A-27151, JULY 31, 1929, 9 COMP. GEN. 41

A-27151: Jul 31, 1929

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PUBLIC BUILDINGS - MUNICIPAL SEWER-CONNECTION CHARGES THE AMOUNT CHARGED THE UNITED STATES BY A MUNICIPALITY FOR THE PRIVILEGE OF CONNECTING THE SEWERS OF A VETERANS' BUREAU HOSPITAL WITH AN EXTENSION SEWER OF THE CITY IS NOT A TAX LEVIED AGAINST THE FEDERAL GOVERNMENT AND MAY BE PAID ON THE BASIS OF AN IMPLIED CONTRACT AS A PART OF THE COST OF CONSTRUCTION OF THE HOSPITAL. WHERE THE GOVERNMENT AUTHORITIES WERE ADVISED BEFORE THE CONNECTION WAS EFFECTED THAT THE CHARGE WOULD BE MADE. UPON THE REQUEST OF THE REGIONAL MANAGER OF THE UNITED STATES VETERANS' BUREAU FOR THE PROVIDING OF SEWER FACILITIES TO SERVE THE HOSPITAL THAT WAS TO BE CONSTRUCTED ON THE UNIVERSITY OF OREGON MEDICAL SCHOOL TRACT.

A-27151, JULY 31, 1929, 9 COMP. GEN. 41

PUBLIC BUILDINGS - MUNICIPAL SEWER-CONNECTION CHARGES THE AMOUNT CHARGED THE UNITED STATES BY A MUNICIPALITY FOR THE PRIVILEGE OF CONNECTING THE SEWERS OF A VETERANS' BUREAU HOSPITAL WITH AN EXTENSION SEWER OF THE CITY IS NOT A TAX LEVIED AGAINST THE FEDERAL GOVERNMENT AND MAY BE PAID ON THE BASIS OF AN IMPLIED CONTRACT AS A PART OF THE COST OF CONSTRUCTION OF THE HOSPITAL, WHERE THE GOVERNMENT AUTHORITIES WERE ADVISED BEFORE THE CONNECTION WAS EFFECTED THAT THE CHARGE WOULD BE MADE.

DECISION BY COMPTROLLER GENERAL MCCARL, JULY 31, 1929:

REVIEW HAS BEEN REQUESTED OF THE DISALLOWANCE, UNDER DATE OF APRIL 30, 1929, OF THE CLAIM OF THE CITY OF PORTLAND, OREG., FOR THE SUM OF $1,464.60, BEING THE AMOUNT CHARGED TO THE UNITED STATES FOR THE PRIVILEGE OF CONNECTING THE SEWERS OF THE UNITED STATES VETERANS' HOSPITAL LOCATED NEAR THE CITY, WITH THE EXTENSION OF WOODS STREET GULCH SEWER.

FROM THE RECORD AND EVIDENCE SUBMITTED IT APPEARS THAT ON JANUARY 8, 1926, PRIOR TO THE BEGINNING OF CONSTRUCTION WORK ON THE HOSPITAL, THE CITY COUNCIL OF PORTLAND, UPON THE REQUEST OF THE REGIONAL MANAGER OF THE UNITED STATES VETERANS' BUREAU FOR THE PROVIDING OF SEWER FACILITIES TO SERVE THE HOSPITAL THAT WAS TO BE CONSTRUCTED ON THE UNIVERSITY OF OREGON MEDICAL SCHOOL TRACT, ADOPTED A RESOLUTION ASSURING THE OFFICIALS OF THE HOSPITAL THAT IF THE BUILDING SHOULD BE CONSTRUCTED AT THAT LOCATION "SEWER FACILITIES WOULD BE PROVIDED BY THE CITY; " THAT BY ORDINANCE 52059 PASSED BY THE CITY COUNCIL MAY 4, 1927, THE CONSTRUCTION OF THE SEWER FOR THE PURPOSE INDICATED, TO BE KNOWN AS THE EXTENSION OF THE WOODS STREET GULCH SEWER, SAID FACILITIES BEING DESIGNED, ALSO, TO PROVIDE FOR SANITARY AND STORM WATER DRAINAGE FOR A PORTION OF PORTLAND CITY HOMESTEAD, WAS ORDERED BY THE COUNCIL, THE COST THEREOF TO BE ASSESSED UPON PROPERTY SPECIALLY AND PECULIARLY BENEFITED THEREBY WHICH WAS DECLARED TO BE ALL THE LOTS, PARTS THEREOF, AND PARCELS OF LAND WITHIN A DESCRIBED DISTRICT; AND THAT BY ORDINANCE 53501 PASSED BY THE CITY COUNCIL NOVEMBER 12, 1927, THE COST OF CONSTRUCTING THE SEWER WAS DECLARED TO BE THE SUM OF $10,369.12 WHICH AMOUNT WAS PRORATED TO AND ASSESSED AGAINST PROPERTY BENEFITED, THE SHARE CHARGEABLE TO THE VETERANS' BUREAU HOSPITAL PROPERTY BEING THE SUM OF $1,464.60. IT APPEARS, ALSO, THAT THE CONSTRUCTION OF THE HOSPITAL WAS PROCEEDED WITH BY AUTHORITIES OF THE VETERANS' BUREAU ON THE ASSUMPTION, IN THE LIGHT OF THE WORDING OF THE FOREGOING RESOLUTION, THAT THE CITY OF PORTLAND WOULD CONSTRUCT THE SEWER AND PERMIT THE GOVERNMENT TO CONNECT SEWERS FROM THE HOSPITAL BUILDINGS THEREWITH FREE OF CHARGE, BUT THE CITY DISCLAIMS ANY SUCH INTENTION, IT BEING STATED THAT UNDER ITS CHARTER ALL SEWERS ARE REQUIRED TO BE CONSTRUCTED AT THE EXPENSE OF THE PROPERTY OWNERS BENEFITED AND THAT THE CITY NEVER PAYS FOR SEWER CONSTRUCTION OUT OF THE GENERAL FUND.

THE VETERANS' BUREAU HAS RECENTLY ADVISED THIS OFFICE IN RESPONSE TO A REQUEST FOR FURTHER INFORMATION ON THE MATTER THAT ON OCTOBER 21, 1927, AND SUBSEQUENT TO THE COMPLETION OF THE SEWER, THE CITY OF PORTLAND SERVED THE FIRST NOTICE OF ASSESSMENT, AND ON NOVEMBER 29, 1927, BILLED THE REGIONAL MANAGER FOR THE AMOUNT IN QUESTION "FOR THE PRIVILEGE OF THE UNITED STATES VETERANS' BUREAU CONNECTING WITH THE WOODS STREET GULCH SEWER LINE; " AND THAT THE BUREAU FIRST AVAILED ITSELF OF THE PRIVILEGE OF CONNECTING WITH THE SEWER ON APRIL 29, 1928, WHEN MANHOLE NO. 16 WAS ERECTED, AND AGAIN ON JULY 1, 1928, WHEN MANHOLE NO. 21 WAS ERECTED.

IT HAS BEEN HELD THAT THE GOVERNMENT IS NOT LIABLE FOR ASSESSMENTS LEVIED AGAINST IT FOR COST OF SEWER CONSTRUCTION ALONG STREETS CONTIGUOUS TO GOVERNMENT PROPERTY. 2 COMP. DEC. 375; 4 ID. 116; 11 ID. 629. IT HAS BEEN HELD, ALSO, THAT ASSESSMENTS AGAINST THE GOVERNMENT FOR THE PROPORTIONATE COST OF SPRINKLING STREETS, REPAIRING SIDEWALKS, LAYING CURBING, AND PAVING AN ALLEY IN FRONT OF OR ALONGSIDE PROPERTY OWNED BY THE GOVERNMENT, WERE NOT PAYABLE FROM FEDERAL FUNDS. 9 COMP. DEC. 181; 15 ID. 227; 3 COMP. GEN. 416; 29 MS. COMP. GEN. 383, DECISION OF JANUARY 15, 1924. THE DECISIONS IN THE CASES CITED WERE BASED ON THE THEORY THAT THE CHARGES WERE IN THE NATURE OF TAXES UPON GOVERNMENT PROPERTY AND THAT THERE WAS NO AUTHORITY OF LAW FOR THE TAXING BY STATE, OR SUBDIVISION THEREOF, OR BY A MUNICIPALITY OF PROPERTY OWNED BY THE GOVERNMENT OR OF AN INSTRUMENTALITY OF THE GOVERNMENT. ON THE OTHER HAND, IT HAS BEEN HELD THAT THE PAYMENT OF TOLLS OVER HIGHWAYS AND BRIDGES WAS PROPER WHERE THE HIGHWAYS AND BRIDGES HAD NOT BEEN CONSTRUCTED WITH THE AID OF FEDERAL FUNDS AND, ALSO, THAT FEES CHARGED BY A STATE FOR ISSUING WATER CERTIFICATES TO SECURE RIGHTS TO THE USE OF WATER AGAINST OTHER USERS, WERE NOT OBJECTIONABLE AS A STATE TAX. 24 COMP. DEC. 45; 1 COMP. GEN. 560; 4 ID. 366; 5 ID. 413.

THE DECISION IN 4 COMP. DEC. 116, REFERRED TO ABOVE, HELD THAT THE GOVERNMENT WAS NOT LIABLE FOR A PROPORTIONATE SHARE OF AN ASSESSMENT LEVIED BY A CITY TO COVER THE COST OF EXTENDING A SEWER PAST THE SITE WHERE A NEW POST-OFFICE BUILDING WAS TO BE ERECTED, AS PAYMENT WOULD RESULT IN THE DIVERSION OF FUNDS PROVIDED FOR THE ERECTION OF THE STRUCTURE TO A PAYMENT TO THE CITY FOR A SEWER NOT OWNED BY THE GOVERNMENT, NOT PASSING UNDER ITS PROPERTY, NOR UNDER ITS CONTROL OR DIRECTION, BUT THE CASE HERE UNDER CONSIDERATION MAY BE DIFFERENTIATED FROM THE CASE THERE CONSIDERED IN THAT THE SEWER HERE IN QUESTION DOES PASS UNDER A PORTION OF THE HOSPITAL PROPERTY, ALTHOUGH THERE IS NOTHING TO SHOW THAT THE GOVERNMENT WILL HAVE ANY CONTROL OVER ITS OPERATION AND WILL NOT BE CONCERNED THEREWITH OTHER THAN FOR THE USE OF SAME IN DISPOSING OF HOSPITAL SEWAGE AND FOR DRAINING PURPOSES.

THE CHARGE FOR CONNECTING WITH THE SEWER IN THIS CASE APPEARS TO BE MORE ANALOGOUS TO CHARGES FOR TOLLS FOR THE USE OF HIGHWAYS AND BRIDGES AND FOR WATER SERVICES THAN TO TAXES. THE SUPREME COURT OF THE UNITED STATES IN DISTINGUISHING BETWEEN TAXES AND TOLLS IN THE CASE OF SANDS V. MANISTEE RIVER IMPROVEMENT COMPANY, 123 U.S. 288, SAID:

THERE IS NO ANALOGY BETWEEN THE IMPOSITION OF TAXES AND THE LEVYING OF TOLLS FOR IMPROVEMENT OF HIGHWAYS; AND ANY ATTEMPT TO JUSTIFY OR CONDEMN PROCEEDINGS IN THE ONE CASE, BY REFERENCE TO THOSE IN THE OTHER, MUST BE MISLEADING. TAXES ARE LEVIED FOR THE SUPPORT OF GOVERNMENT, AND THEIR AMOUNT IS REGULATED BY ITS NECESSITIES. TOLLS ARE THE COMPENSATION FOR THE USE OF ANOTHER'S PROPERTY, OR OF IMPROVEMENTS MADE BY HIM; AND THEIR AMOUNT IS DETERMINED BY THE COST OF THE PROPERTY, OR OF THE IMPROVEMENTS, AND CONSIDERATIONS OF THE RETURN WHICH SUCH VALUES OR EXPENDITURES SHOULD YIELD. * * *

THE AMOUNT CHARGED TO THE GOVERNMENT FOR THE PRIVILEGE OF CONNECTING WITH THE CITY SEWER CAN NOT BE SAID UNDER THE ABOVE DEFINITION TO HAVE BEEN IN THE NATURE OF A TAX. THEREFORE, AS NEITHER THE ASSESSMENT OF THE PRO RATA COST OF CONSTRUCTION NOR ACTUAL CONNECTIONS WITH THE SEWER APPEAR TO HAVE BEEN MADE UNTIL AFTER THE SEWER HAD BEEN COMPLETED, AND THE GOVERNMENT AUTHORITIES HAD BEEN NOTIFIED OF THE AMOUNT THAT WOULD BE CHARGED FOR THE PRIVILEGE OF MAKING THE CONNECTION, THE AMOUNT CLAIMED IS CONSIDERED AS BEING ALLOWABLE ON THE BASIS OF AN IMPLIED CONTRACTUAL AGREEMENT. ACCORDINGLY, A SETTLEMENT WILL ISSUE IN DUE COURSE FOR THE AMOUNT CHARGED TO THE GOVERNMENT FOR THE PRIVILEGE OF CONNECTING WITH THE SEWER AS A PART OF THE COST OF CONSTRUCTION OF THE HOSPITAL.