B-71989, JANUARY 23, 1948, 27 COMP. GEN. 391

B-71989, JANUARY 23, 1948, 27 COMP. GEN. 391

LEASES - RESTORATION OF PREMISES - INTERAGENCY TRANSFER OF LIABILITY WHERE THE GOVERNMENT'S LIABILITY TO RESTORE LEASED PREMISES OR MAKE A LUMP-SUM PAYMENT IN LIEU OF RESTORATION AROSE WHILE THE PREMISES WERE OCCUPIED BY NAVAL ACTIVITIES UNDER LEASES OBLIGATING NAVAL APPROPRIATIONS, THE FACT THAT SUCH PREMISES PROGRESSIVELY WERE MADE AVAILABLE TO THE VETERANS' ADMINISTRATION UNDER AN INTERAGENCY AGREEMENT WHEREBY THE ADMINISTRATION WOULD ASSUME THE NAVY'S RESTORATION MAY NOT BE REGARDED AS EFFECTING A TRANSFER OF SUCH LIABILITY TO THE ADMINISTRATION'S APPROPRIATIONS.

ACTING COMPTROLLER GENERAL YATES TO THE ADMINISTRATOR OF VETERANS' AFFAIRS, JANUARY 23, 1948:

I HAVE A LETTER DATED DECEMBER 11, 1947, FROM THE ACTING ADMINISTRATOR OF VETERANS' AFFAIRS, TRANSMITTING A COPY OF A PROPOSED SUPPLEMENTAL AGREEMENT NO. 4, PROVIDING FOR A LUMP-SUM PAYMENT OF $93,000 TO THE UNITED EXCHANGE BUILDING CORPORATION AS DAMAGES IN LIEU OF RESTORATION OF 165,000 SQUARE FEET OF SPACE IN THE EXCHANGE BUILDING, SECOND AVENUE, SEATTLE, WASHINGTON, ORIGINALLY OCCUPIED BY THE 13TH NAVAL DISTRICT HEADQUARTERS, AND SUBSEQUENTLY TAKEN OVER BY THE VETERANS' ADMINISTRATION UNDER AN ARRANGEMENT WITH THE NAVY DEPARTMENT, AND REQUESTING A DECISION AS TO WHETHER THERE IS ANY OBJECTION TO SUCH PROPOSED PAYMENT.

THE CIRCUMSTANCES GIVING RISE TO THE EXECUTION OF THE PROPOSED SUPPLEMENTAL AGREEMENT ARE STATED IN THE SUBMISSION TO BE AS FOLLOWS:

FOR THE FISCAL YEAR 1946, THE NAVY DEPARTMENT HAD A LEASE COVERING APPROXIMATELY 165,000 SQUARE FEET OF SPACE IN THE EXCHANGE BUILDING, SEATTLE, WASHINGTON.

IN CONNECTION WITH THE ESTABLISHMENT OF VETERANS ADMINISTRATION BRANCH OFFICE NO. 11, SEATTLE, WASHINGTON, THE VETERANS' ADMINISTRATION CONDUCTED AN EXHAUSTIVE SPACE SURVEY IN THAT CITY, BUT WAS UNABLE TO FIND DESIRABLE SPACE. AS A RESULT OF THIS CONDITION, THE VETERANS ADMINISTRATION ACCEPTED AN ARRANGEMENT WITH THE NAVY DEPARTMENT, WHICH WAS THEN IN THE PROCESS OF VACATING SPACE IN THE EXCHANGE BUILDING, WHEREBY SPACE WOULD BE MADE PROGRESSIVELY AVAILABLE TO THE VETERANS ADMINISTRATION BY THE NAVY AS VACATED, ALSO PROVIDING THAT THE VETERANS ADMINISTRATION WOULD ASSUME THE NAVY'SRESTORATION LIABILITY UNDER ITS LEASE.

IN ACCORDANCE WITH THE ARRANGEMENT REFERRED TO IN THE ABOVE PARAGRAPH, THE VETERANS ADMINISTRATION FIRST BEGAN TO OCCUPY SPACE IN THE EXCHANGE BUILDING IN DECEMBER 1945, AND CONTINUED TO OCCUPY SPACE PROGRESSIVELY AS VACATED BY THE NAVY UP TO JUNE 30, 1946, AND SHORTLY THEREAFTER.

ON JULY 1, 1946, THE VETERANS ADMINISTRATION ENTERED INTO A LEASE WITH THE OWNERS OF THE EXCHANGE BUILDING FOR THE PERIOD OF JULY 1, 1946, AND ENDING JUNE 30, 1947, FOR APPROXIMATELY 165,000 SQUARE FEET OF SPACE. THIS LEAVE CONTAINED NO RIGHT OF RENEWAL. THE PARAGRAPH 7 OF THIS LEASE, WHICH IS IDENTIFIED AS VAM-20655, PROVIDED AS FOLLOWS:

"THE GOVERNMENT SHALL HAVE THE RIGHT, DURING THE EXISTENCE OF THIS LEASE, TO MAKE ALTERATIONS, ATTACH FIXTURES, AND ERECT ADDITIONS, STRUCTURES, OR SIGNS, IN OR UPON THE PREMISES HEREBY LEASED (PROVIDED SUCH ALTERATIONS, ADDITIONS, STRUCTURES, OR SIGNS SHALL NOT BE DETRIMENTAL TO OR INCONSISTENT WITH THE RIGHTS GRANTED TO OTHER TENANTS ON THE PROPERTY OR IN THE BUILDING IN WHICH SAID PREMISES ARE LOCATED); WHICH FIXTURES, ADDITIONS, OR STRUCTURES SO PLACED IN OR UPON OR ATTACHED TO THE SAID PREMISES SHALL BE AND REMAIN THE PROPERTY OF THE GOVERNMENT AND MAY BE REMOVED THEREFROM BY THE GOVERNMENT PRIOR TO THE TERMINATION OF THIS LEASE, AND THE GOVERNMENT, IF REQUIRED BY THE LESSOR, SHALL, BEFORE THE EXPIRATION OF THIS LEASE OR RENEWAL THEREOF, RESTORE THE PREMISES HEREBY LEASED TO THE SAME CONDITION AS THAT AS SHOWN BY FLOOR PLANS CERTIFIED BY THE LESSOR AND THE OFFICE OF THE 13TH NAVAL DISTRICT, UNDER ANY OF THE FOLLOWING LEASES, IRRESPECTIVE OF WHETHER SUCH LEASES ARE NOW IN EFFECT:NOD-1329, NOD 1466, NOD-1481, NOD-1581, NOD-1693, NOD-1939, NOD- 1329 NOD-1329 SUPPLEMENT 7, NOD-1329 SUPPLEMENT 8, NOD-1329 SUPPLEMENT 9, NOD-1329 SUPPLEMENT 10, NOD-1329 SUPPLEMENT 11, NOY (R/-249, NOY (R/-769, NOY (R/-30250, NOY (R/-30249, NOY (R/-30769, NOY (R/-30250 SUPPLEMENT 1, NOY (R/-32053, NOY (R/-32744, NOY (R/-30250 SUPPLEMENT 4, NOY (R/ 30250 SUPPLEMENT 3. ALL OF SAID LEASES PROVIDE THAT THE GOVERNMENT, IF REQUIRED BY THE LESSOR, SHALL, BEFORE THE EXPIRATION OF SAID LEASES OR RENEWALS THEREOF, RESTORE THE PREMISES HEREBY LEASED TO THE SAME CONDITION AS THAT EXISTING AT THE TIME OF ENTERING UPON SAME UNDER SAID LEASES. THE LESSOR HAS GIVEN TO THE GOVERNMENT DESIRE TO EXTEND THE PERIOD FOR MAKING SUCH RESTORATION TO THE END OF THIS LEASE. THEREFORE, THE GOVERNMENT, IF REQUIRED BY THE LESSOR SHALL, BEFORE THE EXPIRATION OF THIS LEASE OR THE EXPIRATION OF ANY RENEWAL THEREOF, RESTORE THE PREMISES HEREBY LEASED TO THE SAME CONDITION AS THAT EXISTING AT THE TIME OF ENTERING UPON THE SAME UNDER ANY AND ALL OF THE AFOREMENTIONED PREVIOUS LEASES, REASONABLE AND ORDINARY WEAR AND TEAR AND DAMAGES BY THE ELEMENTS OR BY CIRCUMSTANCES OVER WHICH THE GOVERNMENT HAS NO CONTROL, EXCEPTED. PROVIDED, HOWEVER, THAT IF THE LESSOR REQUIRES SUCH RESTORATION THE LESSOR SHALL GIVE WRITTEN NOTICE THEREOF TO THE GOVERNMENT NINETY (90) DAYS BEFORE THE TERMINATION OF THIS LEASE OR THE TERMINATION OF ANY RENEWAL THEREOF.'

PURSUANT TO THE AUTHORITY CONTAINED IN THE VARIOUS NAVY LEASES, THE NAVY HAD PERFORMED CONSIDERABLE ALTERATIONS, SUBSTANTIALLY IN OPENING UP WORKING AREAS, AND IN ACCORDANCE WITH THE PROVISIONS OF THE NAVY LEASES, THE NAVY WAS LIABLE FOR RESTORATION OF THE ALTERED AREAS TO THE PREMISES, TO THE CONDITION EXISTING AT THE TIME OF OCCUPANCY, LESS NORMAL WEAR AND TEAR.

DURING THE YEAR 1945, THE NAVY DEPARTMENT, THROUGH THE 13TH NAVAL DISTRICT, CONDUCTED EXTENSIVE NEGOTIATIONS WITH THE LESSOR FOR THE LIQUIDATION AND SETTLEMENT OF RESTORATION LIABILITY BY A LUMP SUM, CASH PAYMENT, IN LIEU OF PHYSICAL RESTORATION. THE ESTIMATED COST OF PHYSICAL RESTORATION, COMPUTED AT 1945 PRICES, WAS $124,901.10. BASED UPON THIS COST ESTIMATE, THE LESSOR AGREED TO A CASH SETTLEMENT OF $93,000.00 PLUS $2,000.00 ARCHITECTURAL FEE AND PLUS AN ADDITIONAL AMOUNT REPRESENTING TAXES TO BE PAID ON THE SETTLEMENT. THIS FIGURE TOOK INTO CONSIDERATION THE FACT THAT CERTAIN ITEMS OF ALTERATIONS WOULD NOT REQUIRE ACTUAL RESTORATION. THESE NEGOTIATIONS WERE NEVER FINALLY CONCLUDED.

DURING THE EARLY PART OF THE OCCUPANCY BY VETERANS ADMINISTRATION, A STUDY WAS CONDUCTED TO DETERMINE THE VETERANS ADMINISTRATION'S LIABILITY FOR RESTORATION AS A RESULT OF ASSUMING THE NAVY'S RESTORATION LIABILITY IN CONSIDERATION OF BEING PERMITTED BY THE NAVY TO OCCUPY SPACE ON A PROGRESSIVE BASIS UNDER ITS LEASE. BASED ON ESTIMATES OF COST AS OF DECEMBER, 1946, IT WAS ESTIMATED THAT PHYSICAL RESTORATION WOULD COST $161,362.90. FURTHER, IT WAS ESTIMATED THAT PHYSICAL RESTORATION WOULD PROBABLY REQUIRE A TOTAL OF 40,000 MAN-HOURS OF WORK, WHICH, WITH A CREW OF FIFTY, WOULD REQUIRE APPROXIMATELY 20 CALENDAR WEEKS TO COMPLETE. THE PHYSICAL RESTORATION WOULD NECESSARILY BE PERFORMED AFTER THE SPACE WAS VACATED, THE LIABILITY FOR RENT FOR 20 CALENDAR WEEKS WOULD BE APPROXIMATELY $190,000.00

IN ACCORDANCE WITH THE PROVISION OF PARAGRAPH 7 OF LEASE VAM-20655, HEREIN ABOVE QUOTED, THE LESSOR HAS GIVEN WITHIN THE TIME SPECIFIED THE REQUIRED NOTICE OF RESTORATION. AS A RESULT OF THIS NOTICE OF RESTORATION, NEGOTIATIONS WITH THE LESSOR HAVE RESULTED IN AN AGREEMENT WHEREBY THE LESSOR WILL AGREE TO ACCEPT, IN FULL AND COMPLETE SATISFACTION OF THE NAVY'S RESTORATION LIABILITY, WHICH THE VETERANS ADMINISTRATION HAS ASSUMED, A CASH PAYMENT OF $93,000.00.

ON MAY 7, 1947, THE VETERANS ADMINISTRATION ENTERED INTO A FIRM FIVE YEAR LEASE WITH THE OWNERS OF THE EXCHANGE BUILDING FOR APPROXIMATELY 142,836 SQUARE FEET OF SPACE. THIS LEAVE IS IDENTIFIED AS VA11B (RE/-60. PARAGRAPH 15 OF THIS LEASE PROVIDES AS FOLLOWS:

"THE PROVISION OF PARAGRAPH 7 OF LEASE NO. VAM-20655 ENTERED INTO BY AND BETWEEN THE INSTANT LESSOR AND THE GOVERNMENT, FOR THE PERIOD JULY 1, 1946 TO JUNE 30, 1947, RELATIVE TO ALTERATIONS AND THE RESTORATION THEREOF, ARE HEREBY INCORPORATED HEREIN AND MADE A PART HEREOF, SO FAR AS SAID PARAGRAPH RELATES TO ALTERATIONS PERFORMED AND FIXTURES INSTALLED BY THE GOVERNMENT DURING THE PERIOD JULY 1, 1946, TO JUNE 30, 1947.'

ATTENTION IS INVITED TO THE FACT THAT LEASE VA11B (RE/-60 DOES NOT CARRY OVER THE LIABILITY FOR RESTORATION WHICH WAS INCURRED UNDER LEASE VAM- 20655 AND THAT DEMAND FOR RESTORATION AS PROVIDED IN PARAGRAPH 7 UNDER LEASE VAM-20655 WAS MADE BY THE LESSOR. ALSO, APPROXIMATELY 23,000 SQUARE FEET OF SPACE ON WHICH THERE IS A CONSIDERABLE RESTORATION LIABILITY UNDER LEASE VAM-20655 IS NOT INCLUDED IN THE CURRENT LEASE VA11B (RE/-60.

SECTION 3678, REVISED STATUTES, 31 U.S.C. 628, PROVIDES---

EXCEPT AS OTHERWISE PROVIDED BY LAW, SUMS APPROPRIATED FOR THE VARIOUS BRANCHES OF EXPENDITURE IN THE PUBLIC SERVICE SHALL BE APPLIED SOLELY TO THE OBJECTS FOR WHICH THEY ARE RESPECTIVELY MADE, AND FOR NO OTHERS.

IN DECISION OF NOVEMBER 12, 1942, 22 COMP. GEN. 462, CITING SECTION 3678, REVISED STATUTES, SUPRA, IT WAS HELD, QUOTING FROM THE SYLLABUS--

THE APPROPRIATION " ACQUISITION OF VESSELS AND SHORE FACILITIES, COAST GUARD," CONTAINED IN THE NAVAL APPROPRIATION ACT, 1943, IS NOT AVAILABLE FOR THE CONSTRUCTION OF BUILDINGS FOR THE DEPARTMENT OF AGRICULTURE TO REPLACE THOSE RELINQUISHED TO THE COAST GUARD, AND, THEREFORE, A TRANSFER OF FUNDS FROM SAID APPROPRIATION TO THE DEPARTMENT OF AGRICULTURE FOR THAT PURPOSE IS NOT AUTHORIZED.

IT WAS SAID IN THAT DECISION---

THE LEGALITY OF THE PROPOSED TRANSFER WOULD APPEAR TO DEPEND PRIMARILY UPON THE AVAILABILITY OF THE FUNDS FOR THE PURPOSE CONTEMPLATED BY THE ARRANGEMENT BETWEEN THE NAVY DEPARTMENT AND THE DEPARTMENT OF AGRICULTURE, I.E., FOR THE CONSTRUCTION OF FACILITIES FOR THE FOREST SERVICE, DEPARTMENT OF AGRICULTURE, TO REPLACE THOSE TAKEN OVER BY THE COAST GUARD- -- IT BEING WELL SETTLED THAT IN THE ABSENCE OF SPECIFIC STATUTORY AUTHORITY APPROPRIATE FUNDS CANNOT BE MADE AVAILABLE BY MEANS OF A TRANSFER TO ANOTHER AGENCY OR ANOTHER APPROPRIATION FOR OBJECTS OR PURPOSE FOR WHICH SUCH FUNDS WOULD NOT BE AVAILABLE UNDER THE APPROPRIATION FROM WHICH THE TRANSFER IS MADE. 9 COMP. GEN. 89; 16 ID. 545; 17 ID. 73; ID. 900; 18 ID. 489.

IN A DECISION OF JULY 7, 1942, B-27024, WHERE THE NAVY HAD FOUND IT NECESSARY TO UTILIZE FACILITIES UNDER THE JURISDICTION OF THE PUBLIC HEALTH SERVICE FOR USE AS A QUARANTINE STATION AND HAD ASSURED THE FEDERAL SECURITY AGENCY THAT SUCH FACILITIES WOULD BE RELOCATED ON ANOTHER SITE BY THE NAVY DEPARTMENT, IT WAS SAID---

THE FACT THAT THE FEDERAL SECURITY AGENCY HAS COOPERATED WITH THE NAVY DEPARTMENT UPON THE DEPARTMENT'S ASSURANCE THAT THE QUARANTINE STATION WOULD BE REPLACED AFFORDS NO BASIS FOR PAYMENT FROM APPROPRIATIONS MADE FOR THE NAVY DEPARTMENT OR THE NAVAL SERVICE FOR THE REPLACEMENT IN KIND OF BUILDINGS AND FACILITIES OF THE PUBLIC HEALTH SERVICE WHICH WERE RENDERED UNAVAILABLE TO THE SERVICE BECAUSE OF THE CONSTRUCTION OF THE SECTION BASE BY THE NAVY DEPARTMENT. THE BUILDINGS AND FACILITIES OF THE QUARANTINE STATION WERE NOT THE PROPERTY OF THE PUBLIC HEALTH SERVICE, BUT OF THE UNITED STATES. THE CASE DOES NOT INVOLVE THE TAKING OF PROPERTY OF OTHERS FOR THE USE OF THE UNITED STATES BUT, RATHER, IT IS MORE IN THE NATURE OF A TRANSFER OF PROPERTY OF THE UNITED STATES FROM ONE OF ITS AGENCIES TO ANOTHER. CF. 10 COMP. GEN. 288, AND CASES THERE CITED AND DISCUSSED. WHETHER THE QUARANTINE STATION WHICH HAS BEEN LOST TO THE PUBLIC HEALTH SERVICE BY THE EXIGENCIES OF WAR SHOULD BE REPLACED IN KIND, OR BY A MORE ELABORATE STATION, OR WHETHER THE STATION SHOULD BE DISCONTINUED, ARE QUESTIONS PROPERLY FOR THE CONSIDERATION OF THE CONGRESS. * *

THOSE CASES, AMONG OTHERS, ILLUSTRATE THE FUNDAMENTAL RULE THAT REPRESENTATIVES OF THE GOVERNMENT AGENCIES MAY NOT BY AGREEMENT WITH THEMSELVES AND WITHOUT LEGISLATIVE SANCTION EXPAND THE AVAILABILITY OF THEIR OWN APPROPRIATIONS OR TRANSFER A LIABILITY INCURRED UNDER THEIR OWN APPROPRIATIONS TO THOSE OF ANOTHER AGENCY. IN THE PRESENT CASE IT APPEARS THAT THE GOVERNMENT'S OBLIGATION TO RESTORE THE PROPERTY IN QUESTION AS OF JUNE 30, 1946, AROSE--- AT LEAST IN MAJOR PART--- WHILE THE PROPERTY WAS OCCUPIED BY NAVAL ACTIVITIES UNDER NAVY DEPARTMENT LEASES DATING BACK TO DECEMBER 1, 1939, MADE UNDER NAVAL APPROPRIATIONS. CONSEQUENTLY, THERE IS NO AUTHORITY OF LAW BY INTER AGENCY AGREEMENT OR BY CONTRACT WITH THE LESSOR, OR OTHERWISE, TO TRANSFER SUCH OBLIGATION TO VETERANS' ADMINISTRATION APPROPRIATIONS.