B-170057, AUG. 11, 1970

B-170057: Aug 11, 1970

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BUILT A NEW RESIDENCE RATHER THAN PURCHASE ONE ALREADY BUILT IS ONLY ENTITLED TO EXPENSES ACCORDING TO THE EXISTING REGULATIONS AT THAT TIME WHICH DID NOT PERMIT REIMBURSEMENT FOR CERTAIN CONSTRUCTION COST. DISALLOWANCE OF YOUR CLAIM WAS PARTLY ON THE BASIS THAT UNDER THE CONTROLLING REGULATION. SEVERAL ITEMS CLAIMED WERE REIMBURSABLE WITH RESPECT TO EITHER SALE OF A RESIDENCE AT THE OLD OFFICIAL STATION OR PURCHASE OF A RESIDENCE AT THE NEW OFFICIAL STATION BUT NOT BOTH. THE REMAINING ITEMS WHICH YOU CLAIMED WERE DISALLOWED AS BEING INCIDENT TO CONSTRUCTION AND NOT OF THE TYPE COVERED BY THE REGULATION WITH REGARD TO RESIDENCE PURCHASE. LIGHT OF THE CHANGE MADE IN CIRCULAR NO A-56 AND SINCE ALLOWANCES FOR REAL ESTATE EXPENSES ARE PAYABLE IN CONNECTION WITH CONSTRUCTION OF A RESIDENCE.

B-170057, AUG. 11, 1970

TRANSFER -- REAL ESTATE EXPENSES -- CONSTRUCTION OF NEW RESIDENCE DECISION TO A NAVY EMPLOYEE SUSTAINING THE DISALLOWANCE OF A CLAIMS SETTLEMENT OF MAY 7, 1970, FOR EXPENSES RELATED TO THE CONSTRUCTION OF A RESIDENCE AT THE NEW DUTY STATION INCIDENT TO PERMANENT CHANGE OF STATION FROM EL CENTRO TO SAN DIEGO, CALIFORNIA. NAVY EMPLOYEE WHO, INCIDENT TO TRANSFER TO NEW STATION ON JUNE 24, 1968, BUILT A NEW RESIDENCE RATHER THAN PURCHASE ONE ALREADY BUILT IS ONLY ENTITLED TO EXPENSES ACCORDING TO THE EXISTING REGULATIONS AT THAT TIME WHICH DID NOT PERMIT REIMBURSEMENT FOR CERTAIN CONSTRUCTION COST, AND SINCE EMPLOYEE MUST FILE CLAIM FOR ANY REIMBURSEMENT DUE ONE YEAR FROM DATE OF TRANSFER, HE MAY NOT AT A LATER DATE, BECAUSE OF A NEW REVISION OF THE REGULATION ALLOWING SOME CONSTRUCTION EXPENSES BE ENTITLED RETROACTIVELY TO SUCH BENEFIT.

TO MR. PHILIP L. WEINTRAUB:

BY LETTER OF MAY 19, 1970, YOU REQUESTED REVIEW OF OUR CLAIMS DIVISION SETTLEMENT OF MAY 7, 1970, DISALLOWING YOUR CLAIM FOR CERTAIN EXPENSES RELATED TO THE CONSTRUCTION OF A RESIDENCE AT YOUR NEW DUTY STATION UPON PERMANENT CHANGE OF STATION FROM EL CENTRO TO SAN DIEGO, CALIFORNIA.

DISALLOWANCE OF YOUR CLAIM WAS PARTLY ON THE BASIS THAT UNDER THE CONTROLLING REGULATION--SECTION 4 OF BUREAU OF THE BUDGET CIRCULAR NO. A- 56, REVISED OCTOBER 12, 1966--SEVERAL ITEMS CLAIMED WERE REIMBURSABLE WITH RESPECT TO EITHER SALE OF A RESIDENCE AT THE OLD OFFICIAL STATION OR PURCHASE OF A RESIDENCE AT THE NEW OFFICIAL STATION BUT NOT BOTH. THE REMAINING ITEMS WHICH YOU CLAIMED WERE DISALLOWED AS BEING INCIDENT TO CONSTRUCTION AND NOT OF THE TYPE COVERED BY THE REGULATION WITH REGARD TO RESIDENCE PURCHASE.

YOUR LETTER REFERS TO CHANGES IN THE GOVERNING REGULATION EFFECTIVE JUNE 26, 1969, WHICH REMOVED THE LIMITATION ON SOME TYPES OF COSTS NOT BEING REIMBURSABLE AT BOTH LOCATIONS REQUIRING ONLY THAT SUCH COSTS BE CUSTOMARILY PAID IN COMPARABLE SITUATIONS IN THE LOCALITY INCURRED. LIGHT OF THE CHANGE MADE IN CIRCULAR NO A-56 AND SINCE ALLOWANCES FOR REAL ESTATE EXPENSES ARE PAYABLE IN CONNECTION WITH CONSTRUCTION OF A RESIDENCE, YOU SUGGEST THAT THE PREVIOUS DISALLOWANCE OF YOUR CLAIM IS IN ERROR.

THE RECORD SHOWS THAT YOU REPORTED TO YOUR NEW DUTY STATION ON JUNE 24, 1968. SECTION 4.1D OF THE REGULATION IN EFFECT AT THAT TIME- CIRCULAR NO. A-56, REVISED OCTOBER 12, 1966--PROVIDED AS A CONDITION THAT:

"THE SETTLEMENT DATES FOR THE SALE AND PURCHASE OR LEASE TERMINATION TRANSACTIONS FOR WHICH REIMBURSEMENT IS REQUESTED ARE NOT LATER THAN ONE YEAR AFTER THE DATE ON WHICH THE EMPLOYEE REPORTED FOR DUTY AT THE NEW OFFICIAL STATION *** ."

THUS, UNDER THE REGULATION, YOU HAD A PERIOD OF ONE YEAR FROM THE DATE OF FIRST REPORTING TO YOUR NEW DUTY STATION TO ESTABLISH A RIGHT TO REIMBURSEMENT OF EXPENSES. ALSO, REIMBURSEMENT RIGHTS ARE DETERMINED ON THE BASIS OF THE REGULATIONS CURRENT AT THE TIME SETTLEMENT TRANSACTIONS OCCUR. THEREFORE, MORE THAN ONE YEAR HAVING ELAPSED BETWEEN YOUR ENTRANCE ON DUTY AND THE EFFECTIVE DATE OF THE REVISED REGULATION, IT IS CLEAR, IN ANY EVENT, WITH RESPECT TO THOSE ITEMS OF THE TYPE WHICH WERE REIMBURSED IN CONNECTION WITH THE SALE OF YOUR RESIDENCE, THAT THE 1966 VERSION OF THE REGULATION PRECLUDING DUPLICATION RATHER THAN THE 1969 REVISION IS APPLICABLE. SEE B-166126, APRIL 20, 1970, COPY ENCLOSED, HOLDING THAT A CHANGE MADE IN BUREAU OF THE BUDGET CIRCULAR NO. A-56, EFFECTIVE JUNE 26, 1969, MAY NOT BE GIVEN RETROACTIVE EFFECT. SEE ALSO B-168448, DECEMBER 24, 1969; AND B 163946, JUNE 21, 1968, COPIES ENCLOSED.

AS TO THE REMAINING ITEMS OF YOUR CLAIM CONCERNING EXPENSES INCURRED DURING CONSTRUCTION, THE 1969 REVISION MAKES CLEAR THAT ALLOWANCES ARE PAYABLE IN CONNECTION WITH CONSTRUCTION. HOWEVER, THIS APPLIES ONLY TO ITEMS OF THE TYPE REIMBURSABLE IN CONNECTION WITH PURCHASE OF A RESIDENCE. WE HAVE SPECIFICALLY HELD THAT SALES TAXES, CONSTRUCTION LOAN CHARGES, AND PLANS AND ENGINEERING CHARGES ARE NOT REIMBURSABLE. WE HAVE CONSISTENTLY HELD THAT EXPENSES SPECIFICALLY RELATED TO THE CONSTRUCTION PROCESS ARE NOT ALLOWABLE. SEE B-164491, AUGUST 20, 1968; B-164452, JULY 2, 1968; B-164926, SEPTEMBER 30, 1968; B-168710, FEBRUARY 4, 1970; B- 165879, FEBRUARY 7, 1969; AND B-164938, AUGUST 26, 1968, COPIES ENCLOSED.

ACCORDINGLY, THE DISALLOWANCE OF MAY 7, 1970, IS SUSTAINED.