A-71820, MARCH 12, 1936, 15 COMP. GEN. 787

A-71820: Mar 12, 1936

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ARE NOT IN EXCESS OF THE RENTAL AND REPAIR LIMITATION. THERE IS NO OBJECTION TO THE INCORPORATION OF BOTH THE RENTAL AND REPAIR AGREEMENTS IN THE LEASE. 1936: REFERENCE IS HAD TO YOUR LETTER OF FEBRUARY 28. THE RENTAL RATE AGREED UPON FOR THE PREMIER APARTMENTS BUILDING WAS THE FULL 15 PERCENT OF THE ASSESSED VALUATION. IT WAS FURTHER AGREED THAT THE LESSOR WOULD MAKE CERTAIN NECESSARY ALTERATIONS AND IMPROVEMENTS FOR WHICH THE GOVERNMENT WOULD REIMBURSE THE LESSOR OVER AND ABOVE THE BASIC RENTAL PRICE. THESE ALTERATIONS AND IMPROVEMENTS HAVE BEEN COMPLETED AT A COST. THE GOVERNMENT WILL REIMBURSE THE LESSOR FOR ONLY $2. IT IS BELIEVED THAT PAYMENT FOR THE REPAIRS IN MONTHLY INSTALLMENTS WOULD BE TO THE BEST INTEREST OF THE GOVERNMENT.

A-71820, MARCH 12, 1936, 15 COMP. GEN. 787

LEASES - RENT, REPAIRS AND IMPROVEMENTS - ECONOMY ACT LIMITATIONS WHERE THE AMOUNTS TO BE PAID AS RENT, AND AS THE COST OF REPAIRS AND IMPROVEMENTS, ARE NOT IN EXCESS OF THE RENTAL AND REPAIR LIMITATION, RESPECTIVELY, FIXED BY SECTION 322 OF THE ACT OF JUNE 30, 1932, 47 STAT. 412, THERE IS NO OBJECTION TO THE INCORPORATION OF BOTH THE RENTAL AND REPAIR AGREEMENTS IN THE LEASE, BUT THE RENTAL AND REPAIR INSTALLMENT PAYMENTS SHOULD BE STATED SEPARATELY ON THE VOUCHER.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE SECRETARY OF THE INTERIOR, MARCH 12, 1936:

REFERENCE IS HAD TO YOUR LETTER OF FEBRUARY 28, 1936, AS FOLLOWS:

THE VACATING OF TEMPORARY BUILDING NO. 5, LOCATED AT TWENTIETH STREET AND CONSTITUTION AVENUE, THIS CITY, IN ORDER TO MAKE THE SITE AVAILABLE FOR THE CONSTRUCTION OF THE FEDERAL RESERVE BOARD BUILDING, NECESSITATED THE RENTAL OF THE PREMIER APARTMENTS, 718 EIGHTEENTH STREET, N.W., BY THIS DEPARTMENT, FOR THE HOUSING OF A PORTION OF THE FEDERAL TRADE COMMISSION.

THE RENTAL RATE AGREED UPON FOR THE PREMIER APARTMENTS BUILDING WAS THE FULL 15 PERCENT OF THE ASSESSED VALUATION, AND IT WAS FURTHER AGREED THAT THE LESSOR WOULD MAKE CERTAIN NECESSARY ALTERATIONS AND IMPROVEMENTS FOR WHICH THE GOVERNMENT WOULD REIMBURSE THE LESSOR OVER AND ABOVE THE BASIC RENTAL PRICE. THESE ALTERATIONS AND IMPROVEMENTS HAVE BEEN COMPLETED AT A COST, TO THE LESSOR, IN EXCESS OF 25 PERCENT, BUT THE GOVERNMENT WILL REIMBURSE THE LESSOR FOR ONLY $2,662.99 OR 25 PERCENT OF THE RENTAL TERM EXTENDING FROM DECEMBER 21, 1935, TO JUNE 30, 1936.

IT IS BELIEVED THAT PAYMENT FOR THE REPAIRS IN MONTHLY INSTALLMENTS WOULD BE TO THE BEST INTEREST OF THE GOVERNMENT, IN VIEW OF THE POSSIBILITY OF THE BUILDING'S BECOMING UNINHABITABLE PRIOR TO THE EXPIRATION OF THE RENTAL TERM FROM FIRE, ETC. IT IS DESIRED TO ADD THE COST FOR THESE ALTERATIONS AND IMPROVEMENTS TO THE RENTAL, WITH SUCH COSTS JUSTIFIED BY AFFIDAVITS OR OTHER EVIDENCE THAT THE MONEY WAS SO EXPENDED.

THE FOLLOWING QUESTION IS SUBMITTED FOR YOUR CONSIDERATION AND DECISION. WHEN THE COST OF RENTAL PLUS THE COST OF IMPROVEMENTS IS IN EXCESS OF 15 PERCENT OF THE FAIR MARKET VALUE OF RENTED PREMISES, CAN THE COST OF ALTERATIONS AND IMPROVEMENTS BE ADDED TO THE RENTAL AND PAID IN INSTALLMENTS, IF AFFIDAVITS ARE FURNISHED COVERING THE EXPENDITURE OF SUCH MONEYS FOR IMPROVEMENTS, OR SHOULD A SEPARATE AGREEMENT BE MADE UNDER WHICH THE LESSOR WILL MAKE THE IMPROVEMENTS AND BE REIMBURSED BY THE GOVERNMENT EITHER BY MONTHLY INSTALLMENTS OR BY FULL PAYMENT ON COMPLETION OF THE WORK? A COPY OF THE PROPOSED LEASE, COVERING OCCUPANCY OF THE PREMISES, IS ENCLOSED.

PARAGRAPH 9 OF THE PROPOSED LEASE PROVIDES:

THE GOVERNMENT SHALL PAY THE LESSOR FOR THE PREMISES AT THE FOLLOWING RATE: TEN THOUSAND SIX HUNDRED FIFTY-ONE DOLLARS AND NINETY EIGHT CENTS ($10,651.98) FOR THE PERIOD DECEMBER 21, 1935, TO JUNE 30, 1936, BOTH DATES INCLUSIVE, PAYABLE IN MONTHLY INSTALLMENTS OF ONE THOUSAND SIX HUNDRED SEVENTY-SIX DOLLARS AND TWENTY CENTS ($1,676.20), AND THE ADDITIONAL SUM OF TWO THOUSAND SIX HUNDRED SIXTY-TWO DOLLARS AND NINETY- NINE CENTS ($2,662.99), PAYABLE IN MONTHLY INSTALLMENTS OF FOUR HUNDRED NINETEEN DOLLARS AND FIVE CENTS ($419.05) IN CONSIDERATION OF CERTAIN ALTERATIONS, REPAIRS AND/OR IMPROVEMENTS MADE TO THE PREMISES BY THE LESSOR AND NECESSARY FOR OCCUPANCY BY THE GOVERNMENT.

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.

SUBJECT TO SATISFACTORY PROOF THAT THE AGREED RENTAL, EXCLUSIVE OF THE IMPROVEMENTS, DOES NOT EXCEED 15 PERCENT OF THE FAIR MARKET VALUE OF THE PROPERTY AND SUBJECT TO SATISFACTORY PROOF, ALSO, THAT THE COST OF ALTERATIONS, IMPROVEMENTS AND REPAIRS WHICH THE GOVERNMENT PROPOSES TO PAY DOES NOT EXCEED 25 PERCENTUM OF THE AUTHORIZED AMOUNT OF RENT FOR THE TERM OF THE PROPOSED LEASE, NO OBJECTION WILL BE INTERPOSED TO INCORPORATING BOTH THE RENTAL AND THE REPAIR AGREEMENT IN THE SAME DOCUMENT, SUCH AS INDICATED IN PARAGRAPH 9 OF THE PROPOSED LEASE, SUPRA -- THE RENTAL AND REPAIR INSTALLMENTS TO BE STATED SEPARATELY UPON THE VOUCHER.