B-134973, SEPTEMBER 28, 1959, 39 COMP. GEN. 229

B-134973, SEPTEMBER 28, 1959, 39 COMP. GEN. 229

PAYMENTS IN LIEU OF TAXES - OCCUPANCY FOR GOVERNMENTAL PURPOSES - TAX EXEMPTION ALTHOUGH THE USE OF REAL PROPERTY, WHICH WAS SUBJECT TO STATE AND LOCAL TAXES WHEN TRANSFERRED FROM THE RECONSTRUCTION FINANCE CORPORATION TO OTHER FEDERAL AGENCIES, FOR GOVERNMENTAL PURPOSES IS NOT SUFFICIENT IN ITSELF TO BRING THE PROPERTY WITHIN THE TAX EXEMPTION PROVISIONS IN SECTION 704 (B) OF THE ACT OF AUGUST 12, 1955, 40 U.S.C. 524 (B), SUCH GOVERNMENTAL USE MUST BE CONSIDERED WITH THE SPECIFIC USES DESCRIBED IN SECTION 704 (B) (1), (2) AND (3) OF THE ACT; HENCE, ONLY IF OFFICE BUILDINGS AND FACILITIES FOR GOVERNMENTAL PURPOSES ARE USED OR HELD PRIMARILY FOR THE RENDITION OF SERVICE TO OR ON BEHALF OF THE LOCAL PUBLIC MAY THE PROPERTY BE CONSIDERED TAX EXEMPT UNDER SECTION 704 (B) (3) OF THE ACT. WHEN ONE OF THREE FEDERAL AGENCIES, WHICH JOINTLY OCCUPY A FORMER RECONSTRUCTION FINANCE CORPORATION PROPERTY CONSISTING OF 23.3 ACRES OF LAND AND TWO BUILDINGS, USES 69 PERCENT OF THE TOTAL SQUARE FOOTAGE OF THE PROPERTY INCLUDING 16.7 ACRES OF LAND AND ONE BUILDING, FOR A PURPOSE WHICH IS CONSIDERED TO BE FOR THE BENEFIT OF THE LOCAL PUBLIC WITHIN THE MEANING OF THE TAX EXEMPTION PROVISIONS IN SUBSECTIONS 704 (B) (3) AND (4) OF THE ACT OF AUGUST 12, 1955, 40 U.S.C. 524 (B) (3) AND (4), EVEN THOUGH A PREPONDERANCE OF THE BUILDING SPACE IS UED BY THE OTHER AGENCIES FOR GOVERNMENTAL PURPOSES WHICH DO NOT RENDER THE PROPERTY TAX EXEMPT, THE PROPERTY MUST BE CONSIDERED AS A WHOLE AND, THEREFORE, TAX EXEMPT SO THAT PAYMENTS IN LIEU OF TAXES MAY NOT BE MADE.

TO RAY SLAVIN, DEPARTMENT OF THE ARMY, SEPTEMBER 28, 1959:

BY SECOND ENDORSEMENT DATED JUNE 19, 1959, THE CHIEF OF ENGINEERS REFERRED TO US YOUR LETTER OF MAY 13, 1959, SUBMITTING ADDITIONAL INFORMATION REGARDING YOUR PRIOR REQUEST FOR ADVANCE DECISION AS TO WHETHER YOU MAY CERTIFY FOR PAYMENT UNDER ACT OF AUGUST 12, 1955, PUBLIC LAW 388, 84TH CONGRESS, 69 STAT. 721, 40 U.S.C. 524 (B), AS AMENDED, 40 U.S.C. 521-524, A VOUCHER FOR $12,341.41 IN FAVOR OF MULTNOMAH COUNTY, OREGON. THE VOUCHER COVERS PAYMENTS IN LIEU OF TAXES FOR THE PERIODS JANUARY 1, 1955, THROUGH JUNE 30, 1958, ON CERTAIN REAL PROPERTY DESCRIBED AS TAX LOT 8, SECTION 24, TOWNSHIP 1, NORTH, RANGE 3 EAST OF THE W.M. BY LETTER OF AUGUST 28, 1958, B-134973, IN RESPONSE TO YOUR EARLIER REQUEST FOR ADVANCE DECISION, WE CONCLUDED THAT IT WAS NOT POSSIBLE TO DETERMINE CONCLUSIVELY FROM THE INFORMATION FURNISHED BY YOU AT THAT TIME WHETHER THE PROPERTY WAS DEDICATED TO LOCAL PUBLIC PURPOSES (AS DISTINGUISHED FROM GENERAL PUBLIC PURPOSES) WITHIN THE MEANING OF SECTION 704 (B) (3) OF PUBLIC LAW 388, 40 U.S.C. 524 (B) (3); AND, ACCORDINGLY, WE HELD THAT THE VOUCHER IN QUESTION COULD NOT BE CERTIFIED FOR PAYMENT.

FROM THE INFORMATION NOW FURNISHED BY YOU AND FROM THE PRIOR RECORD, THE FACTS CONCERNING THE REAL PROPERTY IN QUESTION APPEAR TO BE AS FOLLOWS:

THE PROPERTY CONSISTS OF 23.3 ACRES OF LAND AND TWO ONE-STORY BUILDINGS CONTAINING APPROXIMATELY 112,500 SQUARE FEET OF SPACE. THE PROPERTY WAS TRANSFERRED TO THE DEPARTMENT OF THE ARMY, CORPS OF ENGINEERS, BY THE WAR ASSETS ADMINISTRATION AND TITLE THERETO CONVEYED TO THE UNITED STATES ON JUNE 3, 1949, BY THE RECONSTRUCTION FINANCE CORPORATION.

THE PROPERTY IS JOINTLY OCCUPIED ON A PERMANENT BASIS BY THREE FEDERAL AGENCIES. ONE BUILDING HAVING 50,000 SQUARE FEET OF SPACE IS USED ENTIRELY BY THE BONNEVILLE POWER ADMINISTRATION FOR STORAGE OF MATERIALS, EQUIPMENT AND ELECTRICAL APPARATUS. THE OTHER BUILDING HAVING 62,500 SQUARE FEET OF SPACE IS OCCUPIED BY THE UNITED STATES GEOLOGICAL SURVEY AND THE CORPS OF ENGINEERS FOR LABORATORY PURPOSES, 6,500 SQUARE FEET BY THE SURVEY AND 56,000 SQUARE FEET BY THE CORPS. APPROXIMATELY 16.7 OF THE TOTAL 23.3 ACRES OF LAND INVOLVED ARE ASSIGNED FOR USE OF THE BONNEVILLE POWER ADMINISTRATION.

SECTION 703 OF PUBLIC LAW 388, 40 U.S.C. 523, DIRECTS THE VARIOUS DEPARTMENTS AND AGENCIES OF THE FEDERAL GOVERNMENT TO MAKE PAYMENTS IN LIEU OF TAXES ON CERTAIN PROPERTIES TRANSFERRED TO THEM FROM THE RECONSTRUCTION FINANCE CORPORATION ON OR AFTER JANUARY 1, 1946, IF TITLE HAS BEEN CONTINUOUSLY IN THE UNITED STATES SINCE THE DATE OF TRANSFER. HOWEVER, SECTION 704 (B) OF THAT PUBLIC LAW, UNDER THE SUBHEADING " LIMITATIONS," PROVIDES IN PERTINENT PART AS FOLLOWS:

(B) NO PAYMENT SHALL BE MADE UNDER SECTION 703 WITH RESPECT TO ANY REAL PROPERTY OF THE FOLLOWING CATEGORIES:

(3) REAL PROPERTY USED OR HELD PRIMARILY FOR THE RENDITION OF SERVICE TO OR ON BEHALF OF THE LOCAL PUBLIC, INCLUDING (BUT NOT LIMITED TO) THE FOLLOWING CATEGORIES OF REAL PROPERTY: COURTHOUSES; POST OFFICES AND OTHER PROPERTY USED FOR PURPOSES INCIDENTAL TO POSTAL OPERATIONS; AND FEDERALLY OWNED AIRPORTS MAINTAINED AND OPERATED BY THE CIVIL AERONAUTICS ADMINISTRATION.

(4) OFFICE BUILDINGS AND FACILITIES WHICH ARE AN INTEGRAL PART OF, OR ARE USED FOR PURPOSES INCIDENTAL TO THE USE MADE OF, ANY PROPERTIES DESCRIBED IN PARAGRAPH (1) (2), OR (3) OF THIS SUBSECTION.

WE HELD IN OUR DECISION OF APRIL 24, 1958, B-134973, THAT THE TROUTDALE SUBSTATION OF THE BONNEVILLE POWER ADMINISTRATION WAS BEING USED OR HELD PRIMARILY FOR THE PURPOSE OF RENDERING SERVICE TO OR ON BEHALF OF THE LOCAL PUBLIC AND HENCE THAT PAYMENT IN LIEU OF TAXES PROPERLY MAY NOT BE MADE ON THAT SUBSTATION UNDER PUBLIC LAW 388. IT APPEARS THAT THE BUILDING USED BY THE BONNEVILLE POWER ADMINISTRATION AS A WAREHOUSE IS FOR PURPOSES INCIDENTAL TO THE USE MADE OF THE ADMINISTRATION'S SUBSTATIONS IN RENDERING SERVICE TO OR ON BEHALF OF THE LOCAL PUBLIC AND, ACCORDINGLY, WITHIN THE PURVIEW OF SECTION 704 (B) (4) OF PUBLIC LAW 388, 40 U.S.C. 524 (B) (4), PRECLUDING PAYMENTS IN LIEU OF TAXES THEREFOR.

WITH RESPECT TO THE SPACE UTILIZED BY THE GEOLOGICAL SURVEY YOU STATE THAT EACH OF THE THREE OPERATING DIVISIONS THEREOF CARRIES ON ACTIVITIES THAT REDOUND SIGNIFICANTLY AND SPECIFICALLY TO THE BENEFIT OF THE PEOPLE OF THE PORTLAND-1VANCOUVER AREA AND THAT THE SURVEY WORKS IN CLOSE COOPERATION WITH STATE, LOCAL, AND OTHER FEDERAL AGENCIES IN THE AREA, MOST OF ITS WORK BEING ON A COST-SHARING BASIS WITH THESE AGENCIES. EXAMPLES OF PROJECTS WHICH BENEFIT PRIMARILY THE LOCAL PUBLIC YOU CITE THREE STUDIES COVERING WATER RESOURCES IN THE LOCAL AREA. YOU STATE THAT OFFICIALS OF THE GEOLOGICAL SURVEY ESTIMATE THAT ABOUT TWO-THIRDS OF ITS SPACE IN THE LABORATORY BUILDING IS DEVOTED TO ACTIVITIES WHICH PRIMARILY BENEFIT THE LOWER COLUMBIA BASIN AREA. THE SCOPE OF THE THREE WATER STUDIES CITED BY YOU IS, QUOTING FROM YOUR LETTER, AS FOLLOWS:

A. EXTENSIVE STUDY AND REPORT ON THE GROUND-WATER RESOURCES OF THE TUALATIN VALLEY, OREGON. THE TUALATIN RIVER EMPTIES INTO THE WILLAMETTE JUST SOUTH OF PORTLAND, AND THE TUALATIN VALLEY WHICH IS RAPIDLY BECOMING A PART OF METROPOLITAN PORTLAND LIES SOUTHWEST OF THE CITY CENTER. WITH THE SUBDIVISION AND SETTLEMENT OF THE SUBURBAN AREAS, GREATER DEMAND HAS ARISEN FOR MORE DOMESTIC AND LARGER PUBLIC WATER SUPPLIES. IN ADDITION, THE MANUFACTURING AND PROCESSING PLANTS THAT HAVE LOCATED IN THE AREA REQUIRE SUBSTANTIAL SUPPLIES OF WATER. THIS STUDY AND REPORT MADE IN COOPERATION WITH THE OFFICE OF THE OREGON STATE ENGINEER WAS UNDERTAKEN TO PROVIDE NECESSARY INFORMATION ON THE OCCURRENCE AND QUALITY OF GROUND WATER IN THIS AREA OF RAPID DEVELOPMENT. (SEE PRELIMINARY REPORT ON THE GROUND-WATER RESOURCES OF THE TUALATIN VALLEY, OREGON, BY D. H. HART AND R. C. NEWCOMB, JANUARY 1956.)

B. ANOTHER MORE COMPREHENSIVE STUDY WAS MADE ABOUT THE SAME TIME OF THE WATER RESOURCES OF THE PORTLAND-1VANCOUVER AREA INCLUDING MULTNOMAH COUNTY. AMONG THE AGENCIES WHICH COOPERATED WITH THE U.S.G.S. ON THIS STUDY WAS THE CITY OF PORTLAND, BUREAU OF WATER WORKS. (SEE GEOLOGICAL SURVEY CIRCULAR 372).

C. THE U.S.G.S. IS COOPERATING IN A CONTINUING STUDY OF THE GRADUAL LOWERING OF THE WATER TABLE UNDER THE PORTLAND-1VANCOUVER AREA INCLUDING MULTNOMAH COUNTY AND THE DOWNTOWN AREA. THIS CONDITION INVOLVES SERIOUS ECONOMIC CONSEQUENCES TO THE COMMUNITY, ESPECIALLY FOR BUSINESS AND INDUSTRY WHERE EXPENSIVE HEAT EXCHANGE EQUIPMENT HAS BEEN INSTALLED AND ITS CONTINUED USE IS THREATENED BY THE DWINDLING SUPPLY OF WATER IN DEEP WELLS.

CONCERNING THE BUILDING SPACE DEVOTED TO ACTIVITIES OF THE CORPS OF ENGINEERS, YOU POINT OUT THAT FOR FISCAL YEAR 1958 APPROXIMATELY 40.7 PERCENT OF THE CORPS' WORK WAS RELATED TO ITS CIVIL WORKS PROGRAM INVOLVING PRINCIPALLY THE TESTING OF SOIL AND ROCK SAMPLES AS WELL AS CONCRETE, ASPHALT, AND OTHER CONSTRUCTION MATERIALS USED IN CARRYING OUT RIVER AND HARBOR IMPROVEMENT AND FLOOD CONTROL FUNCTIONS OF THE CORPS. YOU STATE THAT IT IS A WELL-RECOGNIZED FACT THAT THE MOST FUNDAMENTAL FLOOD CONTROL MEASURE ON THE COLUMBIA RIVER SYSTEM IS THE CONSTRUCTION OF DAMS TO REGULATE THE RIVER FLOW AND THAT, AT THE SAME TIME, SUCH RIVER REGULATION FURNISHES VALUABLE AIDS TO NAVIGATION IN THE LOWER RIVER BY IMPROVING AND STABILIZING CHANNEL DEPTHS. YOU STATE FURTHER THAT THE BENEFITS OF THIS FLOOD CONTROL PROGRAM ARE OF TREMENDOUS IMPORTANCE TO PEOPLE OF THE PORTLAND-1VANCOUVER AREA AS DEMONSTRATED BY THE VANPORT FLOOD OF 1948 INVOLVING LOSS OF LIFE AND MORE THAN $20 MILLION OF PROPERTY DAMAGE.

BY ADDING ALL OF THE SPACE USED BY THE BONNEVILLE POWER ADMINISTRATION TO 40.7 PERCENT OF THE SPACE DEVOTED TO WORK OF THE CORPS OF ENGINEERS AND TWO-THIRDS OF THE SPACE USED BY THE GEOLOGICAL SURVEY, YOU ARRIVE AT 77,125 SQUARE FEET OF THE TOTAL BUILDING AREA OF 112,500 SQUARE FEET AS BEING USED OR HELD PRIMARILY FOR THE BENEFIT OF THE LOCAL PUBLIC. IN VIEW OF THE PREPONDERANCE OF SPACE SO DEVOTED YOU DID NOT DEEM IT NECESSARY TO ASSIGN ANY RELATIVE VALUE AS BETWEEN BUILDING AND LAND USE.

WE ARE NOT CONVINCED THAT THE ACTIVITIES OF THE GEOLOGICAL SURVEY AND THE CORPS OF ENGINEERS, WHILE OF BENEFIT TO THE LOCAL PUBLIC, CONSTITUTE SUCH USE OF THE REAL PROPERTY INVOLVED AS TO BE WITHIN THE MEANING OF THE PHRASE "PRIMARILY FOR THE RENDITION OF SERVICES TO OR ON BEHALF OF THE LOCAL PUBLIC" AS USED IN THE ACT. THE PRIMARY FUNCTIONS OF THE SURVEY AND THE CORPS DO NOT CONTEMPLATE THE RENDITION OF SERVICES AS SUCH. WHILE IN ANY GIVEN PERIOD THE WORK OF THESE AGENCIES COULD BE OF SIGNIFICANT BENEFIT TO THE LOCAL PUBLIC, THEIR ACTIVITIES ARE NOT NECESSARILY RELATED TO SERVICE OF THE LOCAL PUBLIC AND IN ANOTHER PERIOD MIGHT NOT BE OF ANY PARTICULAR LOCAL BENEFIT. IT WOULD APPEAR THAT, AS USED IN THE ACT,"THE RENDITION OF SERVICES" RELATES TO SUCH SERVICES AS ARE DIRECTLY PROVIDED TO OR ON BEHALF OF MEMBERS OF THE LOCAL PUBLIC. ALMOST ANY GOVERNMENT AGENCY OPERATING IN AN AREA WOULD BE OF SOME BENEFIT TO THAT AREA; HOWEVER, ONLY IF THE PRIMARY PURPOSE FOR LOCATING THE AGENCY OPERATION IN THAT AREA WAS TO RENDER SERVICE TO OR ON BEHALF OF THE LOCAL PUBLIC COULD THE EXEMPTION FROM PAYMENTS IN LIEU OF TAXES BE SAID TO APPLY. THE EXAMPLES OF EXEMPT USES GIVEN IN THE ACT, NAMELY, COURTHOUSES, POST OFFICES, AND AIRPORTS WOULD BEAR THIS OUT. MOREOVER, THE PROPERTY IN QUESTION WAS INCLUDED IN A LIST OF PROPERTIES SUBJECT TO PAYMENTS IN LIEU OF TAXES UNDER THE PROVISIONS OF H.R. 6182, WHICH LIST IS CONTAINED IN HOUSE OF REPRESENTATIVES REPORT NO. 1453, 84TH CONGRESS, ST SESSION, ACCOMPANYING THAT BILL LATER ENACTED AS PUBLIC LAW 388. FURTHERMORE, IT WAS RECOGNIZED IN REPORT NO. 1453 THAT THE PROPERTY WAS SOLD TO ARMY ENGINEERS FOR USE AS A "CONCRETE SOILS LABORATORY" AND IT MUST BE PRESUMED THAT THE GENERAL NATURE OF THE WORK TO BE CARRIED ON IN THE BUILDING BY THE CORPS WAS KNOWN. ALTHOUGH WE DO NOT CONSIDER THAT PROPERTIES LISTED IN THE HOUSE REPORT AS BEING SUBJECT TO PAYMENTS IN LIEU OF TAXES ARE THEREBY CONCLUSIVELY MADE SUBJECT TO SUCH PAYMENTS, IN THE ABSENCE OF A CLEAR SHOWING THAT SUCH PROPERTIES ARE USED PRIMARILY FOR THE RENDITION OF SERVICES TO OR ON BEHALF OF THE LOCAL PUBLIC, IT WOULD APPEAR THAT INCLUSION OF A PROPERTY IN THE LIST WITH KNOWLEDGE OF ITS PROPOSED USE IS AT LEAST PERSUASIVE OF AN INTENT THAT SUCH USE DID NOT EXEMPT IT FROM PAYMENTS IN LIEU OF TAXES.

SEPARATE AND APART FROM THE QUESTION OF PROPERTY USED FOR LOCAL BENEFIT YOU POINT OUT IN YOUR LETTER THAT THE REAL PROPERTY IN QUESTION IS NOT USED FOR INDUSTRIAL PURPOSES BY PRIVATE ENTERPRISES SEEKING PROFIT BUT RATHER THAT THE USE MADE THEREOF CONSTITUTES THE CARRYING OUT OF REGULAR GOVERNMENTAL FUNCTIONS WHICH WERE INTENDED TO BE EXCLUDED FROM OPERATION OF THE ACT. IN POINTING THIS OUT YOU REFER TO OUR DECISION OF SEPTEMBER 4, 1957, 37 COMP. GEN. 170, WHEREIN WE QUOTED EXTENSIVELY FROM THE LEGISLATIVE HISTORY OF H.R. 6182 AND FROM H.R. 7184, 84TH CONGRESS, ST SESSION, A SIMILAR BILL, TO SHOW THAT THE ACT WAS INTENDED TO REACH ONLY THOSE PROPERTIES WHICH ARE OCCUPIED AND USED BY PRIVATE ENTERPRISES FOR PROFIT PURPOSES AND NOT THOSE PROPERTIES WHICH WERE TAKEN OVER FOR PURELY GOVERNMENTAL PURPOSES ON A PERMANENT BASIS.

HOWEVER, UPON RECONSIDERATION OF THE FULL LEGISLATIVE HISTORY OF THE ACT, WE ARE CONSTRAINED TO CONCLUDE THAT USE OF REAL PROPERTY FOR REGULAR GOVERNMENTAL PURPOSES IS NOT SUFFICIENT IN AND OF ITSELF TO WARRANT EXCLUSION OF SUCH PROPERTY FROM OPERATION OF THE ACT. WHILE OUR DECISION OF SEPTEMBER 4, 1957, DEALT IN CONSIDERABLE DETAIL WITH THE PROPOSITION THAT PROPERTY USED FOR GOVERNMENTAL PURPOSES WAS EXEMPT FROM THE REQUIREMENT FOR PAYMENTS IN LIEU OF TAXES, OUR CONCLUSION THEREIN WAS BASED ON OUR FINDING THAT THE PROPERTY INVOLVED WAS PRIMARILY USED OR HELD FOR THE RENDITION OF SERVICE TO OR ON BEHALF OF THE LOCAL PUBLIC OR AS AN OFFICE BUILDING USED FOR PURPOSES INCIDENTAL THERETO AND, THEREFORE, FELL WITHIN THE SCOPE OF SECTIONS 704 (B) (2) AND (3), 40 U.S.C. 524 (B) (2), (3). SEE OUR DECISION OF JULY 15, 1958, 38 COMP. GEN. 24, WHEREIN WE HELD THAT INDUSTRIAL PROPERTY USED BY THE DEPARTMENT OF THE ARMY FOR A RESERVE TRAINING CENTER WAS SUBJECT TO PAYMENTS IN LIEU OF TAXES. AS INDICATED IN THE TWO DECISIONS REFERRED TO ABOVE, WHILE CONGRESS WAS APPARENTLY CONCERNED PRIMARILY WITH THE TAX EXEMPT STATUS OF PROPERTY COMMONLY USED FOR INDUSTRIAL PURPOSES, IT PROHIBITED PAYMENTS IN LIEU OF TAXES UNDER PUBLIC LAW 388 ONLY ON PROPERTY FALLING WITHIN THE PURVIEW OF SECTION 704 (B) OF THAT PUBLIC LAW.

ALTHOUGH THE PORTIONS OF THE LEGISLATIVE HISTORY QUOTED IN THE DECISION OF SEPTEMBER 4, 1957, ARE PERSUASIVE OF THE VIEW THAT PAYMENTS IN LIEU OF TAXES WERE CONTEMPLATED ONLY WITH RESPECT TO PROPERTY USED FOR INDUSTRIAL PURPOSES, OTHER PORTIONS THEREOF AND THE DECLARATION OF POLICY CONTAINED IN THE VERY ACT ITSELF WOULD SEEM TO REQUIRE A DIFFERENT CONCLUSION. WHILE MR. MEADER STATES, AT PAGE 21 OF THE HEARINGS ON H.R. 6182, THAT HE WOULDN-T WANT TO SEE PAYMENTS IN LIEU OF TAXES ON PROPERTY USED FOR GOVERNMENTAL PURPOSES, IT IS OBVIOUS THAT HIS STATEMENT WAS LARGELY PREDICATED ON HIS DOUBT THAT ANY SUCH CASES WOULD ARISE. THE FOLLOWING LATER EXCHANGE BETWEEN MR. MEADER AND MR. MOSS, ALSO RECORDED AT PAGE 21 OF THE HEARINGS, INDICATES STRONGLY THAT PROPERTY USED FOR GOVERNMENT PURPOSES WAS NOT INTENDED BY REASON THEREOF TO BE EXEMPT FROM PAYMENTS IN LIEU OF TAXES:

MR. MOSS.

I HAVE ONE IN MIND IN DENVER, COLO., WHERE THEY HAVE WHAT THEY CALL THE FEDERAL CITY. IT WAS AN ARMS PLANT DURING THE LAST WAR, HELD BY THE R.F.C. I THINK TITLE WAS FINALLY TRANSFERRED TO THE GENERAL SERVICES ADMINISTRATION. I WOULD INTERPRET THAT AS COMING UNDER THIS BILL, BUT IT IS OPERATED AS THE CENTER OF GOVERNMENTAL ACTIVITIES IN DENVER. WOULD IT BE SUBJECT TO TAXES? IT WOULD BE NO DIFFERENT THAN THE FEDERAL BUILDINGS IN THE DISTRICT OF COLUMBIA?

MR. MEADER.

IF IT CAME WITHIN THE DEFINITIONS OF THIS BILL.

MR. MOSS.

I THINK IT WOULD.

MR. MEADER.

I THINK THERE WOULD BE PAYMENTS IN LIEU OF TAXES PAID. I WAS NOT AWARE OF THAT PLANT AND PERHAPS THERE IS SOME WAY OF EXEMPTING THOSE PROPERTIES, BUT I WOULD LIKE TO SEE WHICH PROPERTIES THEY MIGHT BE.

MR. MOSS.

I THINK IT WAS OPERATED DURING THE WAR BY REMINGTON ARMS, AND IN MY INTERPRETATION OF THIS BILL IT WOULD COME UNDER THE TERMS OF THIS LEGISLATION, BUT I THINK IT WOULD COME WITHIN THE TERMS IMPROPERLY.

MOREOVER, SECTION 701 OF THE ACT, DECLARING THE POLICY OF CONGRESS, RECOGNIZES THAT "THE TRANSFER OF REAL PROPERTY HAVING A TAXABLE STATUS FROM THE RECONSTRUCTION FINANCE CORPORATION OR ANY OF ITS SUBSIDIARIES TO ANOTHER GOVERNMENT DEPARTMENT HAS OFTEN OPERATED TO REMOVE SUCH PROPERTY FROM THE TAX ROLLS OF STATES AND LOCAL TAXING AUTHORITIES, THEREBY CREATING AN UNDUE AND UNEXPECTED BURDEN UPON SUCH STATES AND LOCAL TAXING AUTHORITIES, AND CAUSING DISRUPTION OF THEIR OPERATIONS.' THE DECLARATION OF POLICY STATES FURTHER THAT "IT IS THE PURPOSE OF THIS TITLE (ACT) TO FURNISH TEMPORARY MEASURES OF RELIEF FOR SUCH STATES AND LOCAL TAXING AUTHORITIES BY PROVIDING THAT PAYMENTS IN LIEU OF TAXES SHALL BE MADE WITH RESPECT TO PROPERTY SO TRANSFERRED ON OR AFTER JANUARY 1, 1946.'

NOWHERE IN THE ACT IS THERE MENTIONED THAT PROPERTY USED FOR GOVERNMENTAL PURPOSES SHALL BE EXCLUDED FROM THE PROVISIONS THEREOF. THE FACT THAT THE ACT IS SILENT IN THIS RESPECT, IN VIEW OF THE CONSIDERABLE ATTENTION DEVOTED BY MEMBERS OF CONGRESS TO DISCUSSION OF THIS ASPECT, WOULD INDICATE THAT SUCH USE WAS NOT INTENDED TO BE EXEMPT, SINCE THE ACT COULD HAVE BEEN EASILY CLARIFIED TO SHOW SUCH PROPERTY USED FOR GOVERNMENTAL PURPOSES ACCORD WITH THE STATED PURPOSE OF THE ACT--- TO FURNISH RELIEF FOR THOSE STATES AND LOCAL TAXING AUTHORITIES WHOSE OPERATIONS HAVE BEEN DISRUPTED BECAUSE TAX INCOME HAS BEEN LOST TO THEM BY REASON OF RFC PROPERTY TRANSFERS. THE EXEMPTIONS FROM PAYMENTS IN LIEU OF TAXES CONTAINED IN THE ACT ARE IN HARMONY WITH THE ACT'S PURPOSE. THE ADDITIONAL EXEMPTION COVERING GOVERNMENTAL USE OF PROPERTIES WOULD DO SUCH VIOLENCE TO THE PURPOSE FOR WHICH PUBLIC LAW 388 WAS ENACTED THAT WE CANNOT, IN THE ABSENCE OF A CLEAR AND UNMISTAKABLE DIRECTION, INTRODUCE IT BY WAY OF IMPLICATION.

IN VIEW OF THE ABOVE IT WOULD APPEAR THAT THE PREPONDERANCE OF THE BUILDING SPACE IN QUESTION IS BEING USED FOR PURPOSES WHICH DO NOT RENDER THE PROPERTY EXEMPT FROM PAYMENTS IN LIEU OF TAXES. HOWEVER, AS STATED IN YOUR LETTER, APPROXIMATELY 16.7 OF A TOTAL 23.3 ACRES OF LAND INVOLVED ARE DEVOTED TO THE USE OF THE BONNEVILLE POWER ADMINISTRATION, WHICH USE IS CONSIDERED TO BE FOR THE BENEFIT OF THE LOCAL PUBLIC AND THEREBY EXEMPT FROM PAYMENTS IN LIEU OF TAXES. ADDING THE TOTAL BUILDING SPACE (112,500 SQUARE FEET) TO THE TOTAL LAND AREA (1,014,948 SQUARE FEET AT 43,560 SQUARE FEET PER ACRE) WE ARRIVE AT A TOTAL PROPERTY AREA OF 1,127,448 SQUARE FEET. OF THIS AREA, THE BONNEVILLE POWER ADMINISTRATION USES APPROXIMATELY 777,452 (50,000 BUILDING AND 727,452 LAND) SQUARE FEET, OR 69 PERCENT, FOR ITS ACTIVITIES.

WHILE WE RECOGNIZE THAT THERE MAY BE SOME QUESTION AS TO WHETHER USE OF THE LAND INVOLVED SHOULD BE APPORTIONED ON A SQUARE-FOOT BASIS EQUALLY WITH THE APPORTIONMENT OF BUILDING SPACE, WE KNOW OF NO OTHER BASIS, FROM THE INFORMATION OF RECORD, UPON WHICH WE MIGHT PRORATE THE USE OF THE LAND. SINCE THE BONNEVILLE POWER ADMINISTRATION IS UTILIZING THE MAJOR PORTION OF THE PROPERTY IN QUESTION AND SINCE WE HAVE ALREADY DETERMINED THAT THE ACTIVITIES OF THAT AGENCY ARE PRIMARILY FOR THE RENDITION OF SERVICE TO OR ON BEHALF OF THE LOCAL PUBLIC WITHIN THE MEANING OF THE EXEMPTIVE PROVISIONS OF SECTIONS 704 (B) (3) AND (4), WE CONCLUDE, ON THE BASIS OF THE PRESENT RECORD, THAT THE PROPERTY AS A WHOLE IS WITHIN THE LIMITATIONS IMPOSED BY THE ACT AND PAYMENTS IN LIEU ..END :