B-151124, MAY 27, 1963, 42 COMP. GEN. 653

B-151124: May 27, 1963

Additional Materials:

Contact:

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

 

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

UPON THE QUARTERS OCCUPIED BY THE GOVERNMENT UNDER A LEASE OBLIGATING THE GOVERNMENT TO PAY THE WATER AND SEWERAGE SERVICE CHARGES IS NOT AN ASSESSMENT TO AMORTIZE THE REVENUE BONDS. 1963: WE HAVE CONSIDERED HEREIN THE QUESTION SUBMITTED BY YOUR LETTER OF MARCH 21. ALTHOUGH A VOUCHER COVERING THE SURCHARGE IS NOT AMONG THE ENCLOSURES WITH YOUR LETTER. WE PRESUME PAYMENT OF THE CHARGE IS BEFORE YOU FOR CERTIFICATION. " AND GOES ON TO STIPULATE: "IT IS UNDERSTOOD AND AGREED THAT THE LESSOR SHALL NOT BE RESPONSIBLE FOR ANY SEWERAGE SERVICE CHARGES.'. WAS AMENDED TO IMPOSE A SURCHARGE. THE ORDINANCE OF 1962 WAS INCIDENT TO THE ISSUANCE OF $67. THERE IS PRIMARILY HERE INVOLVED NOT THE IMMUNITY OF THE FEDERAL GOVERNMENT FROM LOCAL TAXATION.

B-151124, MAY 27, 1963, 42 COMP. GEN. 653

SEWERS - SERVICE CHARGES - LEASED PREMISES A SURCHARGE ON SEWERAGE SERVICES IMPOSED BY A MUNICIPALITY, INCIDENT TO THE ISSUANCE OF REVENUE BONDS TO FINANCE THE IMPROVEMENT OF SEWER AND WATER SYSTEMS, UPON THE QUARTERS OCCUPIED BY THE GOVERNMENT UNDER A LEASE OBLIGATING THE GOVERNMENT TO PAY THE WATER AND SEWERAGE SERVICE CHARGES IS NOT AN ASSESSMENT TO AMORTIZE THE REVENUE BONDS, BUT A SEWER SERVICE CHARGE RELATING TO THE SERVICES NEEDED BY THE GOVERNMENT THAT INVOLVES ITS CONTRACTUAL OBLIGATION TO THE LESSOR AND NOT ITS IMMUNITY FROM LOCAL TAXATION, AND THE GOVERNMENT HAVING ASSUMED THE RESPONSIBILITY FOR ANY SEWERAGE SERVICE CHARGES IMPOSED UPON THE LESSOR BY THE MUNICIPAL GOVERNMENT, THE SURCHARGE, A VALID PART OF THE SERVICE CHARGE, MAY BE PAID UNDER THE TERMS OF THE LEASE.

TO JOHN W. HALL, POST OFFICE DEPARTMENT, MAY 27, 1963:

WE HAVE CONSIDERED HEREIN THE QUESTION SUBMITTED BY YOUR LETTER OF MARCH 21, 1963, AS TO THE GOVERNMENT'S LIABILITY FOR A SURCHARGE ON SEWERAGE SERVICES, OF $4.50 A QUARTER, IMPOSED BY THE CITY OF HANKINSON, NORTH DAKOTA, UPON THE LOCAL POST OFFICE QUARTERS UNDER A 1962 ORDINANCE. ALTHOUGH A VOUCHER COVERING THE SURCHARGE IS NOT AMONG THE ENCLOSURES WITH YOUR LETTER, WE PRESUME PAYMENT OF THE CHARGE IS BEFORE YOU FOR CERTIFICATION. SEE 31 U.S.C. 82D.

THE HANKINSON POST OFFICE OCCUPIES LEASED QUARTERS. THE LEASE, ENTERED INTO APRIL 25, 1961, INCORPORATES BY SPECIFIC REFERENCE THE TERMS OF THE AGREEMENT TO LEASE DATED MAY 30, 1960, AND ACCEPTED BY THE GOVERNMENT ON JUNE 22, 1960, WHICH STIPULATES THAT THE LESSOR SHALL NOT BE OBLIGATED TO FURNISH WATER OR SEWERAGE SERVICE. THE LEASE PROVIDES: "THE LESSOR SHALL PAY ALL TAXES AND SHALL FURNISH AND MAINTAIN * * * PLUMBING AND TOILET FACILITIES," AND GOES ON TO STIPULATE: "IT IS UNDERSTOOD AND AGREED THAT THE LESSOR SHALL NOT BE RESPONSIBLE FOR ANY SEWERAGE SERVICE CHARGES.' ALSO INCLUDES AN ESCALATION CLAUSE WITH REFERENCE TO GENERAL AND REAL ESTATE TAXES.

BY AN ORDINANCE OF JULY 15, 1958, THE CITY OF HANKINSON ESTABLISHED THE CURRENT BASIC CHARGES FOR MUNICIPAL SEWER SERVICES AND MADE SUCH CHARGES PAYABLE BY THE OWNER OF PREMISES SERVED BY THE CITY'S SANITARY SEWERAGE SYSTEM. ON AUGUST 16, 1962, THE ORDINANCE OF JULY 15, 1958, WAS AMENDED TO IMPOSE A SURCHARGE, AS PART OF SEWER SERVICE CHARGES,"IN AN AMOUNT EQUAL TO 1 1/2 TIMES THE MINIMUM SEWER CHARGE.' THE ORDINANCE OF 1962 WAS INCIDENT TO THE ISSUANCE OF $67,000 WORTH OF REVENUE BONDS FOR THE IMPROVEMENT OF THE SEWER AND WATER SYSTEMS OF THE CITY.

YOU ENTERTAIN DOUBT AS TO THE PROPRIETY OF CERTIFYING THE SURCHARGE FOR PAYMENT AS "WE CONSIDER IT TO BE IN THE NATURE OF AN ASSESSMENT FOR THE PURPOSE OF AMORTIZING THE $67,000.00 ISSUANCE OF REVENUE BONDS FOR THE SEWER AND WATER BETTERMENT AND IMPROVEMENT PROJECT, RATHER THAN A SEWER SERVICE CHARGE DETERMINED PURSUANT TO STATUTE, BY THE QUANTITY OF WATER FURNISHED OR AMOUNT OF SEWAGE DISPOSED OF.'

THERE IS PRIMARILY HERE INVOLVED NOT THE IMMUNITY OF THE FEDERAL GOVERNMENT FROM LOCAL TAXATION, BUT THE CONTRACTUAL OBLIGATION OF THE GOVERNMENT TO THE LESSOR. AS WE READ THE LEASE AND THE AGREEMENT TO LEASE, PARTICULARLY THE STIPULATIONS THAT THE LESSOR SHALL NOT BE OBLIGATED TO FURNISH WATER OR SEWERAGE SERVICE AND THAT HE SHALL NOT BE RESPONSIBLE FOR ANY SEWERAGE SERVICE CHARGES, THE GOVERNMENT ASSUMED RESPONSIBILITY FOR WATER AND SEWER CHARGES THAT MAY BE IMPOSED UPON THE LESSOR BY THE MUNICIPAL GOVERNMENT.

WHILE THE CITY OF HANKINSON COULD PERHAPS HAVE FINANCED THE IMPROVEMENT PROJECT BY SPECIAL ASSESSMENTS OR GENERAL ASSESSMENTS, IT NEVERTHELESS CHOSE THE MEANS OF ISSUING REVENUE BONDS AND LIQUIDATING THE BONDED INDEBTEDNESS BY INCREASING THE SEWER SERVICE CHARGES. SEE 8 NORTH DAKOTA CENTURY CODE, CHAPTER 41-35, REVENUE BOND LAW.

THE IMPROVEMENT FOR WHICH THE REVENUE BONDS WERE ISSUED AND THE SEWER SERVICE SURCHARGE LEVIED RELATES TO THE FURNISHING OF SERVICES PRESUMABLY NEEDED BY THE GOVERNMENT. WE PERCEIVE NO SUBSTANTIAL BASIS FOR INSISTING THAT THE SURCHARGE IS NOT A VALID PART OF THE SERVICE CHARGE, BUT A SPECIAL OR GENERAL ASSESSMENT TO BE ASSUMED IN WHOLE OR IN PART BY THE LESSOR.

ACCORDINGLY, YOU ARE ADVISED THAT WE CONSIDER THE SURCHARGE PAYABLE BY THE GOVERNMENT UNDER THE TERMS OF THE LEASE.