A-89084, SEPTEMBER 29, 1937, 17 COMP. GEN. 290

A-89084: Sep 29, 1937

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

THE USE OF "THE ACTUAL-NUMBER-OF-DAYS BASIS" FOR COMPUTING THE INTEREST THEREAFTER FOLLOWS TREASURY METHODS AND IS PROPER. 1937: I HAVE YOUR LETTER OF SEPTEMBER 17. IS AS FOLLOWS: CHART DATE ADVANCED (DATE OF CHECK) PURPOSE AMOUNT NOV. 7. 109.59 YOU WILL NOTE THAT THE ABOVE COMPUTATION IS BASED UPON 4 PERCENT INTEREST ACCRUING THREE YEARS FROM DATE OF EACH ADVANCE TO JUNE 30. ON THE BASIS OF ACTUAL NUMBER OF DAYS (365-DAY BASIS) AND ON 70 PERCENT OF THE LOANS WHICH IS THE OBLIGATION OF THE DISTRICT OF COLUMBIA TO THE FEDERAL EMERGENCY RELIEF ADMINISTRATION OF PUBLIC WORKS. THAT DURING THE FISCAL YEAR 1938 NO GREATER SUM SHALL BE DEPOSITED IN THE TREASURY OF THE UNITED STATES TO THE CREDIT OF THE SPECIAL ACCOUNT ESTABLISHED UNDER SECTION 3 OF SAID ACT THAN IS REQUIRED BY SAID SECTION FOR REIMBURSEMENT TO THE UNITED STATES.'.

A-89084, SEPTEMBER 29, 1937, 17 COMP. GEN. 290

DISTRICT OF COLUMBIA - LOANS BY FEDERAL GOVERNMENT - ANTICIPATORY REPAYMENTS AND INTEREST COMPUTATION THE ACT OF JUNE 25, 1934, 48 STAT. 1215, PROVIDING THAT REPAYMENTS BY THE DISTRICT OF COLUMBIA ON ACCOUNT OF LOANS OBTAINED FROM THE FEDERAL EMERGENCY ADMINISTRATION OF PUBLIC WORKS SHALL BE MADE ON THE 30TH DAY OF JUNE EACH YEAR IN NOT LESS THAN A STATED AMOUNT AND THAT THE DISTRICT COMMISSIONS MAY ANTICIPATE THE PAYMENTS REQUIRED BY THE ACT, CONTEMPLATES A MINIMUM ANNUAL PAYMENT NOT LATER THAN JUNE 30 EACH YEAR OF THE STATED AMOUNT, AND THE PROVISIONS OF THE DISTRICT OF COLUMBIA APPROPRIATION ACT FOR THE FISCAL YEAR 1938, 50 STAT. 365, DO NOT AFFECT THE QUESTION OF, OR PRECLUDE, REPAYMENT AT ANY TIME DURING THE FISCAL YEAR 1938 IN ORDER TO EFFECT INTEREST SAVINGS. INTEREST ON LOANS BY THE FEDERAL EMERGENCY ADMINISTRATION OF PUBLIC WORKS TO THE DISTRICT OF COLUMBIA UNDER AUTHORITY OF THE ACT OF JUNE 25, 1934, 48 STAT. 1215, BEGINS TO ACCRUE THREE YEARS FROM DATE OF LOAN, AND THE USE OF "THE ACTUAL-NUMBER-OF-DAYS BASIS" FOR COMPUTING THE INTEREST THEREAFTER FOLLOWS TREASURY METHODS AND IS PROPER.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE PRESIDENT, BOARD OF COMMISSIONERS, DISTRICT OF COLUMBIA, SEPTEMBER 29, 1937:

I HAVE YOUR LETTER OF SEPTEMBER 17, 1937, AS FOLLOWS:

PURSUANT TO THE PROVISIONS OF THE ACT OF JUNE 25, 1934 (48 STAT. 1215), AS AMENDED BY THE ACT OF MAY 6, 1935 (49 STAT. 174), THE FEDERAL EMERGENCY RELIEF ADMINISTRATION OF PUBLIC WORKS HAS LOANED TO THE DISTRICT OF COLUMBIA THE SUM OF $6,375,000 FOR THE PROJECTS INDICATED BELOW, AND THERE HAS BEEN REPAIR ON SAID LOANS THE SUM OF $2,000,000 AS PROVIDED IN THE 1936 AND 1937 DISTRICT OF COLUMBIA APPROPRIATION ACTS APPROVED JUNE 14, 1935, AND JUNE 23, 1936, RESPECTIVELY. (SEE 14 COMP. GEN. 273).

THE STATEMENT OF ACCOUNT, TOGETHER WITH INTEREST AS PROVIDED IN SECTIONS 2 AND 3 OF THE ACT, SUPRA, IS AS FOLLOWS:

CHART

DATE ADVANCED

(DATE OF CHECK) PURPOSE AMOUNT

NOV. 7, 1934 ---------- SEWAGE TREATMENT PLANT ------- $4,000,000

JAN. 11, 1935 --------- ADULT TB SANATORIUM ---------- 100,000

MAR. 27, 1935 --------- ----DO------------------------ 1,400,000

JAN. 13, 1936 --------- CHILDREN'S HOSPITAL ---------- 30,000

JAN. 14, 1936 --------- ----DO------------------------ 70,000

MAY 25, 1937 ---------- ADULT TB SANATORIUM ---------- 450,000

MAY 26, 1937 ---------- SEWAGE PUMPING STATION ------- 325,000

TOTAL, LOANS ------------------------------------- 6,375,000

CHART

DISBURSEMENTS CHECK AUDIT AMOUNT NET

(DATE OF CHECK) NUMBER NUMBER AMOUNT

JUNE 6, 1936 --------- 475,122 147,259 $1,000,000 ----------

JUNE 16, 1937 -------- 752,441 203,289 1,000,000 ----------

$4,375,000

CHART

INTEREST DATES 70 PERCENT OF INTEREST

LOAN

NOV. 7, 1937 (70 PERCENT OF

$4,000,000) ---------------------- $2,800,000 ----------

LESS REPAYMENTS:

JUNE 6, 1936 ---------- $1,000,000

JUNE 16, 1937 --------- 1,000,000

TOTAL -------------------------- 2,000,000 ----------

NOV. 7, 1937, TO JUNE 30, 1938,

235 DAYS AT 4 PERCENT ON ------- 800,000 $20,602.74

INTEREST DATES:

JAN. 11, 1938, TO JUNE 30, 1938,

170 DAYS AT 4 PERCENT ON

70 PERCENT OF $100,000 --------- 70,000 1,304.11

MAR. 27, 1938, TO JUNE 30, 1938,

95 DAYS AT 4 PERCENT ON 70

PERCENT OF $1,400,000 ---------- 980,000 10,202.74

JAN. 13, 1939 (70 PERCENT OF

$30,000) ----------------------- 21,000 ----------

JAN. 14, 1939 (70 PERCENT OF

$70,000) ----------------------- 49,000 ----------

MAY 25, 1940 (70 PERCENT OF

$450,000) ---------------------- 315,000 ----------

MAY 25, 1940 (70 PERCENT OF

$325,000) ---------------------- 227,500 ----------

BALANCE DUE U.S. ----------- 2,462,500 ----------

INTEREST ------------------- --------- 32,109.59

YOU WILL NOTE THAT THE ABOVE COMPUTATION IS BASED UPON 4 PERCENT INTEREST ACCRUING THREE YEARS FROM DATE OF EACH ADVANCE TO JUNE 30, 1938, ON THE BASIS OF ACTUAL NUMBER OF DAYS (365-DAY BASIS) AND ON 70 PERCENT OF THE LOANS WHICH IS THE OBLIGATION OF THE DISTRICT OF COLUMBIA TO THE FEDERAL EMERGENCY RELIEF ADMINISTRATION OF PUBLIC WORKS, LESS REPAYMENTS.

THE CURRENT DISTRICT OF COLUMBIA APPROPRIATION ACT APPROVED JUNE 29, 1937, PROVIDES IN PART:

"FOR REIMBURSEMENT TO THE UNITED STATES, IN COMPLIANCE WITH SECTION 3 OF THE ACT APPROVED JUNE 25, 1934 (48 STAT., P. 1215), OF FUNDS LOANED UNDER THE AUTHORITY OF SAID ACT, $1,000,000: PROVIDED, THAT DURING THE FISCAL YEAR 1938 NO GREATER SUM SHALL BE DEPOSITED IN THE TREASURY OF THE UNITED STATES TO THE CREDIT OF THE SPECIAL ACCOUNT ESTABLISHED UNDER SECTION 3 OF SAID ACT THAN IS REQUIRED BY SAID SECTION FOR REIMBURSEMENT TO THE UNITED STATES.'

THESE LOANS ARE ADVANCED TO THE DISTRICT OF COLUMBIA "WITHOUT INTEREST FOR THE FIRST THREE YEARS AFTER ANY SUCH ADVANCES AND WITH INTEREST AT NOT EXCEEDING 4 PERCENTUM PER YEAR THEREAFTER ON ANNUAL BALANCES AS OF EACH JUNE 30.' THIS LANGUAGE PROBABLY CONTEMPLATES THAT REPAYMENT IS TO BE MADE AT OR NEAR THE END OF EACH FISCAL YEAR. HOWEVER, THE LANGUAGE IN THE APPROPRIATION ACT, IT IS BELIEVED, WOULD PERMIT REPAYMENT AT ANY TIME DURING THE YEAR PROVIDED SUFFICIENT FUNDS WERE AVAILABLE WITH WHICH TO MAKE REIMBURSEMENT ON ACCOUNT OF SAID ADVANCES, AND THEREBY REDUCE THE INTEREST CHARGE.

THE COMMISSIONERS WOULD APPRECIATE EARLY ADVICE FROM YOU AS TO WHETHER REIMBURSEMENT MAY BE MADE AT ANY TIME DURING THE FISCAL YEAR 1938 TO THE FEDERAL EMERGENCY RELIEF ADMINISTRATION OF PUBLIC WORKS, ASSUMING THAT SUFFICIENT FUNDS ARE AVAILABLE, AND THEREBY REDUCE THE AMOUNT OF INTEREST DUE ON SAID LOANS JUNE 30, 1938. ALSO PLEASE ADVISE WHETHER THE INTEREST AS SET OUT IN THE FOREGOING STATEMENT HAS BEEN CORRECTLY COMPUTED.

SECTION 3 OF THE ACT OF JUNE 25, 1934, 48 STAT. 1215, PROVIDES, IN PERTINENT PART, AS FOLLOWS:

THAT 70 PERCENTUM OF SO MUCH OF SAID SUM AUTHORIZED BY SECTION 1OF THIS ACT AS MAY BE EXPENDED AS THEREIN PROVIDED SHALL BE REIMBURSED TO THE FEDERAL EMERGENCY ADMINISTRATION OF PUBLIC WORKS FROM ANY FUNDS IN THE TREASURY TO THE CREDIT OF THE DISTRICT OF COLUMBIA, AS FOLLOWS, TO WIT: NOT LESS THAN $1,000,000 ON THE 30TH DAY OF JUNE EACH YEAR AFTER SUCH SUM SHALL HAVE BEEN ADVANCED TO SAID DISTRICT UNTIL THE FULL AMOUNT EXPENDED HEREUNDER IS REIMBURSED, WITHOUT INTEREST FOR THE FIRST THREE YEARS AFTER ANY SUCH ADVANCES AND WITH INTEREST AT NOT EXCEEDING 4 PERCENTUM PER YEAR THEREAFTER ON ANNUAL BALANCES AS OF EACH JUNE 30: * * * PROVIDED, THAT SUCH SUMS AS MAY BE NECESSARY FOR THE REIMBURSEMENT HEREIN REQUIRED OF OR PERMITTED BY THE DISTRICT OF COLUMBIA, AND FOR THE PAYMENT OF INTEREST, SHALL BE INCLUDED IN THE ANNUAL ESTIMATES OF THE COMMISSIONERS OF THE DISTRICT OF COLUMBIA, THE FIRST REIMBURSEMENT TO BE MADE ON JUNE 30, 1936. UNTIL 70 PERCENTUM OF SO MUCH OF SAID SUM AUTHORIZED BY SECTION 1 OF THIS ACT AS MAY BE EXPENDED AS THEREIN PROVIDED SHALL BE REIMBURSED TO THE FEDERAL EMERGENCY ADMINISTRATION OF PUBLIC WORKS, WITH INTEREST AS PROVIDED IN THIS SECTION, 10 CENTS OF THE TAX LEVIED AND COLLECTED UPON EACH $100 OF THE ASSESSED VALUATION OF ALL REAL AND TANGIBLE PERSONAL PROPERTY SUBJECT TO TAXATION IN THE DISTRICT OF COLUMBIA SHALL BE DEPOSITED IN THE TREASURY OF THE UNITED STATES TO THE CREDIT OF A SPECIAL ACCOUNT FOR SUCH REIMBURSEMENT TO THE FEDERAL EMERGENCY ADMINISTRATION OF PUBLIC WORKS AND SHALL NOT BE AVAILABLE FOR ANY OTHER PURPOSE. THE COMMISSIONERS MAY, IN THEIR DISCRETION, ANTICIPATE FROM SAID SPECIAL ACCOUNT THE PAYMENTS REQUIRED BY THIS ACT.

WHILE THIS SECTION OF THE ACT WAS AMENDED BY THE ACT OF MAY 6, 1935, 49 STAT. 174, THE AMENDMENT HAS NO BEARING UPON THE QUESTIONS PRESENTED IN YOUR SUBMISSION.

THE PROVISO CONTAINED IN THAT PART OF THE DISTRICT OF COLUMBIA APPROPRIATION ACT OF JUNE 29, 1937 (50 STAT. 359, 365), QUOTED IN YOUR LETTER, MODIFIES, IN EFFECT, THE REQUIREMENTS OF SECTION 3 OF THE ABOVE- QUOTED ACT RELATING TO THE "SPECIAL ACCOUNT" TO THE EXTENT THAT FOR THE FISCAL YEAR 1938 THE DEPOSITS IN SAID SPECIAL ACCOUNT SHALL NOT EXCEED THE AMOUNT TO BE REIMBURSED TO THE UNITED STATES AS REQUIRED BY STATUTE. EXCEPT FOR SUCH MODIFICATION, THE DEPOSITS TO THE SPECIAL ACCOUNT REQUIRED BY THE 1934 ACT MIGHT EXCEED THE AMOUNT NECESSARY TO REIMBURSE THE UNITED STATES IN THE MANNER PROVIDED BY STATUTE AND THUS CONTAIN, AS IT WERE, SOME IDLE FUNDS. I FAIL TO SEE, THEREFORE, WHERE, AS SEEMS TO HAVE BEEN SUGGESTED IN YOUR LETTER, THE CITED PROVISION OF THE CURRENT APPROPRIATION ACT HAS ANY RELATION TO THE QUESTION WHETHER REIMBURSEMENT MAY BE MADE AT ANY TIME DURING THE FISCAL YEAR 1938.

WHILE IN THE FIRST PART OF SECTION 3 IT IS PROVIDED "THAT 70 PERCENT OF SO MUCH OF SAID SUM AUTHORIZED BY SECTION 1 OF THIS ACT AS MAY BE EXPENDED AS THEREIN PROVIDED SHALL BE REIMBURSED * * * AS FOLLOWS, TO WIT: NOT LESS THAN $1,000,000 ON THE 30TH DAY OF JUNE EACH YEAR," IT IS VERY PERTINENT TO NOTE THAT THE CONCLUDING SENTENCE OF THE SAME SECTION OF THE STATUTE PROVIDES THAT ,THE COMMISSIONERS MAY, IN THEIR DISCRETION, ANTICIPATE FROM SAID SPECIAL ACCOUNT THE PAYMENTS REQUIRED BY THIS ACT.' THE ACT, THEREFORE, READ IN ITS ENTIRETY, WOULD SEEM TO CONTEMPLATE A MINIMUM PAYMENT OF $1,000,000 FOR EACH FISCAL YEAR TO BE MADE NOT LATER THAN JUNE 30 OF EACH YEAR.

REGARDING THE MATTER OF INTEREST CALCULATION, IT SEEMS CLEAR THAT THE STATUTE CONTEMPLATES THAT THE PERIOD FOR WHICH A LOAN IS TO RUN WITHOUT INTEREST IS 3 YEARS FROM THE DATE OF LOAN, AND NO LONGER. 14 COMP. GEN. 273. THE USING OF THE ACTUAL-NUMBER-OF-DAYS BASIS FOR COMPUTING INTEREST FOLLOWS TREASURY METHODS. 15 COMP. GEN. 992. ACCORDINGLY THE METHOD OF COMPUTING INTEREST AS SET UP IN YOUR LETTER APPEARS PROPER. OF COURSE, IF ANY REPAYMENT ON THE LOANS IS MADE BEFORE JUNE 30, 1938, THERE WOULD BE REQUIRED A RECOMPUTATION OF THE INTEREST UPON THE REDUCED PRINCIPAL AS TO THE LOANS ON WHICH INTEREST CHARGES HAD BEGUN TO RUN.