be freely sold in a fluctuating open market. 41 Indeed, the regulations governing this program leave considerable doubt as to whether what the FmHA means by “fair market value” is what is usually meant by that term. 42 And, of course, this sale option provides nothing to an owner that, for whatever reasons, does not want to sell its property. 43
At trial, defendant attempted to blunt the force of these concerns and deficiencies by serving up a many-colored splendor of palliatives, regulatory assurances and liberal legal interpretations that, as far as the court can tell, were all of recent vintage. Defendant thus contended, inter alia, that an owner could rescind an offer to sell to a non-profit entity if it did not like the price set by the appraisal process and, remarkably, that owners who converted to commercial financing under the G-4 option could pay low-income tenants a stipend to leave their property. These assertions, apart from being somewhat gratuitous, are not supported by the relevant statutory and regulatory provisions. 44 And *744 they apparently do not track how the FmHA has run the program since ELIHPA and the HCDA were passed: indeed, there is not the slightest reliable indication in the record that the FmHA ever reduced any of these salvifie principles to regular practice. Among the rosiest of defendant’s assumptions is that plaintiffs would have been allowed to prepay had they simply asked correctly (or, vice versa, appealed the FmHA’s denial of their prepayment request). But, other than the self-serving testimony of FmHA officials, there is absolutely no indication that any of the properties would have met the new regulatory requirements for prepayment and, conspicuously, defendant fails to identify any particular complex for which this would hold true. 45 At all events, the halcyon picture defendant now paints fails to account for the fact that the established standard for evaluating the reasonableness of mitigation efforts is “from the perspective of ‘one viewing the situation at the time the problem was presented.’ ” Koby, 53 Fed.Cl. at 498 (quoting In re Kellett Aircraft, 186 F.2d at 198 ). Here, the suspicions that most plaintiffs harbored from the start were not only reasonable ab initio, but prescient.
To cinch matters, it should not be overlooked that by electing any of the alterna *745 tives offered by Congress, plaintiffs could have severely compromised their ability to seek any damages under the original contracts. Although, perhaps for tactical reasons, defendant has not pursued this theory here (lest it undercut its mitigation claims), a plaintiffs acceptance of any of these options could well have been construed as abandoning its rights under the first contracts via some rescission, compromise, or accord and satisfaction. Thus, a decision to abandon contract rights can be conveyed through a formal agreement of rescission or through the acts and conduct of the parties indicating such an intent. See Nebco & Assocs. v. United States, 23 Cl.Ct. 635, 642 (1991); Montana Bank of Circle, N.A. v. United States, 7 Cl.Ct. 601, 610 (1985); see also Restatement §§ 279 & 283, cmt. a. When a party engages in acts inconsistent with the existence of a contract, including acquiescing in a repudiation of the contract by the other party, courts have found an objective intent to abandon despite the party’s assertion of subjective intent to the contrary. 46 Although no case flatly indicates that invocation of the statutory alternatives here could trigger this result, the case law generally is such that those plaintiffs who decided, often on the advice of counsel, not take this course were certainly acting reasonably. These plaintiffs were “not obligated to risk surrendering [their] rights under the first contracts] in order to minimize defendant’s damages.” Koby, 53 Fed.Cl. at 499 ; see Teradyne, 676 F.2d at 870 ; Stanspec Corp., 464 F.2d at 1187 ; Campfield, 189 F. at 579-80 .
Based on the foregoing, the court finds that those plaintiffs who refused to elect one of the alternatives Congress offered acted reasonably. As such, they did not fail improperly to mitigate them damages here. Defendant has not proven otherwise and its affirmative defense on this count, therefore, must fail.
But, what of the plaintiffs who actually received incentives in exchange for extending their housing agreements? As noted, defendant has not argued that these actions amounted to a rescission; nor does this court view the fact that a few individuals elected these incentives as indicating that the plaintiffs who did not were unreasonable. 47 Nonetheless, the net value, if any, attributable to these incentives must be subtracted from the damages owed to these individuals to the extent it lessens the amount of the actual loss here. See LaSalle Talman Bank, FSB v. United States, 317 F.3d 1363, 1372 (Fed.Cir.2003) (damages must be reduced by loss avoided as result of substitute transaction); United States v. City of Twin Falls, 806 F.2d 862, 873-74 (9th Cir.1986) (contract damages to non-breaching party are properly offset by gains after breach because contract damages seek only to “fairly compensate the injured party for his loss”). This result derives not from the rule of avoidable consequences, mind you, but rather of consequences avoided — as the Restatement observed, “[i]f [the injured party] arranges a substitute transaction that he would not have been expected to do under the rules on avoidability ..., his damages are similarly limited by the loss so avoided.” Restate *746 ment, § 347, cmt. e; see also 3 Dan B. Dobbs, Law of Remedies: Damages, Equity, Restitution (hereinafter “Dobbs”) § 12.62(2) (2d ed.1993). In the court’s estimation, plaintiffs’ damage model adequately accounts for the value of any offsetting cash flows actually received from the defendant, requiring mo further adjustments by this court. 48
2. Expectation Damages — Restitutio in Integrum.
Turning to plaintiffs’ damages claim: “The general rule in common law breach of contract cases,” the Federal Circuit has often stated, “is to award damages sufficient to place the injured party in as good a position as he or she would have been had the breaching party fully performed,” San Carlos Irrigation & Drainage Dist. v. United States, 111 F.3d 1557, 1562-63 (Fed.Cir.1997), in other words, to give them “the benefits [they] expected to receive had the breach not occurred.” Glendale, 239 F.3d at 1380 (citing Restatement, § 344(l)(a)). The Federal Circuit has further elucidated — “[t]he benefits that were expected from the contract, ‘expectancy damages,’ are often equated with lost profits, although they can include other damage elements as well.” Id. (citing Restatement, § 347); see also Energy Capital Corp. v. United States, 302 F.3d 1314, 1324 (Fed.Cir.2002). To recover lost profits for breach of contract, the plaintiff must establish by a preponderance of the evidence that: “(1) the loss was the proximate result of the breach; (2) the loss of profits caused by the breach was within the contemplation of the parties because the loss was foreseeable or because the defaulting party had knowledge of special circumstances at the time of contracting; and (3) a sufficient basis exists for estimating the amount of lost profits with reasonable certainty.” Energy Capital, 302 F.3d at 1325 ; see also Cal. Fed. Bank, FSB v. United States, 245 F.3d 1342, 1349 (Fed.Cir.2001); Chain Belt Co. v. United States, 127 Ct.Cl. 38 , 115 F.Supp. 701, 714 (1953). 49
Nonetheless, care must be taken lest the calculation of damages become a quixotic quest for delusive precision or worse, an insurmountable barrier to any recovery. As such, “[t]he ascertainment of damages is not an exact science, and where responsibility for damage is clear, it is not essential that the amount thereof be ascertainable with absolute exactness or mathematical precision.” Bluebonnet Sav. Bank, FSB v. United States, 266 F.3d 1348, 1355 (Fed.Cir.2001); see also Restatement § 352, cmt. a (“[d]amages need not be calculable with mathematical accuracy and are often at best approximate”). “ ‘It is enough,’ ” the Federal Circuit has taught, “‘if the evidence adduced is sufficient to enable a court ... to make a fair and reasonable approximation.’” Elec. & Missile Facilities, Inc. v. United States, 189 Ct.Cl. 237 , 416 F.2d 1345, 1358 (1969) (quoting Specialty Assembling & Packing Co., Inc. v. United States, 174 Ct.Cl. 153 , 355 F.2d 554, 572 (1966)); see also Seaboard Lumber Co. v. United States, 308 F.3d 1283, 1303 (Fed.Cir.2002). Accordingly, “[i]f a reasonable probability of damage can be clearly established, uncertainty as to the amount will not preclude recovery .... ” Ace-Federal Reporters, Inc. v. Barram, 226 F.3d 1329, 1333 (Fed.Cir.2000) (quoting Locke v. United States, 151 Ct.Cl. 262 , 283 F.2d 521, 524 (1960)); see also Glendale Federal Bank, FSB v. United States, 378 F.3d at 1313 (Fed.Cir.2004).
*747 Defendant seeks to preclude plaintiffs from recovering the profits they arguably would have earned had they been allowed to prepay them mortgages in accordances with their original contract rights. It argues that plaintiff can neither prove that such damages were caused by the defendant’s breach nor demonstrate, with sufficient certainty, the amount thereof. As will be seen, it is important to analyze, under the tripartite standard outlined above, each of defendant’s claims separately, as they apply to the specific proof adduced with respect to each of the 41 complexes still in question. And while there are similarities in the circumstances that exist and existed at many of the complexes, there are also differences — differences that lead to the conclusion that while most of the plaintiffs here provided adequate proof of lost profits, some did not.
(a) Proximate result — Causa Próxima non Remota Spectatur.
Plaintiffs must first show that defendant’s breach produced damage “inevitably and naturally, not possibly or probably.” Ramsey v. United States, 121 Ct.Cl. 426 , 101 F.Supp. 358, 357 (1951) (citing Myerle v. United States, 33 Ct.Cl. 1, 26-27 , 1800 WL 2024 (1897)). 50 On this point, the Federal Circuit has advised that lost profits are a “just and proper item of damages to be recovered against the delinquent party upon a breach of the agreement ... if the profits are such as would have accrued and grown out of the contract itself, as the direct and immediate results of its fulfillment.” Energy Capital, 302 F.3d at 1328 ; see California Fed. Bank, 245 F.3d at 1342 ; Wells Fargo v. United States, 88 F.3d 1012, 1022-23 (Fed.Cir.1996). Sometimes distilled to require proof that the breach was a “substantial factor” in the loss of profits, this standard requires a showing that there was a “direct causal relationship” between the breach and such losses. See Bluebonnet Sav. Bank, 266 F.3d at 1356 ; Columbia First Bank, FSB v. United States, 60 Fed.Cl. 97,125 (2004); Citizens Fed. Bank, FSB v. United States, 59 Fed.Cl. 507, 514-15 (2004) (citing numerous cases). 51
The court finds that, in most instances, plaintiffs’ lost profits were the direct result of defendant’s failure to permit them to exercise their prepayment option, preventing them from converting their properties to commercial use. In particular, on the weight of the evidence offered, the court finds that, at the point damages began to accrue, most of the plaintiffs either had the ready means or a reasonable prospect of financially accomplishing prepayment and, in fact, would have prepaid their mortgages and converted them properties to commercial use, had they been allowed to do so without restriction. Documentary evidence of this includes letters from various banks offering or committing to provide alternative financing to the plaintiffs, as well as formal appraisals of the properties. Indeed, it appears that most plaintiffs were readily assured commercial financing because they either had substantial equity in their complexes to secure such a mortgage (frequently, in the hundreds of thousands and, sometimes, in the millions of dollars) or had appraisals that indicated that the value of them properties would surge if converted to commercial housing. Many of these documents were included in formal applications requesting prepayment that were sent to the FmHA. In other cases, plaintiffs either had prepaid other properties they owned or were *748 consistently able to make sizeable extra payments of principal, accelerating the amortization of their loans. Testimony and evidence on this issue was essentially unrebutted and, as indicated in Fact Appendix A, at least one category of such evidence covered most of the properties at issue.
Most — but not all. For four of the complexes in question — Rolling Hills, Scenic Valley, Eastwood and Fox Ridge II — the record is essentially devoid of any indication that their owners had the capacity to prepay at any point prior to trial. As to these properties, there is neither a commitment letter or correspondence from financial institutions indicating a willingness to provide commercial financing; appraisals or other documents indicating that the plaintiffs equity position in the complex was favorable; FmHA prepayment requests with the associated documentation; nor any other indication that the financial status of the complex or that of its owners was such as reasonably to assure prepayment. To be sure, in each of these instances, the owners testified that they had an intent to prepay. But, without some objective indication that these owners had the financial wherewithal, either based upon their personal wealth or the value of the security represented by their complex, to effectuate a prepayment, it cannot be said that these plaintiffs received diminished profits as the result of the repudiation of the prepayment clause. The fact that such evidence was provided as to the other complexes does not give this court license to take the fact-finding equivalent of a Kierkegaardian leap of faith and provide these plaintiffs with what might well be a windfall. Each of the cases here must stand on its own factual footing. Indeed, the evidence produced as to the prepayment capacity of the other complexes only serves to highlight the failure of proof as to the four properties in question.
For those plaintiffs who demonstrated the capacity to prepay, 52 there is every indication that the conversion of their complexes would have been profitable — the record demonstrates that each of their complexes is well-maintained and in desirable locations and that there was demand for renting them as commercial apartments. 53 In a number of instances the FmHA formally determined, as a precondition to offering incentives, that a particular complex could successfully be converted to conventional use. 54 In other instances, particular plaintiffs actually accomplished that conversion, albeit with the G-4 restrictions. Moreover, while the specific amount of profits remains to be determined below, the record supports the conclusion that the commercial rents potentially realizable from these properties exceeded the capped rents under the program to such a degree that increased profitability was reasonably certain. 55 Lastly, the record amply shows that the limitations on prepayment imposed by the breaching provisions of ELIHPA and the HCDA were a “substantial factor” in causing each plaintiff to lose the additional profits that would have been otherwise produced.
To counter this evidence, defendant relies heavily upon its damages expert, Dr. Hamm, who testified that, for most of the complexes in question, prepayment was either disadvantageous or impossible. But, with one exception, *749 56 Dr. Hamm failed to provide a complex-by-complex rebuttal to the evidence presented by plaintiffs, even though the FmHA, under its regulations, presumably had evaluated the prepayment potential of every property that had formally requested prepayment. See 7 C.F.R. § 1965.211-12 (1997). Instead, he attempted to extrapolate from a 2002 GAO study which found that “[i]f the statutory requirement covering loans made before December 15, 1989, were changed to allow prepayment without restriction after 20 years from the date of the loan, we estimate that prepayment could be an option for the owners of 8,872, or about 24 percent, of the 16,366 section 515 properties.” GAO, Multifamily Rural Housing, supra, at 8 . While, in one breath, Dr. Hamm readily conceded that this study did not provide definitive evidence as to whether any particular property could prepay, he, in the next, wielded the study essentially for that purpose, asseverating, based thereupon, that many of the complexes in question could not or would not successfully prepay. A careful review of this report, however, reveals that, like Pelion and Ossa, it bears none of the weight that Dr. Hamm piled upon it.
First, as even Dr. Hamm realized, the report makes clear that within the 16,366 properties reviewed were 6,137 for which prepayment was statutorily barred because the loans were made after December 15, 1989 — excluding these, the GAO’s percentage of properties likely to prepay immediately jumps to 37.8 percent (3,872 out of 10,171 properties). Next, in suggesting that the remainder of the pre-1989 loans would or could not prepay, the GAO (and, in turn, Dr. Hamm) relied on three indicia. Id. at 726-27. However, the first of these — that many section 515 properties are owned by nonprofit or public organizations whose basic mission is to provide affordable housing — applies to none of the complexes here. Indeed, had the GAO considered only privately owned properties, its prepayment percentage would undoubtedly been much higher. The second and third factors identified by the GAO— that prepayment is unlikely where there is a high dependence on FmHA housing assistance or local population declines in the 1990s — apply to many of the remaining complexes sub judice. But, again, unlike Dr. Hamm, the GAO made no pretense that the mere presence of these indicia would foreclose an owner from prepaying; their presence, in the GAO’s view, merely made that event less likely. Given this, it made no sense for Dr. Hamm to rely upon these indicators to project the likelihood of prepayment in the face of specific evidence that the particular properties involved could and would prepay. 57 See generally, Hart v. Sec’y of Dept. of Health & Human Serv., 60 Fed. Cl. 598 (2004) (rejecting the inappropriate use of probabilistic statistics). Indeed, Dr. Hamm uncritically assumed that the indicia identified by the GAO were valid, even though he knew that the same agency had, years before, predicted, with equal sureness, that absent the passage of what became ELIHPA, up to 70 percent of section 515 borrowers would prepay. 58 To say the least, the court believes that Dr. Hamm’s testimony on this point proves too much.
Nor is it sufficient to argue, as defendant repeatedly does with rhetorical ferocity, that plaintiffs’ losses were caused not by defendant’s breach, but rather by “the choices that plaintiffs made among the alternatives presented to them by the Government.” In this *750 regard, defendant further asserts that “[t]he evidence does not establish that plaintiffs could not have chosen differently, that they cannot still choose -differently, or that they will not in fact choose differently in the future, thus avoiding much if not all of the losses estimated by plaintiffs’ experts.” These claims, however, are nothing more than a rewarmed hash of the mitigation theories rejected above, reasserted here, under the causation heading, in a transparent attempt to sidestep the limitations that led to the demise of defendant’s mitigation defense. Having failed to prove that plaintiffs acted unreasonably in failing to elect one of the substitute transactions offered by ELIHPA, defendant now, in the guise of enforcing the causation requirement, would have plaintiffs prove a series of negatives — that they could not have lessened their losses by choosing any of the options offered by Congress. The decisional law, however, demonstrates that, as between the concepts of causation and mitigation, these contentions sound only under the latter doctrine, the contours of which have been carefully charted by the courts to avoid placing exactly the sort of burdens on injured parties that defendant would assign here. See, e.g., In re Kellett Aircraft Corp., 186 F.2d at 199 .
While “in the workaday world, the conceptual distinctions between damage, ‘duty1 to minimize, mitigation, and proximate cause are frequently blurred,” R.F. Martin, “Burden of Proving Value of Relief from Performing Contract in Suit Based on Defendant’s Breach Preventing or Excusing Full Performance,” 17 A.L.R.2d 968 , 1951 WL 7375 , § 2(a), the fact is these concepts have distinct purposes and definitions. In order to prove that losses were “proximately caused” by defendant’s breach, plaintiffs need not show that they might have avoided or minimized such losses or that defendant’s conduct was the “sole” cause of their damages. See Long Island Sav. Bank, FSB v. United States, 60 Fed.Cl. 80, 90 (2004); Westfed Holdings, 55 Fed.Cl. at 553 . 59 Rather, they must only show that the breach was a “substantial factor” and that the damages flowed “inevitably and naturally” therefrom. Bluebonnet, 266 F.3d at 1366 ; Long Island, 60 Fed.Cl. at 90; Ramsey, 101 F.Supp. at 357 . Thus, plaintiffs need not show that each dollar claimed was entirely unaffected by outside events. Citizens, 59 Fed.Cl. at 514-15 . By comparison, where instead the question presented involves an injured party’s failure to act to lessen damages, the issue does not involve proximate causation, but rather mitigation. See Deere & Co. v. Reinhold, 2000 WL 486607 at *8 (E.D.Pa. Apr.24, 2000). As one leading commentator has summarized, “[although the injured party’s own failure to avoid a loss may bar recovery for that loss, this is not thought of as a consequence of a requirement of causation, but of a limitation under a ‘mitigation’ rule.” III. E Allen Farnsworth, Farnsworth on Contracts (Farnsworth) § 12.1 at p. 149 (2d ed.1998); see also id. at § 12.12 at p. 228.
Were these distinctions untrue, “the doctrine of mitigation of damages would lose much of its significance,” Willems Indus. Inc. v. United States, 155 Ct.Cl. 360 , 295 F.2d 822, 831 (1961). Indeed, in every case, a breaching party could simply recast its mitigation defense in causation terms and thereby avoid the hurdles imposed by the established case law. Under this scenario, such a party would never be called upon affirmatively to plead, let alone prove, mitigation, and instead would benefit from a pervasive causation defense not subject, like mitigation, to the bounds of reasoned decisionmaking. A breaching party simply could spin out a tangled web of damage-reducing hypothetical events in hopes that the injured party would become ensnared in failing to disprove at least one of them. Perhaps not surprisingly, defendant has not directed this court to a single case that supports the creation of such a serious incongruity between mitigation and causation principles. The few federal cases *751 that have addressed this issue do not do so, 60 and state cases rejecting this approach are legion. See, e.g., AAS-DMP Mgmt., L.P. Liquidating Trust v. Acordia NW, Inc., 115 Wash.App. 833 , 63 P.3d 860, 865 (2003); City of Seattle v. Blume, 134 Wash.2d 243 , 947 P.2d 223, 230 (1997); Moura v. Pulieri, 40 Conn.App. 183 , 669 A.2d 1243, 1245-16 (1996); Wiese-GMC, Inc. v. Wells, 626 N.E.2d 595, 599 (Ind.App.1993); Erler v. Five Points Motors, 249 Cal.App.2d 560 , 57 Cal.Rptr. 516, 522 (1967) (“We conceive a substantial difference between what a plaintiff has actually done and what he could have done with the exercise of reasonable diligence and effort”). This court finds these cases persuasive and thus finds unpersuasive defendant’s attempts to addle the concepts of mitigation and causation.
In sum, the court finds that plaintiffs’ lost profits were not, as defendant argues, “remote and consequential,” Wells Fargo, 88 F.3d at 1021 . Those profits do not derive from what the courts have defined as “independent and collateral undertakings,” but rather would have “accrued and grown” from the timely termination of those agreements, “as the direct and immediate results of [their] fulfillment.” Energy Capital, 302 F.3d at 1328 ; see also Cal. Fed., 245 F.3d at 1349 . As such, plaintiffs have met the “proximate result” requirement for proving lost profits.
(b) Foreseeability — Providentia.
As to the second requirement, foreseeability, the Restatement (Second) of Contracts provides that a “[l]oss may be foreseeable as a probable result of a breach because it follows from the breach (a) in the ordinary course of events, or (b) as a result of special circumstances, beyond the ordinary course of events, that the party in breach had reason to know.” Restatement § 351(2); see also Bluebonnet, 266 F.3d at 1355 ; Chain Belt Co., 115 at 714; Home Sav. of America, 57 Fed.Cl. at 726. Expounding on this standard, one leading commentator has stated that, in order to be foreseeable, “the injury that occurs must be one of such a kind and amount as a prudent man would have realized to be a probable result of his breach.” 5 Corbin, § 1012 at 88; see also Restatement, § 351, cmt. a (“The mere circumstance that some loss was foreseeable, or even that some loss of the same general kind was foreseeable, will not suffice if the loss that actually occurred was not foreseeable.”). 61 In this regard, the remaining plaintiffs need not show that a particular type of breach was foreseeable, but must prove that both the general magnitude and type of damages were foreseeable. See Landmark Land Co., Inc. v. United States, 256 F.3d 1365, 1378 (Fed.Cir.2001); see generally N. Helex Co. v. United States, 207 Ct.Cl. 862 , 524 F.2d 707, 714 (1975).
*752 Here, it was reasonably foreseeable, at the time the program agreements were executed, that plaintiffs would stand to lose profits if they were unable to invoke unqualifiedly their prepayment rights. Virtually all of the evidence presented at trial confirms that the government should have known— and, in fact, knew — about the profit expectations that led plaintiffs to agree to the housing contracts. The testimony of numerous witnesses (most notably, Mr. Greenwalt, former chief of the FmHA’s Multifamily Housing Services Branch) confirms that FmHA officials worked diligently to plant those expectations in the minds of potential program participants by repeatedly touting the ability of borrowers to convert their properties to commercial use. As discussed above, they encouraged such conversions because they served to recycle the program’s limited funds into new properties for which commercial financing was unavailable. In addition, for many complexes, FmHA officials knew, at the time the loans were executed, that various features in the building designs that they approved, such as ah’ conditioning, courtyards and masonry, were being incorporated with an eye towards maximizing the future commercial profitability of the property. Consequently, it was reasonably foreseeable that entrants into the program would, as plaintiffs clearly did, adopt the profit motivation urged by the agency and that the ability to obtain such profits, therefore, would become “an essential part of the quid pro quo” of the contracts. Winstar, 518 U.S. at 921 , 116 S.Ct. 2432 (Scalia, J., concurring). 62
Further confirmation of this may be found in the legislative history of ELIHPA. For example, in 1986, an FmHA official noted that for many properties it had become “profitable to prepay the loan after, say 5 years, and sell or convert the housing for occupancy by the general public instead of maintaining it as low-income apartments.” 1986 Hearings, supra, at 17 (statement of Eric P. Thor, Assoc. Administrator, FmHA). These sentiments were echoed in 1987, when the then administrator of the FmHA testified before a House subcommittee that — “[v]arious factors, as I am sure you are aware, including tax incentives and extension of loan eligibility to limited profit entities, made it profitable to prepay the loan after a few years and then sell or convert the property to general occupancy with no low income tenants.” 1987 Hearings, supra, at 364 (statement of Vance Clark); see also H.R. Rep. 122(1) at 54, U.S.Code Cong. & Admin.News 1987, pp. 3317, 3369-70 (noting that “profit-taking motives” were causing owners of FmHA housing to prepay and that such commercial use was resulting in rent increases of “more than 60 percent”). To be sure, these statements were made after the loans in question were executed. But, taken together with hawking representations made by FmHA officials in marketing the program to potential borrowers, they reinforce the notion that a reasonable person would have foreseen, at the time the agreements were entered, that the effect of abrogating the prepayment clause would be to deny plaintiffs profits from the conversion of their properties.
In short, the record as a whole amply demonstrates that, at the time the loans in question were executed, FmHA officials clearly foresaw that the borrowers intended to use the prepayment clause to convert their properties to commercial use and thus defendant must be deemed reasonably to have foreseen that the subsequent imposition of significant limitations on the prepayment rights would cause borrowers to lose the profits associated with that conversion. Accordingly, the lost profits in question were, in *753 the ordinary course of events, foreseeable as a probable result of the breach in question.
(c) Reasonable certainty — Cerium Probabiliter Scire.
Finally, the fact that plaintiffs would have made additional profits, absent the breach, must be “definitely established, and [there must be a] basis on which a reasonable estimate of the amount of the profit can be made.” California Fed. Bank, FSB, 245 F.3d at 1349 (quoting Neely v. U.S., 152 Ct.Cl. 137 , 285 F.2d 438, 443 (1961)). Under this standard, absolute certainty is not required because “ ‘the risk of uncertainty must fall on the defendant whose wrongful conduct caused the damages.’ ” Energy Capital, 302 F.3d at 1327 (quoting Mid-Am. Tablewares, Inc. v. Mogi Trading Co., 100 F.3d 1353, 1366 (7th Cir.1996)) (quoting Super Valu Stores, Inc. v. Peterson, 506 So.2d 317, 330 (Ala.1987)). 63 Although, a court will not permit a plaintiff to recover damages under this standard based on “ ‘mere speculation or guess,’ ” Samaritan Inns, Inc. v. District of Columbia, 114 F.3d 1227, 1235 (D.C.Cir.1997) (quoting Wood v. Day, 859 F.2d 1490, 1493 (D.C.Cir.1988)), the plaintiff need only provide some reasonable basis upon which to estimate damages. See Hill v. Republic of Iraq, 328 F.3d 680, 684 (D.D.C. 2003); see also Palmer v. Connecticut Ry. & Lighting Co., 311 U.S. 544, 561 , 61 S.Ct. 379 , 85 L.Ed. 336 (1941) (“Certainty as to the amount [of damages] goes no further than to require a basis for a reasoned conclusion.”). 64 As to this analysis, the Federal Circuit has made clear that the court “ ‘may act on probable and inferential as well as direct and positive proof.’ ” Energy Capital, 302 F.3d at 1329 (quoting Locke, 283 F.2d at 524 ); see also id. (court may rely on “reasonable inferences”).
“Fixing lost profits damages with reasonable certainty requires careful examination of the nature and reliability of the statistical proof.” Travellers Intern., A.G. v. Trans World Airlines, 41 F.3d 1570, 1579 (2d Cir. 1994). In the case sub judice, plaintiffs statistical evidence essentially was designed to show that, unfettered by the restrictions of the rural housing program, each of the complexes would have generated greater profits. As stated in his report, plaintiffs damages expert, Dr. George Karvel, selected the relevant time period for conducting this analysis as “the period beginning on the date that each plaintiff intended to prepay its mortgage (at which time it would have begun charging market rents) and ending on the date that each plaintiffs’ mortgage will mature (at which time each plaintiff will actually be able to begin charging market rents).” By way of further explaining his discounted cash flow method, Dr. Karvel’s report stated:
This approach projects the income and expenses for each property as a market-rent property in order to calculate the cash flow of the property over the ... period. The market rent cash flow is then compared to the allowable return as restricted rent property. The resulting difference represents the cash flow lost by each plaintiff as a result of being unable to prepay his or her mortgage as of the intended prepayment date, and instead being able to charge market rents only when his or her mortgage reaches maturity.
Toward these ends, Dr. Karvel’s report contains two sets of yearly balance sheets and income statements for each property — one projecting the profitability of the complexes under the program, the other projecting that *754 profitability assuming the complexes had been converted to commercial use.
It is beyond peradventure that the discounted cash flow method employed by Dr. Karvel is typically used by economists, appraisers and damage experts and, if properly executed with the appropriate factual predicates, would establish the lost profits owed the remaining plaintiffs, with the certainty required by the law. Defendant freely admits as much and numerous cases so hold. See Palmer, 311 U.S. at 557-58 , 61 S.Ct. 379 ; Energy Capital, 302 F.3d at 1328-34; Ace-Fed. Reporters, Inc. v. Barram, 226 F.3d 1329, 1333 (Fed.Cir.2000); see also Sure-Trip, Inc. v. Westinghouse Eng. & Instr. Serv. Div., 47 F.3d 526, 531 (2d Cir.1995); Blackman v. Hustler Magazine, Inc., 800 F.2d 1160, 1163 (D.C.Cir.1986); Cienega Gardens v. United States, 38 Fed.Cl. 64, 76 (1997), rev’d on other grounds, 194 F.3d 1231 (Fed.Cir.1998). Fundamentally, Dr. Karvel’s discounted cash flow methodology depends, for its accuracy, on four features: the endpoints of the relevant time period for calculating the damages, the revenue that would be generated by the given facility during that period, the corresponding costs associated with generating that revenue, and a factor for discounting the stream of income that would be produced. In addressing these features seriatim, defendant raises a bevy of objections regarding the accuracy of the assumptions upon which Dr. Karvel relied and the numbers which he produced. The court will address these objections, in turn.
(i) The calculation period.
As to the first of the aforementioned factors — the endpoints of the relevant time period- — -defendant objects to the assumptions employed by Dr. Karvel in setting the initiation and termination of the damages period.
As a general rule, “[t]he time when performance should have taken place is the time as of which damages are measured.” Reynolds v. United States, 141 Ct.Cl. 211 , 158 F.Supp. 719, 725 (1958). In a breach of contract action, that date ordinarily corresponds to the time of the breach. See Energy Capital, 302 F.3d at 1330 ; Estate of Berg v. United States, 231 Ct.Cl. 466 , 687 F.2d 377, 380 (1982). Whether this rule holds true in the case of a repudiation apparently is an issue of first impression in this circuit. Drawing analogies to U.C.C. § 2-713, which indicates that time for measuring damages for a breach is when the injured party “learns of the breach,” some cases hold that the measure of damages for a repudiation should be at the time the injured party learns of the repudiation. See, e.g., First Nat. Bank of Chicago v. Jefferson Mortg. Co., 576 F.2d 479 , 490 (3rd Cir.1978); Ralston Purina Co. v. McFarland, 550 F.2d 967, 971 (4th Cir.1977). However, the prevailing rule — and the one that makes most sense to this court — instead measures damages in the case of a repudiation by focusing on when performance was due. 65 In the court’s view, damages for a party suffering a repudiation should not be fixed any earlier than when that party decides to elect a remedy, which is essentially what happens when, rather than waiting for a repudiation to be cured, it either demands performance or files suit.
For the alpha point for the pre-1979 complexes, Dr. Karvel assumed that the breach occurred not upon the earlier, of a specific request for prepayment or the filing of this lawsuit, but rather on the date that a given plaintiff would have exercised its termination were it not for the repudiation. There are at least two problems with this theory. First, the case law does not support the notion that, in the case of a repudiation, one can establish a breach based upon an unexpressed intent to request performance. Besides demanding performance or filing suit, the only other circumstance that can be deemed to trigger a breach is a “material change of position taken in reliance on the repudiation.” Restatement (First) of Contracts § 318, cmt. d *755 (1932); see also Income Props./Equity Trust v. Wal-Mart Stores, Inc., 33 F.3d 987 , 990 n. 3 (8th Cir.1994); Canderm Pharmacal, Ltd. v. Elder Pharms., Inc., 862 F.2d 597, 604 (6th Cir.1988). Indeed, strictly speaking, the filing of a complaint causes a breach to arise because it is viewed as effectuating such a material change of position. See Canderm Pharmacal Ltd. v. Elder Pharmaceuticals, Inc., 862 F.2d 597, 604 (6th Cir.1988); Commonwealth Edison Co. v. Decker Coal Co., 612 F.Supp. 978, 982 (N.D.Ill.1985). Here, however, there is no evidence that, in advance of filing suit, any of the owners who failed to demand performance otherwise materially changed their positions in reliance on the repudiation.
Second, plaintiffs’ assertion that, as to owners who did not request prepayment, the breach occurred earlier than the filing of suit conflicts with what it argued before the Supreme Court in asserting that the statute of limitations in these cases had not run. On brief before that Court, plaintiffs plainly argued that their claims arose no earlier than when formal prepayment requests were made. Thus, for example, they contended that “given the fact that ELIHPA continued to compel the agency to ... [accept prepayments] in certain circumstances, it was certainly reasonable for petitioners to defer suit until they decided to exercise their termination option, submitted a request to the agency, and obtained a decision.” Franconia Assocs. v. United States, No. 01-455, Brief for Petitioners, 2002 WL 315418 at *27 (Feb. 19, 2002). They further asserted that “[u]nder the doctrine of anticipatory repudiation, petitioners’ contract claims did not accrue upon the enactment of the legislation by Congress, but rather when the agency, applying the new restrictions set forth in the statute, breached its contractual obligation by refusing to accept petitioners’ prepayment requests.” Id. at *18 . The Supreme Court unmistakably credited these assertions in holding that plaintiffs’ suit was not time barred under 28 U.S.C. § 2501 , for if a breach could arise earlier than an actual request for performance, the Court would have been unable to determine whether plaintiffs’ suit was timely filed. As such, were plaintiffs’ position on this issue not erroneous as a matter of law, this court would be compelled to reject their position, nonetheless, under the doctrine of judicial estoppel. See New Hampshire v. Maine, 532 U.S. 742, 750 , 121 S.Ct. 1808 , 149 L.Ed.2d 968 (2001); Data Gen. Corp. v. Johnson, 78 F.3d 1556 , 1565 (Fed.Cir.1996) (“The doctrine of judicial estoppel is that where a party successfully urges a particular position in a legal proceeding, it is estopped from taking a contrary position in a subsequent proceeding where its interests have changed.”) (citing Davis v. Wakelee, 156 U.S. 680, 689 , 15 S.Ct. 555 , 39 L.Ed. 578 (1895)).
Based on the foregoing analysis, as well as the findings incorporated in Fact Appendix A regarding the specific dates of various prepayment requests, the court finds that, for plaintiffs who owned the pre-1979 complexes and did not file prepayment requests prior to the filing of the instant suit, the alpha date that should have been employed by Dr. Karvel in his calculations is the date this suit was commenced. For plaintiffs who owned the pre-1979 complexes and actually made prepayment requests prior to the initiation of this lawsuit, the alpha point should be the date of the request, rather than the date of any earlier-formed intent to prepay. As such, the court finds that the beginning points of the discounted cash flow analyses should be adjusted for the listed properties as follows:
Property Plaintiffs Breach Date Actual Breach Date
R.C. Getty
R.C. Mo July 1992 May 1997
R.C. Pierre
R.C. Springs_
Pine Needle June 1992 December 1993
Riverfront_June 1992_August 1994
*756 August 1994 Sunrise River June 1992
May 1997 Evergreen Manor of Waukee I & II May 1993
Prairie Village of Grimes I & II_
Greenway of Altoona I
Greenway of Newton I
Prairie Village of Altoona I & II
Prairie Village of Huxley I & II May 1993 May 1997
Prairie Village LaPorte City I
Prairie Village of Slater I & II
Prairie Village of State Center
Pine Tree Lane December Í995 May 1997
lisiQCl (rTOTlnP T
Casa Grande II June 1993 May 1997
Rancho Verde
For the post-1979 complexes, Dr. Karvel set the alpha point for his calculations in the month that the restrictive use clause for the given property expired. These dates are unaffected by the foregoing analysis and, in the court’s view, are supported by the record.
It remains to determine when the discounted cash flow analyses should terminate — the omega points. As reflected in Dr. Karvel’s calculations, plaintiffs claim that this omega point generally should be the date their respective mortgages are satisfied, after which there will be no restrictions on the commercial use of their complexes. 66 Not so, defendant retorts, again contending that this analysis ignores the possibility that an individual plaintiff might sooner avail itself of one of the options offered by ELIHPA, opting to receive an incentive in exchange for extending the housing agreement; selling their property to a non-profit entity, prepaying with restrictions or,- perhaps, even being allowed to prepay without restrictions. But, like limp doggerel, defendant’s position on the ELIHPA options is no more legally sonorous on this, its third recapitulation.
In addressing defendant’s mitigation and causation claims, the court already has found that each of the options cited by defendant has major drawbacks and is unlikely to be invoked by any of the plaintiffs. Truncating the damages calculations based on the assumption that one of these alternatives, nonetheless, will be elected in the- future would be tantamount to adopting, via a bank shot, defendant’s mitigation arguments. The record does not support this result — indeed, some of the options offered under ELIHPA are so unlikely to be pursued as to make it no less likely that Congress might react to a decision by this court and statutorily prohibit any of the plaintiffs from taking advantage of the ELIHPA options in the future.
Beyond the weaknesses in defendant’s recast mitigation arguments, which do not disappear upon repetition, there are two other reasons why this court declines to view the options offered under ELIHPA as precluding plaintiffs from relying on a discounted cash flow method. First, cases adopting the discounted cash flow method of calculating lost profits generally ignore events subsequent to the breach. As noted by one leading commentator, “[o]ne effect of a market damages measurements ... is to ignore later events, whether they are favorable to the plaintiff or unfavorable.” Dobbs, § 3.8(2) at p. 379; see also id. at § 3.3(3); LaSalle, 317 F.3d at 1373 (a “ ‘claim acerue[s] at once in the theory of the law and it does not inquire into later events’ ”) (quoting Southern Pacific Co. v. Darnell Taenzer Lumber Co., 245 U.S. 531, 533-34 , 38 S.Ct. 186 , 62 L.Ed. 451 (1918)). 67 Accordingly, if, in the context of *757 mitigation, it is unreasonable to assume that these options would be invoked, they simply fall out of the damages equation — a contrary ruling, indeed, would mean that proof in this case would never close. Second, this result is in accord with “[t]he principle ... that the plaintiff should not be made to pay for unwanted benefits, directly or by a reduction in a recovery otherwise due.” Dobbs, § 3.8(2) at p. 378. 68 While this “officious intermeddler” principle is applied most often to prevent a tortfeasor from forcing a benefit on an injured party, see Restatement (Second) of Torts § 920, cmt. f (1979), logic suggests that it also should hold true in breach of contract actions, where, as in torts, the goal of damages is to make the injured party whole. And, it certainly should apply to the unfunded and dysfunctional options that were foisted upon plaintiffs here.
Accordingly, the court holds that the termination point employed by Dr. Karvel in his discounted cash flow analyses are supported by the record and should be employed, as is.
(ii) Projected revenue.
Regarding the second critical prong of Dr. Karvel’s cash flow method — the projected revenue of the complexes under the alternative scenarios — it is noteworthy, at the outset, that while most of the complexes did not have a record of operating as a commercial property, they were not new or fledgling businesses and thus had a record of past performance from which comfortably to predict income. Cf. Merlite Indus., Inc. v. Valassis Inserts, Inc., 12 F.3d 373, 376 (2d Cir.1993) (“An established business often is in a good position to offer evidence of past experience as a reasonable basis from which [to] determine lost profits with the requisite degree of certainty”). In this regard, this case is no different than others holding that the ability to recover lost profits based on the extension of an existing business is not barred by a per se rule of disallowance, but rather hinges on the quality of the evidence presented. See Energy Capital, 302 F.3d at 1326-27 ; see also Ind. Bus. Forms, Inc. v. A-M Graphics, Inc., 127 F.3d 698, 703 (8th Cir.1997) (“While the general rule requiring proof of expected profits with reasonable certainty places a greater burden upon a newly established business, it does not mean a new business can never recover lost profits.”); Midr-Am. Tablewares, Inc., 100 F.3d at 1366 (“[T]he weight of modern authority does not predicate recovery of lost profits upon the artificial categorization of a business as ‘unestablished,’ ‘existing,’ or ‘new5 particularly where the defendant itself has wrongfully prevented the business from coming into existence and generating a track record of profits.”) (quoting Super Valu Stores, Inc. v. Peterson, 506 So.2d 317, 327-30 (Ala.1987)); Care Travel Co. v. Pan American World Airways, 944 F.2d 983, 993-94 (2d Cir. 1991). 69 As will be discussed, the evidence *758 persuades the court that the remaining plaintiffs have established, with reasonable certainty, the projected revenue stream associated with the hypothetical conversion of their complexes to commercial use, albeit with some adjustments.
Recall that Dr. Karvel’s basic methodology was to compare the discounted cash flows that plaintiffs would earn under the program (the restricted model) with the discounted cash flows that they would have earned had they been allowed to prepay their mortgages and convert their properties to market-rate operations (the unrestricted model). Determining the revenue for the restricted model is relatively straightforward because it is based largely on a given plaintiffs current operations. To ascertain the revenue in the unrestricted model, however, Dr. Karvel had to determine the hypothetical rent that would have been realized from the conversion and commercial operation of the complexes. See Cienega, 38 Fed.Cl. at 76 (“In order to arrive at a reliable figure for damages from an income analysis, one must examine market rent figures, which directly affect gross income.”). For those complexes that actually converted to commercial use under the G-4 option, Dr. Karvel used the actual rents realized. For the other complexes, Dr. Karvel used what the FmHA refers to as a “note-rate rent,” a defined concept that the agency employs in administering various aspects of the section 515 programs. 70 Consistent with the methodology employed by the FmHA, see, e.g., 68 Fed. Reg. 32872 , 32893 (June 2, 2003), Dr. Karvel set the note-rate rent for a given complex at a level designed to yield sufficient revenues to cover debt service payments, operating expenses and an eight percent return on the owner’s initial equity investment in the property. In calculating revenue flows for particular years, Dr. Karvel then adjusted that rent for inflation.
Defendant correctly observes that there is no assurance that a given property owner could, in setting rents, cover its expenses, including debt service, and still receive a positive return on its investment — quite obviously, not every building in the country is profitable. However, the note-rate rents were used by the FmHA in analyzing the feasibility of allowing particular complexes to convert to commercial use. While, based on their use by the FmHA, Dr. Karvel suggested that the note-rate rents independently track the market rents for the areas in question, he compared those rents to what he believed were other surrogates for market rents, including: (i) the rents derived from comparable properties analyzed by plaintiffs’ appraiser, Mr. Gorowsky; 71 (ii) the actual *759 market rents that have been achieved at the Iowa properties that have prepaid subject to G-4 restrictions; (iii) data indicating what FmHA found were market rents for two of the properties at issue, Sunrise River and Fall River I; and (iv) the “fair market rents” issued for the relevant areas by HUD. A list of these figures, broken out for the various apartment configurations (e.g., one bedroom, two bedroom), is contained in Fact Appendix B.
In the court’s view, the four surrogates identified by Dr. Karvel are critical because, like vectors yielding a cross-product on a graph, they, in combination, provide a stronger indication of market rents than any one of them supplies alone. As to the first of these surrogates, Dr. Hamm soundly criticized Mr. Gorowsky’s selection of comparable properties, suggesting that the comparables he selected were of greater quality than the complexes sub judiee. But, Dr. Hamm is neither a certified appraiser nor particularly experienced in real estate valuation. Moreover, except for focusing on the distances between the comparables and the subject properties, he provided little, by way of specifics, to explain why the comparables selected by Mr. Gorowsky were inappropriate. Because of the gaps in his experience, the court finds Dr. Hamm’s largely conclusory testimony regarding plaintiffs’ appraisals inadequate to overcome the probative value that the court attaches to Mr. Gorowsky’s findings. 72 Much the same can be said of the next two surrogates for fair market rents offered by plaintiffs — the actual market rents that have been achieved at the Iowa properties and the studies done of Sunrise River and Fall River I. In the court’s view, these indicators, which defendant largely left unchallenged, serve both to establish the fair market rents for the particular complexes involved and to bolster plaintiffs’ overall case as to the remaining complexes.
Perhaps because they offer the b

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/6653027. Public record. Not legal advice.