B-125931, NOV. 23, 1955

B-125931: Nov 23, 1955

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IT IS FURTHER PROVIDED THAT THE LOANS "SHALL BE OF SUCH SOUND VALUE OR SO SECURED AS REASONABLY TO ASSURE RETIREMENT OR REPAYMENT.'. THE PUBLIC FACILITIES LOAN PROGRAM WAS BEGUN UNDER THE RECONSTRUCTION FINANCE CORPORATION IN 1934. TITLE II WAS INTENDED TO REVIVE IT ON AN OPERATING BASIS. IT WAS THE PRACTICE OF THE RFC. TO REQUIRE THE PAYMENT OF AN APPLICATION FEE BY ALL APPLICANTS FOR LOANS EVEN THOUGH THERE WAS NO STATUTORY PROVISION SPECIFICALLY AUTHORIZING OR REQUIRING SUCH FEES. THE PUBLIC FACILITY LOANS PROGRAM WAS TO BE CARRIED ON BY AN OFFICER OR AGENCY OTHER THAN THE RFC TO BE DESIGNATED BY THE PRESIDENT. THE FOLLOWING YEAR THE HOUSING AND HOME FINANCE ADMINISTRATOR WAS DESIGNATED TO CONTINUE THE PROGRAM UNDER SECTION 804 OF THE HOUSING ACT OF 1954.

B-125931, NOV. 23, 1955

TO HONORABLE ALBERT M. COLE, ADMINISTRATOR, HOUSING AND HOME FINANCE AGENCY:

A LETTER OF OCTOBER 27, 1955, FROM THE ACTING ADMINISTRATOR, REQUESTS A DECISION AS TO WHETHER LOAN AGREEMENTS MADE PURSUANT TO THE PUBLIC FACILITY LOANS PROGRAM UNDER TITLE II OF THE HOUSING AMENDMENTS OF 1955, 69 STAT. 642-644, MAY PROVIDE FOR PAYMENT BY THE APPLICANTS OF A FIXED FEE TO COVER THE COSTS TO THE GOVERNMENT OF INSPECTIONS AND OF PROVIDING REPRESENTATIVES AT THE PROJECT SITES. SHOULD IT BE DETERMINED THAT SUCH FEE MAY BE CHARGED, THE LETTER REQUESTS ADVICE WHETHER THE PROCEEDS FROM SUCH FEES MAY BE DEPOSITED IN THE REVOLVING FUND ESTABLISHED PURSUANT TO SUBSECTION 203 (B) OF TITLE II OF THE ACT, 69 STAT. 644.

TITLE II OF THE ACT AUTHORIZES THE HOUSING AND HOME FINANCE ADMINISTRATOR, ACTING THROUGH THE COMMUNITY FACILITIES ADMINISTRATION, TO MAKE LOANS TO "STATES, MUNICIPALITIES AND OTHER POLITICAL SUBDIVISIONS OF STATES, PUBLIC AGENCIES, AND INSTRUMENTALITIES OF ONE OR MORE STATES, MUNICIPALITIES AND OTHER POLITICAL SUBDIVISIONS OF STATES, AND PUBLIC CORPORATIONS, BOARDS, AND COMMISSIONS" TO FINANCE PUBLIC PROJECTS. IT IS FURTHER PROVIDED THAT THE LOANS "SHALL BE OF SUCH SOUND VALUE OR SO SECURED AS REASONABLY TO ASSURE RETIREMENT OR REPAYMENT.'

THE PUBLIC FACILITIES LOAN PROGRAM WAS BEGUN UNDER THE RECONSTRUCTION FINANCE CORPORATION IN 1934. SEE 15 U.S.C., 1946 ED., 606B; 15 U.S.C., 1952 ED., 604; AND 40 U.S.C., 1952 ED., SUPP. II, 459. THE PROGRAM SUFFERED AN ECLIPSE UPON THE DISSOLUTION OF THE RFC, AND TITLE II WAS INTENDED TO REVIVE IT ON AN OPERATING BASIS. HOUSE REPORT NO. 913, 84TH CONGRESS, (PAGE 23) ON THE BILL WHICH BECAME THE HOUSING AMENDMENTS OF 1955.

SECTION 204 OF TITLE II VESTS IN THE ADMINISTRATOR ALL THE "FUNCTIONS, POWERS, AND DUTIES SET FORTH IN SECTION 402, EXCEPT SUBSECTION (C) (2), OF THE HOUSING ACT OF 1950.' THE PROVISIONS OF SECTION 402 OF THE HOUSING ACT OF 1950, 64 STAT. 78-80, THUS MADE APPLICABLE TO THE PUBLIC FACILITY LOAN PROGRAM, AUTHORIZE THE ADMINISTRATOR TO PRESCRIBE RULES AND REGULATIONS NECESSARY TO CARRY OUT THE PURPOSES OF THE TITLE (SECTION 402 (C) (1) (, AND TO INCLUDE IN ANY CONTRACT OR INSTRUMENT ENTERED INTO PURSUANT TO THE TITLE ANY COVENANTS, CONDITIONS, OR PROVISIONS HE DEEMS NECESSARY TO ACHIEVE THE PURPOSES OF THE TITLE (SECTION 402 (C) (9) ).

IT WAS THE PRACTICE OF THE RFC, SINCE AT LEAST 1950, TO REQUIRE THE PAYMENT OF AN APPLICATION FEE BY ALL APPLICANTS FOR LOANS EVEN THOUGH THERE WAS NO STATUTORY PROVISION SPECIFICALLY AUTHORIZING OR REQUIRING SUCH FEES. BY THE TERMS OF SECTION 108 OF THE RECONSTRUCTION FINANCE CORPORATION LIQUIDATION ACT, 67 STAT. 231, THE PUBLIC FACILITY LOANS PROGRAM WAS TO BE CARRIED ON BY AN OFFICER OR AGENCY OTHER THAN THE RFC TO BE DESIGNATED BY THE PRESIDENT. THE FOLLOWING YEAR THE HOUSING AND HOME FINANCE ADMINISTRATOR WAS DESIGNATED TO CONTINUE THE PROGRAM UNDER SECTION 804 OF THE HOUSING ACT OF 1954, 68 STAT. 643. WHEN IT BECAME APPARENT THAT THE PROGRAM WAS TO BE ADMINISTERED BY HIM, THE HOUSING AND HOME FINANCE ADMINISTRATOR REQUESTED SPECIFIC AUTHORITY TO CHARGE LOAN APPLICANTS FIXED FEES TO COVER THE NECESSARY EXPENSES OF INSPECTIONS AND OF PROVIDING REPRESENTATIVES AT THE PROJECT SITES. PAGE 1281, SENATE HEARINGS ON H.R. 9936, 83RD CONGRESS. THAT AUTHORITY WAS PROVIDED IN THE SUPPLEMENTAL APPROPRIATION ACT, 1955, 68 STAT. 817. ALSO, IN THE INDEPENDENT OFFICES APPROPRIATION ACT, 1956, 69 STAT. 206, THE AUTHORITY WAS GIVEN IN THE FOLLOWING LANGUAGE:

"PROVIDED, THAT NECESSARY EXPENSES OF INSPECTIONS AND OF PROVIDING REPRESENTATIVES AT THE SITE OF * * * PROJECTS AND FACILITIES FINANCED BY LOANS TO PUBLIC AGENCIES PURSUANT TO SECTION 108 OF THE RECONSTRUCTION FINANCE CORPORATION LIQUIDATION ACT, AS AMENDED (40 U.S.C. 459), SHALL BE COMPENSATED BY SUCH AGENCIES OR INSTITUTIONS BY THE PAYMENT OF FIXED FEES WHICH IN THE AGGREGATE WILL COVER THE COSTS OF RENDERING SUCH SERVICES.

THE LEGISLATIVE HISTORY OF TITLE II DOES NOT INDICATE ANY CONGRESSIONAL INTENT TO DEPART FROM THE ESTABLISHED POLICY TO CHARGE SUCH FEES. THE ADMINISTRATOR MAY, THEREFORE, PURSUANT TO HIS BROAD POWERS UNDER SECTION 204 OF TITLE II PRESCRIBE RULES AND REGULATIONS AND INCLUDE PROVISIONS IN CONTRACTS REQUIRING THE PAYMENT OF FEES TO COVER THE NECESSARY COSTS OF INSPECTIONS AND OF PROVIDING REPRESENTATIVES AT THE PROJECT SITES.

HAVING ANSWERED THE FIRST QUESTION AFFIRMATIVELY, IT BECOMES NECESSARY TO DETERMINE WHETHER THE FIXED FEES COLLECTED FROM THE LOAN APPLICANTS MAY BE DEPOSITED IN THE REVOLVING FUND ESTABLISHED UNDER SECTION 203 (B) OF TITLE II WHICH READS AS FOLLOWS:

"FUNDS BORROWED UNDER THIS SECTION AND ANY PROCEEDS SHALL CONSTITUTE A REVOLVING FUND WHICH MAY BE USED BY THE ADMINISTRATOR IN THE EXERCISE OF HIS FUNCTIONS UNDER THIS TITLE.'

SECTION 204 OF TITLE II PROVIDES:

"FUNDS OBTAINED OR HELD BY THE ADMINISTRATOR IN CONNECTION WITH THE PERFORMANCE OF HIS FUNCTIONS UNDER THIS TITLE SHALL BE AVAILABLE FOR THE ADMINISTRATIVE EXPENSES OF THE ADMINISTRATOR IN CONNECTION WITH THE PERFORMANCE OF SUCH FUNCTIONS.'

ORDINARILY, ALL MONEYS RECEIVED FROM WHATEVER SOURCE ARE REQUIRED UNDER SECTION 3617, REVISED STATUTES, 31 U.S.C. 484, TO BE DEPOSITED INTO THE TREASURY AS MISCELLANEOUS RECEIPTS. HOWEVER, IF SUCH PROVISION WERE TO BE MADE APPLICABLE TO TITLE II, THEN ALL FUNDS OBTAINED UNDER THE TITLE WOULD NOT BE AVAILABLE FOR ADMINISTRATIVE EXPENSES AS PROVIDED BY SECTION 204 AND SECTION 204 WOULD THEREBY BE RENDERED A NULLITY. IN THE LIGHT OF THE FOREGOING, AND READING SECTION 203 (B) IN CONJUNCTION WITH SECTION 204, IT APPEARS THAT THE FEES CHARGED LOAN APPLICANTS PROPERLY MAY BE DEPOSITED IN THE REVOLVING FUND. BOTH QUESTIONS, THEREFORE, ARE ANSWERED IN THE AFFIRMATIVE.