B-145185, MAR. 16, 1961

B-145185, MAR. 16, 1961

TO CONTRACTING OFFICER, THROUGH OFFICE OF THE CHIEF OF ENGINEERS, DEPARTMENT OF THE ARMY:

BY LETTER OF FEBRUARY 24, 1961 (ENGRE-AL PORTALES, N.MEX.), THE DIRECTOR OF REAL ESTATE, CORPS OF ENGINEERS, DEPARTMENT OF THE ARMY, FORWARDED HERE YOUR REQUEST FOR DECISION AS TO THE PROPRIETY OF A PROPOSED AMENDMENT TO LEASE NO. DA-29-005-ENG-1733, DATED MAY 9, 1956, WHICH WOULD OBLIGATE THE GOVERNMENT TO PAY THE COST OF UTILITIES (HEAT, LIGHTS, WATER AND SANITARY FACILITIES) FURNISHED BY THE LESSOR IN EXCESS OF $300.

THE PREMISES AS DESCRIBED IN PARAGRAPH 2 OF THE LEASE WERE LEASED TO THE GOVERNMENT FOR USE AS OFFICE SPACE AND OTHER GOVERNMENTAL PURPOSES FOR THE TERM BEGINNING JUNE 15, 1956, THROUGH JUNE 30, 1956, WITH AN AUTOMATIC RENEWAL OPTION NOT TO EXTEND BEYOND JUNE 30, 1961. THE LESSOR WAS OBLIGATED TO FURNISH HEAT, LIGHTS, WATER AND SANITARY FACILITIES AS PART OF THE ANNUAL RENTAL CONSIDERATION OF $2,700.

IN YOUR ADMINISTRATIVE REPORT OF THE FACTS IT IS STATED THAT IN THE APPRAISAL REPORT MADE DURING THE PRELIMINARY NEGOTIATIONS FOR THE INVOLVED BUILDING AN ESTIMATE OF $300 PER ANNUM WAS ALLOCATED AS THE NOMINAL PER ANNUM UTILITY COST FOR HEAT, ELECTRICITY AND WATER; THAT THE PER ANNUM RATE FOR THE SPACE AND THE UTILITIES WAS ESTABLISHED AT $2,700 OR AN AMOUNT WHICH WOULD ENTITLE THE LESSORS TO A NET RENTAL OF $200 PER MONTH; AND THAT AT THE TIME A FIVE-YEAR LEASE WAS PRESENTED TO THE OWNERS (MR. AND MRS. RANDOLPH) FOR EXECUTION MR. RANDOLPH WAS ADVISED THAT THE FIGURE OF $2,700 PER ANNUM INCLUDED A PAYMENT OF $300 PER ANNUM WAS COMPUTED IT IS STATED THAT IN MAKING AN APPRAISAL OF RENTAL VALUES IT IS THE POLICY OF THE GOVERNMENT TO INCLUDE UTILITY COSTS ARRIVED AT BY (A) PAST EXPERIENCE AND (B) ANTICIPATED FUTURE NEEDS; THAT WHERE, AS IN THE PRESENT INSTANCE, THE PREMISES ARE TO BE OCCUPIED ON THE BASIS OF A MINIMUM USE, UTILITY RATES ARE FIGURED AT THE MINIMUM THAT IN THIS INSTANCE THE NEGOTIATIONS CONTEMPLATED USE OF THE PREMISES FOR ONE NIGHT PER WEEK BASED UPON THE STANDARD ACTIVITIES OF RESERVEUNITS; THAT IT WAS NOT CONTEMPLATED THAT ANY PERSONNEL WOULD BE ON FULL-TIME DUTY AT THE LEASED PREMISES; AND THAT ACCORDINGLY THE APPRAISAL ALLOCATED THE SUM OF $3.33 A MONTH FOR WATER COSTS, $8.33 PER MONTH FOR ELECTRICITY, AND $13.33 FOR HEATING.

IT IS RELATED THAT FOR A SHORT TIME AFTER THE EXECUTION OF THE LEASE THE PREMISES WERE UTILIZED ONE NIGHT PER WEEK IN KEEPING WITH THE COMMITMENT MADE TO MR. RANDOLPH DURING THE NEGOTIATIONS, BUT THAT LATER, BECAUSE OF THE STEPPED-UP TRAINING ACTIVITIES FOR THE RESERVE UNIT, THE PREMISES WERE OCCUPIED ON A CONTINUOUS SEVEN-DAY-A-WEEK BASIS WHICH OCCUPANCY RESULTED IN A PROPORTIONATE INCREASE IN THE USE OF HEAT, WATER AND ELECTRICITY. IS STATED THAT THE UTILIZATION AND INSPECTION REPORT FOR 1958 SHOWED ONE MILITARY AND TWO CIVILIANS ON FULL-TIME DUTY OCCUPYING THE SPACE AND THAT ON FEBRUARY 18, 1959, MR. RANDOLPH, IN ADDITION TO MAKING ORAL REQUESTS, SUBMITTED A WRITTEN REQUEST FOR AN ADJUSTMENT ON ACCOUNT OF INCREASED UTILITY COSTS. IN THE WRITTEN REQUEST MR. RANDOLPH AFTER REFERRING TO THE "AGREEMENT" MADE AT THE TIME THE LEASE WAS EXECUTED TO THE EFFECT THAT THE BUILDING WOULD BE USED "EACH THURSDAY NIGHT" STATED THAT THE BUILDING WAS BEING USED EVERY DAY AND THAT SUCH USE INCREASED THE COST OF UTILITIES. HE REQUESTED A HEARING FOR THE PURPOSE OF ADJUSTING THE RENT TO ACCORD WITH THE ORIGINAL AGREEMENT. AS EVIDENCE OF THE INCREASED COSTS YOU STATE THAT MR. RANDOLPH SUBMITTED HIS UTILITY STATEMENTS FOR THE PERIOD FROM FEBRUARY 1958 THROUGH JANUARY 1959 IN THE TOTAL AMOUNT OF $560.69 AND THAT THE GAS BILL FOR THIS PERIOD TOTALED $301.45, THE ELECTRIC BILL $202.99 AND THE WATER BILL $56.25.

THE PROPOSED SUPPLEMENTAL AGREEMENT WHICH WOULD BECOME EFFECTIVE AS OF JULY 1, 1958, WOULD DELETE PARAGRAPH 6 OF THE ORIGINAL LEASE AND SUBSTITUTE THEREFOR THE FOLLOWING---

"THE LESSORS SHALL FURNISH TO THE GOVERNMENT, AS PART OF THE RENTAL CONSIDERATION, THE FOLLOWING: HEAT, LIGHTS, WATER AND SANITARY FACILITIES, AND THAT THE TOTAL COMBINED COST FOR FURNISHING SAID FACILITIES BY THE LESSORS SHALL BE LIMITED TO THREE HUNDRED ($300.00) DOLLARS PER ANNUM, AND THAT ANY COST THEREFOR IN EXCESS OF $300.00 SHALL BE PAID FOR BY THE GOVERNMENT. LESSORS WILL PAY THE SAID UTILITY BILLS WITH REIMBURSEMENT TO THEM OF THE EXCESS SO PAID, THE SAID EXCESS AMOUNT TO BE DETERMINED FROM THE MONTHLY PAYMENT RECEIPTS FOR SAID UTILITIES AND THE REIMBURSEMENT DUE THEM WILL BE PAID AT THE END OF EACH FISCAL YEAR BY ADDING THE EXCESS AMOUNT OF SAID BILLS TO THE LESSORS' RENTAL PAYMENT FOR THE MONTH OF JUNE OF EACH YEAR DURING THE CONTINUANCE OF THE LEASE AGREEMENT.'

WHILE THE LEASE CONTAINS NO LIMITATION AS TO THE USE OF THE BUILDING THE RECORD SUFFICIENTLY ESTABLISHES THAT THE NEGOTIATIONS LEADING UP TO THE EXECUTION OF THE LEASE WERE ON THE BASIS THAT THE PREMISES WOULD BE USED ONE NIGHT A WEEK. THUS, THE LEASE AS EXECUTED FAILED FULLY TO EXPRESS THE INTENTION OF THE PARTIES, AND TO INTERPRET IT AS OBLIGATING THE LESSOR TO FURNISH UTILITIES WITHOUT LIMIT WOULD BE CONTRARY TO THE ACTUAL AGREEMENT MADE.

ACCORDINGLY, OUR OFFICE WILL NOT OBJECT TO THE EXECUTION OF THE PROPOSED AMENDMENT OF THE LEASE UNDER WHICH THE LESSORS' OBLIGATION FOR UTILITIES (HEAT, LIGHTS, WATER AND SANITARY FACILITIES) WILL BE LIMITED TO $300 PER ANNUM EFFECTIVE AS OF JULY 1, 1958, AND THE GOVERNMENT WILL BE OBLIGATED TO REIMBURSE THE LESSORS AT THE END OF EACH FISCAL YEAR FOR THE ANNUAL COST OF UTILITIES IN EXCESS OF THAT AMOUNT.

THE ENCLOSURES, WITH THE EXCEPTION OF YOUR ADMINISTRATIVE REPORT, ARE RETURNED.