B-8434, NOVEMBER 23, 1940, 20 COMP. GEN. 280

B-8434, NOVEMBER 23, 1940, 20 COMP. GEN. 280

DISPOSITION OF RECEIPTS FROM PROJECTS IN PUERTO RICO THE REVOLVING FUND SET UP UNDER AUTHORITY IN THE ACT OF FEBRUARY 11, 1936, FROM RECEIPTS FROM PROJECTS IN PUERTO RICO MAY NOT BE REIMBURSED OUT OF HOUSING RENTAL COLLECTIONS WHICH ARE FOR COVERING INTO THE TREASURY AS "MISCELLANEOUS RECEIPTS," FOR EXPENDITURES MADE FROM SUCH FUND IN CONNECTION WITH THE REPAIR AND MAINTENANCE OF PROJECT HOUSES WHICH WERE CONSTRUCTED WITH PUBLIC FUNDS OTHER THAN THE SPECIAL FUND AUTHORIZED BY SAID ACT. 19 COMP. GEN. 791, AMPLIFIED.

COMPTROLLER GENERAL WARREN TO THE SECRETARY OF THE INTERIOR, NOVEMBER 23, 1940:

THERE HAS BEEN CONSIDERED A LETTER DATED OCTOBER 28, 1940, FROM THE ASSISTANT ADMINISTRATOR, PUERTO RICO RECONSTRUCTION ADMINISTRATION, AS FOLLOWS:

YOUR LETTER OF MARCH 19, 1940 (B-8434), TO THE SECRETARY OF THE INTERIOR, CONSIDERING QUESTIONS SUBMITTED BY THIS ADMINISTRATION IN A LETTER DATED FEBRUARY 3, 1940, HOLDS IN SUBSTANCE THAT WHERE PROJECTS HAVE BEEN FINANCED PARTLY FROM THE SPECIAL FUND CREATED BY THE ACT OF FEBRUARY 11, 1936 (49 STAT. 1135), AND PARTLY FROM OTHER APPROPRIATIONS THERE MAY BE CREDITED TO THE REVOLVING FUND SUCH PORTION OF THE INCOME DERIVED FROM OPERATIONS AS MAY RESULT FROM EXPENDITURES FROM THE SPECIAL FUND IN THOSE CASES WHERE A SEGREGATION IS POSSIBLE; BUT THAT WHERE A SEGREGATION IS NOT PRACTICABLE, RECEIPTS WHICH CANNOT BE SHOWN TO REPRESENT INCOME OR PROCEEDS DERIVED FROM EXPENDITURES OUT OF THE SPECIAL FUND, SHOULD BE COVERED INTO THE TREASURY AS MISCELLANEOUS RECEIPTS.

ACCORDINGLY, WITH REFERENCE TO RESETTLERS' HOUSES BUILT UPON LAND PURCHASED FROM THE SPECIAL FUND, BUT CONSTRUCTED IN SOME CASES PARTLY FROM THE SPECIAL FUND AND PARTLY FROM FUNDS AVAILABLE UNDER THE EMERGENCY RELIEF APPROPRIATION ACTS OF 1938 AND 1939, AND IN OTHER CASES CONSTRUCTED EXCLUSIVELY WITH FUNDS DERIVED FROM THE 1938 AND 1939 ACTS, ALL RENTALS COLLECTED WHICH CANNOT BE SEGREGATED AS DERIVED ENTIRELY FROM EXPENDITURES MADE FROM THE SPECIAL FUND, ARE BEING DEPOSITED AS MISCELLANEOUS RECEIPTS. HOWEVER, FROM TIME TO TIME OUTLAYS ARE NECESSARY FOR REPAIRS AND MAINTENANCE TO KEEP THESE HOUSES IN A TENANTABLE CONDITION, AND THE ONLY FUNDS AVAILABLE FOR SUCH EXPENSES ARE THOSE AVAILABLE UNDER THE REVOLVING FUND. THE RENTALS CHARGED AND COLLECTED INCLUDE THE ESTIMATED COSTS OF MAINTAINING THE HOUSING UNITS IN A LIVABLE CONDITION.

IN OTHER WORDS, IN A NUMBER OF CASES REVOLVING FUND MONEYS HAVE BEEN AND ARE BEING USED TO DEFRAY THE NECESSARY REPAIR AND MAINTENANCE EXPENSE ON HOUSES THE ENTIRE RENTALS FROM WHICH ARE COVERED INTO THE TREASURY AS MISCELLANEOUS RECEIPTS. IT WOULD THEREFORE SEEM EQUITABLE TO PROVIDE METHOD FOR DEDUCTING FROM THOSE HOUSING RENTAL COLLECTIONS WHICH ARE TO BE DEPOSITED AS MISCELLANEOUS RECEIPTS, AND TO DEPOSIT TO THE REVOLVING FUND, AN AMOUNT CORRESPONDING TO THE EXPENDITURES MADE THEREFROM FOR THE MAINTENANCE AND REPAIR OF THE HOUSES IN QUESTION.

FOR YOUR CONSIDERATION ACCORDINGLY, I SUBMIT THE FOLLOWING QUESTIONS:

1. IF, FOR EXAMPLE, $500 WERE EXPENDED DURING A CALENDAR MONTH FOR THE REPAIR AND MAINTENANCE OF ALL OF THE RESETTLERS' HOUSES THE RENTALS OF WHICH ARE BEING DEPOSITED AS MISCELLANEOUS RECEIPTS, MAY THAT AMOUNT BE CHARGED IN A LUMP SUM AGAINST THAT PORTION OF THE TOTAL RENTAL COLLECTIONS OR

2. WILL IT BE NECESSARY TO CHARGE THE ACTUAL REPAIR AND MAINTENANCE EXPENSE OF EACH SEPARATE HOUSE AGAINST ONLY THE RENTALS COLLECTED FROM THAT PARTICULAR HOUSE?

THE LATTER METHOD WOULD INVOLVE A HIGH ADMINISTRATIVE COST BECAUSE OF THE VOLUMINOUS RECORDS THAT WOULD BE REQUIRED FOR EACH HOUSE. IN THE EVENT YOU AGREE THAT THE METHOD SUGGESTED IN THE FIRST QUESTION IS PERMISSIBLE, THE RENTAL COLLECTIONS MADE FOR DEPOSIT AS MISCELLANEOUS RECEIPTS COULD BE HELD IN A SPECIAL DEPOSIT ACCOUNT, AND PERIODICALLY A SCHEDULE OF TRANSFERS COULD BE APPROVED SO AS TO REIMBURSE THE REVOLVING FUND FOR THE MAINTENANCE AND REPAIR EXPENSES PROPERLY CHARGEABLE AGAINST THE RENTAL COLLECTIONS SO HELD.

YOUR ADVICE IN THIS MATTER WILL BE VERY MUCH APPRECIATED.

THE ACT OF FEBRUARY 11, 1936, 49 STAT. 1135, PROVIDES IN PERTINENT PART AS FOLLOWS:

THAT ALL SUMS WHICH THE PRESIDENT HAS SEGREGATED OR ALLOTTED OR SHALL SEGREGATE OR ALLOT FOR PROJECTS IN PUERTO RICO OUT OF THE MONEY APPROPRIATED BY THE EMERGENCY RELIEF APPROPRIATION ACT OF 1935 SHALL CONSTITUTE A SPECIAL FUND TO PROVIDE RELIEF AND WORK RELIEF AND TO INCREASE EMPLOYMENT IN PUERTO RICO. THE FUND THUS ESTABLISHED SHALL CONTINUE AVAILABLE FOR EXPENDITURE UNTIL JUNE 30, 1940. ALL INCOME DERIVED FROM OPERATIONS FINANCED OUT OF THIS FUND AND THE PROCEEDS OF THE DISPOSITION OF PROPERTY ACQUIRED THEREWITH SHALL CONSTITUTE A REVOLVING FUND, WHICH SHALL REMAIN AVAILABLE FOR EXPENDITURE FOR THE PURPOSES AND IN MANNER AUTHORIZED HEREIN AND IN THE EMERGENCY RELIEF APPROPRIATION ACT OF 1935 UNTIL CONGRESS SHALL PROVIDE OTHERWISE, NOTWITHSTANDING ANY LIMITATION OF TIME CONTAINED IN THE SAID EMERGENCY RELIEF APPROPRIATION ACT OF 1935. ANY AGENCY OR AGENCIES LAWFULLY DESIGNATED OR ESTABLISHED TO ADMINISTER FUNDS ALLOTTED HEREUNDER OR THE REVOLVING FUND HEREIN AUTHORIZED MAY BE CONTINUED SO LONG AS THE SAID FUNDS OR ANY OF THEM REMAIN AVAILABLE FOR EXPENDITURE.

IT WILL BE OBSERVED THAT THE SAID ACT ESTABLISHED TWO FUNDS--- A SPECIAL FUND, AVAILABLE FOR EXPENDITURE UNTIL JUNE 30, 1940, AND A REVOLVING FUND TO CONSIST OF INCOME DERIVED FROM OPERATIONS FINANCED OUT OF THE SPECIAL FUND. AS STATED IN THE DECISION OF MARCH 19, 1940, 19 COMP. GEN. 791, THE AUTHORITY CONTAINED IN THE SAID ACT CONSTITUTES AN EXCEPTION TO THE GENERAL RULE THAT RECEIPTS COLLECTED FOR THE USE OF THE UNITED STATES ARE REQUIRED TO BE COVERED INTO THE TREASURY AS MISCELLANEOUS RECEIPTS, AND FOR THAT REASON MUST BE STRICTLY CONSTRUED. SEE SECTIONS 3617 AND 3618, REVISED STATUTES. ACCORDINGLY, IT WAS HELD IN THE DECISION OF MARCH 19, 1940, THAT IN CASES WHERE PROJECTS ARE FINANCED PARTLY FROM THE SPECIAL FUND AND PARTLY FROM OTHER APPROPRIATIONS, AND A SEGREGATION IS POSSIBLE, THERE MAY BE CREDITED TO THE REVOLVING FUND SUCH PORTION OF THE INCOME AND PROCEEDS AS MAY RESULT FROM EXPENDITURES FROM THE SPECIAL FUND, BUT THAT IF A SEGREGATION IS NOT POSSIBLE THE INCOME SHOULD BE COVERED INTO THE TREASURY AS MISCELLANEOUS RECEIPTS.

IT IS STATED IN THE ABOVE-QUOTED LETTER THAT THE RENTALS CHARGED AND COLLECTED INCLUDE THE ESTIMATED COSTS OF MAINTAINING THE HOUSES IN A LIVABLE CONDITION, AND THAT THE COST OF REPAIRS AND MAINTENANCE OF THE RESETTLERS' HOUSES MUST BE MET FROM MONEYS AVAILABLE IN THE REVOLVING FUND. THE USE OF THE REVOLVING FUND FOR SUCH PURPOSES APPEARS TO BE SPECIFICALLY AUTHORIZED BY LETTER OF THE PRESIDENT, DATED JULY 6, 1940, TO THE SECRETARY OF THE TREASURY, AS FOLLOWS:

IN ACCORDANCE WITH THE PROVISIONS OF THE ACT OF FEBRUARY 11, 1936 (49 STAT. 1135), I HEREBY APPROVE THE EXPENDITURE BY THE PUERTO RICO RECONSTRUCTION ADMINISTRATION DURING THE FISCAL YEAR 1941, OF $180,000 INCLUDING $40,000 FOR RESERVES FOR FUTURE REPLACEMENT AND REPAIRS, FROM PUERTO RICO REVOLVING FUND AUTHORIZED BY THE ACT OF FEBRUARY 11, 1936 (49 STAT. 1135) (OFFICIAL PROJECT NUMBER 105-36-RFI).

THIS AMOUNT MAY BE EXPENDED FOR THE FOLLOWING PURPOSES:

MANAGEMENT, OPERATION, AND MAINTENANCE OF HOUSING PROJECTS, INCLUDING EMPLOYMENT OF NECESSARY PERSONNEL TO FULFILL ALL THE DUTIES THEREOF, PURCHASE OF NECESSARY SUPPLIES, MATERIALS, EQUIPMENT, AND INCIDENTAL EXPENSES. IT SHOULD BE NOTED THERE IS NOTHING IN THIS LETTER PROVIDING FOR REIMBURSING THE REVOLVING FUND FOR EXPENDITURES MADE THEREFROM, AND THE ACT OF FEBRUARY 11, 1936, SUPRA, CONTAINS NO AUTHORITY FOR DEPOSITING INCOME IN THE REVOLVING FUND WHICH IS DERIVED FROM EXPENDITURES OUT OF SAID FUND.

UNDER THE CIRCUMSTANCES, IT MUST BE HELD THAT THE REVOLVING FUND MAY NOT BE REIMBURSED, OUT OF HOUSING RENTAL COLLECTIONS WHICH ARE FOR COVERING INTO THE TREASURY AS MISCELLANEOUS RECEIPTS, FOR AUTHORIZED EXPENDITURES MADE FROM THE REVOLVING FUND IN REPAIRING AND MAINTAINING DWELLING HOUSES WHICH WERE CONSTRUCTED WITH PUBLIC FUNDS OTHER THAN THOSE IN THE SPECIAL FUND.