A-24565, OCTOBER 9, 1928, 8 COMP. GEN. 169

A-24565: Oct 9, 1928

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1928: RECEIPT IS ACKNOWLEDGED OF YOUR LETTER OF SEPTEMBER 22. THE FOLLOWING: "RECENTLY WE MADE EXTENSIVE REPAIRS TO THE WATER SYSTEM INSIDE OF THE BUILDING AT THE REQUEST OF YOUR OFFICE AND HAVE INSTALLED NEW ELECTRIC ELEVATORS. THESE ADJUSTMENTS HAVE EFFECTED LARGE ECONOMIES OF MAINTENANCE TO THE BENEFIT OF THE TENANT AND ARE STILL UNADJUSTED SO FAR AS THE RENTAL OF THE OWNER.'. WHEN THE STEAM PLANT IN THE BUILDING WAS OPERATED AT HIGH PRESSURE TO RUN THE ELEVATORS. IT WAS NECESSARY TO HAVE AN ENGINEER ON DUTY THROUGHOUT THE OFFICE HOURS. SINCE THESE BOILERS HAVE BEEN CHANGED FROM HIGH PRESSURE TO LOW PRESSURE THIS ENGINEER IS NO LONGER NEEDED AND. THE FIREMEN ON DUTY AT THAT BUILDING HAVE BEEN REALLOCATED FROM GRADE CU-4 TO GRADE CU-3.

A-24565, OCTOBER 9, 1928, 8 COMP. GEN. 169

LEASES - CANCELLATION AND REEXECUTION AT INCREASED RENTAL A FORMAL LEASE UNDER WHICH THE UNITED STATES ACQUIRES THE RIGHT TO OCCUPANCY OF A BUILDING AT A STIPULATED RENTAL, SUBJECT TO RENEWAL FROM YEAR TO YEAR FOR A PERIOD OF 10 YEARS, MAY NOT BE CANCELED AND A NEW LEASE AT AN INCREASED RENTAL SUBSTITUTED THEREFOR IN ORDER TO COMPENSATE THE LESSORS FOR IMPROVED EQUIPMENT INSTALLED PRIOR TO SUCH CANCELLATION, THE INSTALLATION HAVING BEEN MADE WITHOUT ANY PRIOR AGREEMENT FOR AN INCREASED RENTAL.

COMPTROLLER GENERAL MCCARL TO THE SECRETARY OF THE TREASURY, OCTOBER 9, 1928:

RECEIPT IS ACKNOWLEDGED OF YOUR LETTER OF SEPTEMBER 22, 1928, AS FOLLOWS:

UNDER DATE OF MAY 10, 1924, THE DEPARTMENT ENTERED INTO A CONTRACT WITH THE CAPITAL CITY BENEFIT SOCIETY, SAMUEL H. WALKER, PRESIDENT, FOR THE RENT OF PREMISES KNOWN AS 462 LOUISIANA AVENUE NW., WASHINGTON, D.C., THE CONSIDERATION MADE IN SAID LEASE BEING $11,500.00 PER ANNUM.

MR. WALKER IN A LETTER DATED MAY 15, 1928, STATES AMONG OTHER THINGS, THE FOLLOWING:

"RECENTLY WE MADE EXTENSIVE REPAIRS TO THE WATER SYSTEM INSIDE OF THE BUILDING AT THE REQUEST OF YOUR OFFICE AND HAVE INSTALLED NEW ELECTRIC ELEVATORS. THESE ADJUSTMENTS HAVE EFFECTED LARGE ECONOMIES OF MAINTENANCE TO THE BENEFIT OF THE TENANT AND ARE STILL UNADJUSTED SO FAR AS THE RENTAL OF THE OWNER.'

THE DIRECTOR OF PUBLIC BUILDINGS AND PUBLIC PARKS OF THE NATIONAL CAPITAL STATED IN PART AS FOLLOWS:

"THE CHANGE IN ELEVATORS FROM HYDRAULICS TO ELECTRICS, HOWEVER, DID RESULT IN REDUCING THE MAINTENANCE COST. WHEN THE STEAM PLANT IN THE BUILDING WAS OPERATED AT HIGH PRESSURE TO RUN THE ELEVATORS, IT WAS NECESSARY TO HAVE AN ENGINEER ON DUTY THROUGHOUT THE OFFICE HOURS. SINCE THESE BOILERS HAVE BEEN CHANGED FROM HIGH PRESSURE TO LOW PRESSURE THIS ENGINEER IS NO LONGER NEEDED AND, IN ADDITION, THE FIREMEN ON DUTY AT THAT BUILDING HAVE BEEN REALLOCATED FROM GRADE CU-4 TO GRADE CU-3. A FURTHER SAVING HAS BEEN MADE IN THE COST OF FUEL DURING THE SUMMER MONTHS. ELECTRICITY NOW REQUIRED TO OPERATE THE ELEVATORS IS NOT NEARLY SO EXPENSIVE AS THE COAL WHICH WAS CONSUMED IN OPERATING THEM WHEN THE HYDRAULIC ELEVATORS WERE IS USE. THIS SAVING, HOWEVER, ONLY APPLIES TO THE SUMMER SEASON, AS DURING THE WINTER THE EXHAUST STEAM WAS USED IN HEATING THE BUILDING, AND THE COST OF ELECTRICITY PROBABLY ABOUT EQUALS THE DIFFERENCE BETWEEN WHAT IT NOW COSTS TO HEAT THE BUILDINGS AND WHAT IT FORMERLY COST TO OPERATE THE ELEVATORS AND HEAT THE BUILDING.'

IN ORDER TO PAY ANY ADDITIONAL AMOUNT FOR THE RENT OF THE PREMISES IN QUESTION, IT WILL BE NECESSARY TO OBTAIN SPECIFIC AUTHORITY THEREFOR FROM CONGRESS INASMUCH AS CURRENT APPROPRIATIONS STIPULATE A LIMIT OF $11,500.00.

BEFORE TAKING ACTION LOOKING TO THE OBTAINING OF AN INCREASED AUTHORIZATION YOUR DECISION IS REQUESTED AS TO WHETHER OR NOT, UNDER THE CIRCUMSTANCES AS OUTLINED ABOVE, THE EXISTING LEASE AGREEMENT, TCC-2, DATED MAY 10, 1924, WITH AN OPTION IN THE GOVERNMENT TO RENEW AT A MONTHLY RENTAL OF $1,000.00 SUBJECT TO A REDUCTION OF $41.66 2/3 PER MONTH DURING OCCUPANCY AND OVER A PERIOD NOT TO EXCEED TEN YEARS PROVIDED THAT NO RENEWAL THEREOF SHALL EXTEND THE PERIOD OF OCCUPANCY OF THE PREMISES BEYOND THE THIRTIETH DAY OF JUNE, 1934, MAY BE CANCELED AND A NEW LEASE ENTERED INTO WITH THE OWNERS AT AN INCREASED RENTAL IN AN AMOUNT NOT TO EXCEED THE ACTUAL MONETARY SAVING TO THE GOVERNMENT FOR MAINTENANCE AND OPERATION BECAUSE OF IMPROVEMENTS PLACED ON SAID PROPERTY BY THE OWNERS.

WHILE I DO NOT FIND ANY SPECIFIC REFERENCE TO THE RENT FOR THIS PARTICULAR BUILDING IN THE APPROPRIATION ACT OF MARCH 5, 1928, 45 STAT. 168, IT DOES CONTAIN A RESTRICTION UPON THE AMOUNT WHICH MAY BE EXPENDED FOR RENT OF QUARTERS FOR THE INTERNAL REVENUE SERVICE IN THE DISTRICT OF COLUMBIA TO AN AGGREGATE OF $219,250. FROM THE HEARINGS UPON THE APPROPRIATION BILL IT APPEARS THAT THE ESTIMATES FOR RENTALS SUBMITTED TO THE CONGRESS PLACE THE RENT OF THIS BUILDING AT $11,500 PER YEAR. THE LEASE IN QUESTION PROVIDES FOR ITS RENEWAL AT THE OPTION OF THE UNITED STATES FROM YEAR TO YEAR AFTER JUNE 30, 1924, TO JUNE 30, 1934, AT THE RATE OF $1,000 PER MONTH, SUBJECT TO A REDUCTION OF $41.66 2/3 DURING OCCUPANCY, OR A NET RATE OF $11,500 PER YEAR.

PARAGRAPHS 6 AND 7 OF THE LEASE PROVIDE:

6. THE LESSOR SHALL FURNISH TO THE GOVERNMENT, DURING THE OCCUPANCY OF SAID PREMISES, UNDER THE TERMS OF THIS LEASE, AS PART OF THE RENTAL CONSIDERATION, THE FOLLOWING:

ALL EXTERIOR REPAIRS TO THE PREMISES AND SHALL PAY ALL TAXES AND ASSESSMENTS. IT IS FURTHER UNDERSTOOD AND AGREED THAT THE PREMISES, AT THE BEGINNING OF THIS CONTRACT, SHALL BE EQUIPPED BY THE LESSOR WITH ELEVATORS AND NECESSARY OPERATING MACHINERY IN GOOD RUNNING CONDITION.

THE LESSEE SHALL, DURING THE OCCUPANCY OF SAID PREMISES, UNDER THE TERMS OF THIS LEASE, MAKE ALL INTERIOR REPAIRS AND PAY ALL MAINTENANCE CHARGES INCIDENT TO THE OPERATION OF THE BUILDING.

7. THE LESSOR SHALL, UNLESS HEREIN SPECIFIED TO THE CONTRARY,MAINTAIN THE SAID PREMISES IN GOOD REPAIR AND TENANTABLE CONDITION DURING THE CONTINUANCE OF THIS LEASE, EXCEPT IN CASE OF DAMAGE ARISING FROM THE ACT OR THE NEGLIGENCE OF THE GOVERNMENT'S AGENTS OR EMPLOYEES. FOR THE PURPOSE OF SO MAINTAINING THE PREMISES, THE LESSOR RESERVES THE RIGHT AT REASONABLE TIMES TO ENTER AND INSPECT THE PREMISES AND TO MAKE ANY NECESSARY REPAIRS TO THE BUILDING.

THERE IS NO PROVISION IN THE LEASE AUTHORIZING AN INCREASED RENTAL IN THE EVENT OF THE INSTALLATION OF NEW OR IMPROVED EQUIPMENT, AND IT APPEARS THAT A FORMAL NOTICE OF RENEWAL FOR THE FISCAL YEAR 1929 WAS GIVEN THE LESSOR ON JUNE 18, 1928. THE UNITED STATES, BY THE LEASE IN QUESTION, ACQUIRED THE RIGHT, SUBJECT TO THE GIVING OF PROPER NOTICE, TO THE USE OF THE BUILDING, UPON PAYMENT OF THE STIPULATED RENTAL UP TO JUNE 30, 1934, AND THERE IS, ACCORDINGLY, NO AUTHORITY IN ANY ADMINISTRATIVE OR EXECUTIVE OFFICER TO SURRENDER THAT RIGHT OR ANY PORTION THEREOF BY A CANCELLATION OF THE EXISTING LEASE AND THE SUBSTITUTION OF A NEW LEASE PROVIDING FOR A HIGHER RENTAL BY REASON OF THE IMPROVED EQUIPMENT PREVIOUSLY INSTALLED WITHOUT ANY AGREEMENT THAT INCREASED RENT SHOULD BE PAID. 4 COMP. GEN. 403. IF THE LESSOR EXPECTED TO REALIZE AN INCREASED RENTAL BY REASON OF THE IMPROVED ELEVATOR AND WATER SYSTEM, HE SHOULD HAVE INSISTED UPON AN AGREEMENT TO THAT EFFECT BEFORE MAKING SUCH IMPROVEMENTS. OF COURSE, IT IS WITHIN THE POWER OF THE CONGRESS TO AUTHORIZE THE EXECUTION OF A NEW LEASE OR THE PAYMENT OF INCREASED RENTAL UNDER THE OLD LEASE. SHOULD AN INCREASED APPROPRIATION FOR THAT PURPOSE BE SOUGHT, HOWEVER, IT SHOULD BE SO WORDED AS SPECIFICALLY TO AUTHORIZE THE PAYMENT OF THE INCREASED RENTAL NOTWITHSTANDING THE PROVISIONS OF THE EXISTING LEASE.