B-136228, JULY 15, 1958, 38 COMP. GEN. 24

B-136228, JULY 15, 1958, 38 COMP. GEN. 24

STATES - PAYMENTS IN LIEU OF TAXES - INDUSTRIAL-TYPE PROPERTY TO BE USED FOR RESERVE TRAINING - TAX LIABILITY AN INDUSTRIAL PLANT WHICH WAS FORMERLY OWNED BY THE RECONSTRUCTION FINANCE CORPORATION AND WHICH IS TO BE TRANSFERRED FROM THE DEPARTMENT OF THE NAVY TO THE DEPARTMENT OF THE ARMY FOR A RESERVE TRAINING CENTER DOES NOT COME WITHIN THE EXEMPTIONS IN 40 U.S.C. 524 (B) AND IS, THEREFORE, SUBJECT TO PAYMENTS IN LIEU OF TAXES.

TO THE SECRETARY OF THE ARMY, JULY 15, 1958:

REFERENCE IS MADE TO LETTER DATED MAY 19, 1958, FROM BRIGADIER GENERAL CHARLES L. DECKER, ASSISTANT JUDGE ADVOCATE GENERAL, DEPARTMENT OF THE ARMY, REQUESTING A DECISION AS TO THE LEGALITY OF MAKING PAYMENTS IN LIEU OF TAXES UNDER THE ACT OF AUGUST 12, 1955 ( PUBLIC LAW 388), 69 STAT. 721, 40 U.S.C. 521, 524, ON A GOVERNMENT FACILITY IN NEWARK, NEW JERSEY, WHICH THE ARMY PROPOSES TO USE AS A UNITED STATES ARMY RESERVE CENTER, THE PURPOSE OF WHICH IS TO FURTHER THE DEVELOPMENT, TRAINING, OPERATION AND MAINTENANCE OF THE RESERVE COMPONENTS OF THE ARMED FORCES.

UNDER EXISTING LAW ONLY DISBURSING OFFICERS, CERTAIN CERTIFYING OFFICERS, AND THE HEAD OF ANY EXECUTIVE DEPARTMENT OR OTHER ESTABLISHMENT NOT UNDER ANY OF THE EXECUTIVE DEPARTMENTS, ARE AUTHORIZED TO SUBMIT QUESTIONS TO THE COMPTROLLER GENERAL OF THE UNITED STATES FOR DECISION. SEE 26 COMP. GEN. 993. HOWEVER, IN THIS PARTICULAR INSTANCE THE MATTER WILL BE TREATED AS A SUBMISSION BY YOU.

GENERAL DECKER ADVISES THAT THE DEPARTMENT OF THE ARMY IS IN THE PROCESS OF ACQUIRING BY TRANSFER, WITHOUT REIMBURSEMENT, THE NAVAL INDUSTRIAL RESERVE ORDNANCE PLANT DOD NO. 232 FROM THE DEPARTMENT OF THE NAVY. SAYS THAT THIS PLANT, WHICH IS CURRENTLY BEING USED BY THE DEPARTMENT OF THE NAVY FOR INDUSTRIAL PURPOSES, GENERALLY FALLS WITHIN THE PURVIEW OF THE ACT OF AUGUST 12, 1955 ( PUBLIC LAW 388) AND THE NAVY CURRENTLY IS MAKING PAYMENTS IN LIEU OF TAXES UNDER THE AUTHORITY OF THE MENTIONED ACT.

THE LETTER CONTINUES, IN PERTINENT PART, AS FOLLOWS:

THE LEGISLATIVE HISTORY OF THE ACT OF 12 AUGUST 1955, SUPRA, INDICATES THAT THE CONGRESS CONTEMPLATED THAT PAYMENTS IN LIEU OF TAXES UNDER THE ACT WOULD BE MADE WITH RESPECT TO FACILITIES, FORMERLY OWNED BY THE RECONSTRUCTION FINANCE CORPORATION, WHICH ARE USED BY THE MILITARY DEPARTMENTS FOR RESERVE TRAINING CENTERS AND FOR THE ORGANIZED RESERVE (SEE H.R. REP. NO. 1453, 84TH CONG., ST SESS., NOTES 2 AND 9, PP. 5-7 INCLUSIVE (1955) ). HOWEVER, THIS DEPARTMENT IS UNCERTAIN AS TO THE AUTHORITY TO MAKE PAYMENTS IN LIEU OF TAXES UNDER THAT ACT WITH RESPECT TO THE INSTANT FACILITY, IF USED IN THE MANNER DESCRIBED, IN THE LIGHT OF LANGUAGE IN A RECENT DECISION OF YOUR OFFICE (37 COMP. GEN. 170, 173 (1957) ( INDICATING THAT SUCH A PAYMENT WOULD BE UNAUTHORIZED WHERE THE FACILITY IS NOT USED FOR INDUSTRIAL PURPOSES.

PUBLIC LAW 388 DIRECTS VARIOUS DEPARTMENTS AND AGENCIES OF THE FEDERAL GOVERNMENT TO MAKE PAYMENTS IN LIEU OF TAXES ON CERTAIN PROPERTIES TRANSFERRED TO THEM FOR THE RECONSTRUCTION FINANCE CORPORATION ON OR AFTER JANUARY 1, 1946, IF TITLE HAS BEEN CONTINUOUSLY IN THE UNITED STATES SINCE DATE OF TRANSFER. SECTION 704 (B) OF THE PUBLIC LAW, 40 U.S.C. 524 (B), PROVIDES THAT:

(B) NO PAYMENT SHALL BE MADE UNDER SECTION 703 WITH RESPECT TO ANY REAL PROPERTY OF ANY OF THE FOLLOWING CATEGORIES:

(1) REAL PROPERTY TAXABLE BY ANY STATE OR LOCAL TAXING AUTHORITY UNDER ANY PROVISION OF LAW, OR WITH RESPECT TO WHICH ANY PAYMENT IN LIEU OF TAXES IS PAYABLE UNDER ANY OTHER PROVISION OF LAW.

(2) REAL PROPERTY USED OR HELD PRIMARILY FOR ANY PURPOSE FOR WHICH REAL PROPERTY OWNED BY ANY PRIVATE CITIZEN WOULD BE EXEMPT FROM REAL PROPERTY TAX UNDER THE CONSTITUTION OR LAWS OF THE STATE IN WHICH THE PROPERTY IS SITUATED.

(3) REAL PROPERTY USED OR HELD PRIMARILY FOR THE RENDITION OF SERVICE TO OR ON BEHALF OF THE LOCAL PUBLIC, INCLUDING (BUT NOT LIMITED TO) THE FOLLOWING CATEGORIES OF REAL PROPERTY: COURTHOUSES; POST OFFICES AND OTHER PROPERTY USED FOR PURPOSES INCIDENTAL TO POSTAL OPERATIONS; AND FEDERALLY OWNED AIRPORTS MAINTAINED AND OPERATED BY THE CIVIL AERONAUTICS ADMINISTRATION.

(4) OFFICE BUILDINGS AND FACILITIES WHICH ARE AN INTEGRAL PART OF, OR ARE USED FOR PURPOSES INCIDENTAL TO THE USE MADE OF, ANY PROPERTIES DESCRIBED IN PARAGRAPH (1), (2), OR (3) OF THIS SUBSECTION.

APPARENTLY THE PROPERTY IN QUESTION DOES NOT FALL WITHIN THE SCOPE OF SECTIONS 704 (B) (1) OR (2), 40 U.S.C. 524 (B) (1) OR (2). ALSO, THE PROPERTY IS NOT IN ANY OF THE CATEGORIES SPECIFICALLY ENUMERATED IN SECTION 704 (B) (3), 40 U.S.C. 524 (B) (3), NOR IS IT USED OR HELD PRIMARILY FOR THE RENDITION OF SERVICE TO OR ON BEHALF OF THE LOCAL PUBLIC. FURTHER, IT IS NOT A BUILDING WHICH IS AN INTEGRAL PART OF, OR USED FOR, PURPOSES INCIDENTAL TO THE USE MADE OF, ANY PROPERTIES DESCRIBED IN PARAGRAPHS (1) (2) (3) OF SECTION 704 (B). THUS, IT DOES NOT APPEAR THAT THE PROPERTY IS EXEMPT FROM PAYMENTS IN LIEU OF TAXES UNDER SECTION 704 (B). MOREOVER AS INDICATED BY GENERAL DECKER'S LETTER, RESERVE TRAINING CENTERS LISTED AS PROPERTY ON WHICH IT WAS ANTICIPATED THAT PAYMENTS IN LIEU OF TAXES WOULD BE MADE UNDER PUBLIC LAW 388. SEE THE ABOVE REFERRED-TO HOUSE REPORT.

WHILE, AS INDICATED IN OUR DECISION OF DECEMBER 14, 1957, B-132847, 37 COMP. GEN. 170, CONGRESS WAS CONCERNED PRIMARILY WITH THE TAX EXEMPT STATUS OF PROPERTY COMMONLY USED FOR INDUSTRIAL PURPOSES, IT PROHIBITED PAYMENTS IN LIEU OF TAXES UNDER PUBLIC LAW 388 ONLY ON PROPERTY FALLING WITHIN THE PURVIEW OF SECTION 704 (B) OF THAT PUBLIC LAW. MOREOVER, OUR CONCLUSION IN THE ABOVE REFERRED-TO DECISION WAS BASED ON OUR FINDING THAT THE PROPERTY INVOLVED WAS PRIMARILY USED OR HELD FOR THE RENDITION OF SERVICE TO OR ON BEHALF OF THE LOCAL PUBLIC OR AS AN OFFICE BUILDING USED FOR PURPOSES INCIDENTAL THERETO AND THEREFORE FELL WITHIN THE SCOPE OF SECTIONS 704 (B) (2) AND (3). HENCE, WE CONCLUDED THAT THERE WOULD BE NO AUTHORITY TO MAKE PAYMENTS IN LIEU OF TAXES ON SUCH PROPERTY.

AS INDICATED ABOVE THE PROPERTY INVOLVED IN THE INSTANT CASE IS NOT WITHIN THE PURVIEW OF SECTION 704 (B) AND HENCE IS NOT EXEMPT FROM PAYMENTS IN LIEU OF TAXES, SINCE IT IS PROPERTY APPARENTLY OTHERWISE WITHIN THE SCOPE OF PUBLIC LAW 388. ACCORDINGLY, YOUR DEPARTMENT MAY MAKE PAYMENTS IN LIEU OF TAXES ON THE FACILITY IN QUESTION FOR ANY PERIOD SUCH PAYMENTS ARE AUTHORIZED UNDER PUBLIC LAW 388.