A-64626, NOVEMBER 8, 1935, 15 COMP. GEN. 381

A-64626: Nov 8, 1935

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WILL NOT BE OBJECTED TO IF THE TERMS OF SAID LEASE ARE JUST AND REASONABLE. PAYMENTS ARE NOT COMMENCED UNTIL AFTER SATISFACTORY COMPLETION OF THE REPAIRS AND IMPROVEMENTS. IS SUBJECT TO THE STATUTORY LIMITATION OF SECTION 322 OF THE ACT OF JUNE 30. UPON WHICH YOUR DECISION WAS BASED. FAILED TO DISCLOSE THE FACT THAT THE OPTION CONTAINED IN THE FISCAL YEAR 1935 LEASE FOR THE WALKER-JOHNSON BUILDING WAS NOT EXERCISED WITHIN THE THIRTY-DAY PROVISION. FROM EARLY JUNE TO JULY 16TH OF THIS YEAR VERBAL AND WRITTEN NEGOTIATIONS WERE CONSTANTLY IN PROCESS TO SECURE CERTAIN MAJOR PHYSICAL IMPROVEMENTS WHICH ARE NECESSARY FOR THE OCCUPANCY OF THIS STRUCTURE BY THE GOVERNMENT. THESE NEGOTIATIONS HAVE FAILED THUS FAR TO REACH THE DESIRED OBJECTIVE AND IN ORDER THAT A NEW LEASE MAY BE EFFECTED FOR THE FISCAL YEAR 1936.

A-64626, NOVEMBER 8, 1935, 15 COMP. GEN. 381

LEASES - REPAIRS AND IMPROVEMENTS WHERE THERE HAS BEEN A FAILURE ON THE PART OF THE GOVERNMENT TO GIVE THE REQUIRED NOTICE OF INTENTION TO RENEW, INCREASED RENTAL PAYMENTS UNDER A NEW LEASE CONDITIONED ON SPECIFIC REPAIRS AND IMPROVEMENTS BY LESSOR, WILL NOT BE OBJECTED TO IF THE TERMS OF SAID LEASE ARE JUST AND REASONABLE, AND PAYMENTS ARE NOT COMMENCED UNTIL AFTER SATISFACTORY COMPLETION OF THE REPAIRS AND IMPROVEMENTS. THE INSTALLATION OF ADDITIONAL HEATING EQUIPMENT REQUIRED BY REASON OF THE TEMPORARY PARTITIONING OF A LEASED BUILDING BY A GOVERNMENT AGENCY, WHICH INSTALLATION CANNOT BE REQUIRED OF THE LESSOR UNDER THE TERMS OF THE LEASE, IS SUBJECT TO THE STATUTORY LIMITATION OF SECTION 322 OF THE ACT OF JUNE 30, 1932 (47 STAT. 412), UPON EXPENDITURES BY THE GOVERNMENT FOR ALTERATIONS, IMPROVEMENTS, AND REPAIRS TO RENTED PREMISES.

COMPTROLLER GENERAL MCCARL TO THE ADMINISTRATOR, WORKS PROGRESS ADMINISTRATION, NOVEMBER 8, 935:

CONSIDERATION HAS BEEN GIVEN YOUR LETTER OF OCTOBER 14, 1935, AS FOLLOWS:

WALKER-JOHNSON BUILDING

YOUR LETTER OF AUGUST 29TH ADDRESSED TO THE ADMINISTRATOR OF THE WORKS PROGRESS ADMINISTRATION HAS BEEN RECEIVED AND I REGRET TO NOTE THAT MY LETTER OF AUGUST 13TH, UPON WHICH YOUR DECISION WAS BASED, FAILED TO DISCLOSE THE FACT THAT THE OPTION CONTAINED IN THE FISCAL YEAR 1935 LEASE FOR THE WALKER-JOHNSON BUILDING WAS NOT EXERCISED WITHIN THE THIRTY-DAY PROVISION.

FROM EARLY JUNE TO JULY 16TH OF THIS YEAR VERBAL AND WRITTEN NEGOTIATIONS WERE CONSTANTLY IN PROCESS TO SECURE CERTAIN MAJOR PHYSICAL IMPROVEMENTS WHICH ARE NECESSARY FOR THE OCCUPANCY OF THIS STRUCTURE BY THE GOVERNMENT. THESE NEGOTIATIONS HAVE FAILED THUS FAR TO REACH THE DESIRED OBJECTIVE AND IN ORDER THAT A NEW LEASE MAY BE EFFECTED FOR THE FISCAL YEAR 1936, THIS ADMINISTRATION REQUESTS YOUR OPINION ON THE FOLLOWING RECOMMENDATION.

TWO PROPOSALS, ONE DATED JULY 16TH AND THE OTHER OCTOBER 12TH, SUBMITTED IN BEHALF OF THE OWNERS OF THE WALKER-JOHNSON BUILDING AND DESIGNATED AS "EXHIBITS 1 AND 2" ARE ATTACHED. EXHIBIT 1 REPRESENTS A CONCRETE OFFER BOTH AS TO RENTAL AND MAJOR IMPROVEMENTS AND IN VIEW OF THE LAST PARAGRAPH AND THE ABSENCE OF A TIME LIMIT FOR ACCEPTANCE, I STRONGLY RECOMMEND THAT AUTHORITY BE GRANTED FOR THE EXECUTION OF A NEW LEASE ON THIS BASIS. EXHIBIT 2 CONTAINS A PROPOSAL FOR EXACTING THE APPLICATION OF THE FIFTEEN PERCENT PROVISION BUT IS ENTIRELY TOO INDEFINITE AS TO THE EXTENT OF MAJOR REPAIRS AND THE FINAL DETERMINATION AS TO FULL COMPLIANCE REMAINS DISCRETIONARY WITH THE OWNERS. FURTHER, I SEE NO REASON FOR THE OMISSION OF THE CUSTOMARY THIRTY-DAY NOTICE OF CANCELATION AND THEREFORE DO NOT RECOMMEND THE ACCEPTANCE OF THE PROPOSAL CONTAINED IN EXHIBIT NO. 2.

WASHINGTON AUDITORIUM

LIKEWISE, AUTHORITY IS HEREBY REQUESTED FOR THE EXPENDITURE OF SUFFICIENT FUNDS TO PROVIDE FOR ADDITIONAL HEATING EQUIPMENT IN THE WASHINGTON AUDITORIUM. THE EXISTING HEATING FACILITIES WERE ENTIRELY ADEQUATE FOR THIS PURPOSE UNTIL THIS ADMINISTRATION ERECTED TEMPORARY PARTITIONS DIVIDING THE TOTAL FLOOR AREA OF 70,000 SQUARE FEET INTO APPROXIMATELY NINETY (90) SMALL INDIVIDUAL OFFICES. IT IS NOW APPARENT THAT THE PRESENT HEATING FACILITIES MUST BE SUPPLEMENTED BY PORTABLE HEATING UNITS, EITHER GAS OR STEAM, WHICH WILL SUPPLY SUFFICIENT HEAT WITHIN THESE SMALL ENCLOSURES SO AS TO PERMIT SUITABLE WORKING CONDITIONS DURING THE WINTER MONTHS. IT IS THE THOUGHT OF THIS OFFICE THAT THIS ADDITIONAL EQUIPMENT IS MADE NECESSARY THROUGH ITS OWN ACTION AND SHOULD NOT THEREFORE BE CONSTRUED AS AN ALTERATION, REPAIR, OR IMPROVEMENT AS GENERALLY COME WITHIN THE 25 PERCENT ALLOWANCE OR IN THE SENSE THAT THE LESSOR IS RESPONSIBLE THROUGH FAULTY OR INADEQUATE EQUIPMENT WITHIN THE LEASED STRUCTURE. A PROPOSAL FOR BIDS FOR THIS EQUIPMENT HAS BEEN DRAFTED AND IS ATTACHED HERETO FOR YOUR GUIDANCE.

THESE TWO PROBLEMS HAVE BEEN SET FORTH IN BRIEF FORM AND IT IS URGENTLY REQUESTED, DUE TO THE TIME FACTOR, THAT DECISIONS BE RENDERED COVERING BOTH PREMISES IN ORDER THAT THE PROPER CONDUCT OF THE ADMINISTRATION'S AFFAIRS MAY BE CARRIED FORWARD WITHOUT UNNECESSARY INTERRUPTION.

THE FAILURE TO GIVE THE REQUIRED 30 DAYS' NOTICE IN WRITING OF THE INTENTION ON THE PART OF THE GOVERNMENT TO RENEW THE LEASE FOR THE WALKER- JOHNSON BUILDING FOR THE FISCAL YEAR 1936 WOULD APPEAR TO BE INEXCUSABLE, AND HAS MATERIALLY PREJUDICED THE INTERESTS OF THE GOVERNMENT IN THIS MATTER BY PLACING IT IN THE POSITION WHERE IT MUST EITHER MEET THE DEMANDS OF THE LESSOR, EXERCISE THE RIGHT OF EMINENT DOMAIN, OR VACATE THE PREMISES AT A TIME WHEN SUITABLE QUARTERS ARE NOT IMMEDIATELY AVAILABLE ELSEWHERE.

IT APPEARS, HOWEVER, THAT WITH THE REPAIRS AND IMPROVEMENTS REFERRED TO IN THE LESSOR'S LETTER OF JULY 16, 1935, THE PREMISES WILL BE MORE SUITABLE TO THE GOVERNMENT'S NEEDS THAN WHEN ORIGINALLY LEASED IN 1933. IN VIEW OF THIS, AND OF ALL OTHER FACTS AND CIRCUMSTANCES APPEARING, IF THE LESSOR WILL PROMPTLY MAKE THE REPAIRS AND IMPROVEMENTS REFERRED TO, AT A COST OF APPROXIMATELY $40,000, AND, A LEASE BE EXECUTED WITH SUITABLE TERMS AND CONDITIONS AT A RENTAL OF $50,000 FOR THE FISCAL YEAR 1936 WITH OPTION IN THE GOVERNMENT TO RENEW FOR THE FISCAL YEAR 1937 AT $40,000 PER ANNUM, THIS OFFICE WILL NOT OBJECT TO OTHER PROPER PAYMENTS UNDER SUCH A LEASE AFTER THE REPAIRS AND IMPROVEMENTS SHALL HAVE BEEN SATISFACTORILY COMPLETED.

WITH RESPECT TO THE PROPOSED INSTALLATION OF HEATING UNITS IN THE WASHINGTON AUDITORIUM BUILDING, SECTION 322 OF THE ACT OF JUNE 30, 1932, 47 STAT. 412, PROVIDES:

HEREAFTER NO APPROPRIATION SHALL BE OBLIGATED OR EXPENDED FOR THE RENT OF ANY BUILDING OR PART OF A BUILDING TO BE OCCUPIED FOR GOVERNMENT PURPOSES AT A RENTAL IN EXCESS OF THE PER ANNUM RATE OF 15 PERCENTUM OF THE FAIR MARKET VALUE OF THE RENTED PREMISES AT DATE OF THE LEASE UNDER WHICH THE PREMISES ARE TO BE OCCUPIED BY THE GOVERNMENT NOR FOR ALTERATIONS, IMPROVEMENTS, AND REPAIRS OF THE RENTED PREMISES IN EXCESS OF 25 PERCENTUM OF THE AMOUNT OF THE RENT FOR THE FIRST YEAR OF THE RENTAL TERM, OR FOR THE RENTAL TERM IF LESS THAN ONE YEAR: PROVIDED, THAT THE PROVISIONS OF THIS SECTION SHALL NOT APPLY TO LEASES HERETOFORE MADE, EXCEPT WHEN RENEWALS THEREOF ARE MADE HEREAFTER, NOR TO LEASES OF PREMISES IN FOREIGN COUNTRIES FOR THE FOREIGN SERVICES OF THE UNITED STATES.

THE LEASE FOR THE WASHINGTON AUDITORIUM WAS EXECUTED JULY 1, 1935, AT A RENTAL OF $62,500 PER ANNUM FROM JUNE 10, 1935, TO JUNE 9, 1936, AND $50,000 PER ANNUM THEREAFTER. IT IS REPORTED THAT THE ASSESSED VALUATION OF THE PROPERTY IS $460,544 WHICH WOULD BRING THE RENTAL WITHIN THE LIMIT FIXED BY THE ABOVE ACT. THE LEASE IS EXECUTED UPON THE STANDARD FORM OF GOVERNMENT LEASE, PARAGRAPHS 7 AND 8 OF WHICH REQUIRE THE LESSOR TO MAINTAIN THE PREMISES IN GOOD REPAIR AND TENANTABLE CONDITION AND GIVE THE GOVERNMENT THE RIGHT TO MAKE ALTERATIONS, ATTACH FIXTURES, AND ERECT ADDITIONS WHICH SHALL REMAIN THE PROPERTY OF THE GOVERNMENT AND MAY BE REMOVED THEREFROM PRIOR TO THE EXPIRATION OF THE LEASE. I DO NOT FIND ANY PROVISIONS, HOWEVER, WHICH WOULD REQUIRE THE LESSOR TO BEAR THE COST OF ADDITIONAL HEATING EQUIPMENT NECESSITATED BY THE CHANGES MADE BY THE GOVERNMENT TO ADAPT THE BUILDING TO THE USE OF YOUR ADMINISTRATION. IF, AS STATED BY YOU, THE HEATING EQUIPMENT FURNISHED BY THE LESSOR WAS ADEQUATE BEFORE THE INSTALLATION OF THE PARTITIONS IT IS NOT APPARENT WHY THERE WAS NOT CONSIDERED AT THE TIME THE ALTERATIONS WERE MADE BY YOU THE EFFECT SUCH ALTERATIONS WOULD HAVE UPON THE HEATING SITUATION--- THE LEASE HAVING BEEN EXECUTED FOR A YEAR WITH OPTION TO RENEW. THE FAILURE TO TAKE THIS INTO CONSIDERATION AND TO PROVIDE FOR ANY NECESSARY ADDITIONAL HEATING FACILITIES IN CONNECTION WITH SUCH ALTERATIONS CANNOT OPERATE TO AUTHORIZE INSTALLATION OF THE HEATING EQUIPMENT AS PROPOSED WITHOUT REGARD TO THE PROVISIONS OF THE STATUTORY LIMITATION, SUPRA, UNDER WHICH THE AGGREGATE OF ALL EXPENDITURES BY THE GOVERNMENT FOR ALTERATIONS, IMPROVEMENTS, AND REPAIRS ON THIS BUILDING MAY NOT EXCEED 25 PERCENT OF $62,500 OR A MAXIMUM OF $15,625.