B-170185, SEP. 3, 1970

B-170185: Sep 3, 1970

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300 MAY NOT HAVE REQUEST FOR RENEGOTIATION OF LEASE TO PAY INCREASE TAXES AND TO MAKE IMPROVEMENTS APPROVED SINCE OBLIGATIONS OF PARTIES WERE FIXED BY TERMS OF LEASE AND ALTHOUGH TAXES MAY HAVE INCREASED THERE IS NO AUTHORITY TO INCREASE RENTAL ON THAT ACCOUNT. TO WATERLOO BUILDING CORPORATION: FURTHER REFERENCE IS MADE TO YOUR LETTER OF JUNE 25. REQUESTING AN INCREASE IN RENTAL WHEN THE FIRST 5-YEAR OPTION FOR LEASE OF THE POST OFFICE BUILDING IN WATERLOO IS EXERCISED BY THE POST OFFICE DEPARTMENT UNDER ITS AGREEMENT WITH THE WATERLOO BUILDING CORPORATION. POST OFFICE BUILDING IS LEASED BY THE CORPORATION TO THE GOVERNMENT PURSUANT TO A LEASE FOR A BASIC TERM OF 10 YEARS BEGINNING OCTOBER 1.

B-170185, SEP. 3, 1970

LEASES - RENT INCREASE CORPORATION WHICH LEASES BUILDING TO POST OFFICE UNDER TEN YEAR AGREEMENT WITH TWO FIVE-YEAR RENEWAL OPTIONS FOR ANNUAL RENTAL OF $3,300 MAY NOT HAVE REQUEST FOR RENEGOTIATION OF LEASE TO PAY INCREASE TAXES AND TO MAKE IMPROVEMENTS APPROVED SINCE OBLIGATIONS OF PARTIES WERE FIXED BY TERMS OF LEASE AND ALTHOUGH TAXES MAY HAVE INCREASED THERE IS NO AUTHORITY TO INCREASE RENTAL ON THAT ACCOUNT.

TO WATERLOO BUILDING CORPORATION:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF JUNE 25, 1970, REQUESTING AN INCREASE IN RENTAL WHEN THE FIRST 5-YEAR OPTION FOR LEASE OF THE POST OFFICE BUILDING IN WATERLOO IS EXERCISED BY THE POST OFFICE DEPARTMENT UNDER ITS AGREEMENT WITH THE WATERLOO BUILDING CORPORATION.

THE WATERLOO, WISCONSIN, POST OFFICE BUILDING IS LEASED BY THE CORPORATION TO THE GOVERNMENT PURSUANT TO A LEASE FOR A BASIC TERM OF 10 YEARS BEGINNING OCTOBER 1, 1960, PLUS TWO 5-YEAR RENEWAL OPTIONS, ALL AT AN ANNUAL RENTAL OF $3,300. THE REQUEST FOR ADDITIONAL RENTALS IS BASED UPON AN INCREASE IN TAXES, IMPROVEMENTS TO THE BUILDING, AND BECAUSE THE CORPORATION HAS TAKEN UPON ITSELF TO PAY FOR REPAIRS WHICH SHOULD HAVE BEEN THE POST OFFICE DEPARTMENT'S RESPONSIBILITY. ALSO, THE CORPORATION SEEKS TO JUSTIFY RENEGOTIATION OF THE LEASE ON THE BASIS OF THE MAIL VOLUME WHICH YOU STATE IS UNUSUALLY LARGE FOR SUCH A SMALL FACILITY AND BECAUSE THE DEPARTMENT HAS REQUESTED THE INSTALLATION OF AIR CONDITIONING.

THE PERTINENT PROVISIONS OF THE LEASE ARE AS FOLLOWS:

"6. *** AS PART OF THE RENTAL CONSIDERATION ***

THE LESSOR SHALL PAY ALL TAXES AND WATER RATES ***

"7. THE LESSOR SHALL, UNLESS HEREIN SPECIFIED TO THE CONTRARY MAINTAIN THE DEMISED PREMISES, INCLUDING THE BUILDING AND ANY AND ALL EQUIPMENT, FIXTURES, AND APPURTENANCES, WHETHER SEVERABLE OR NON SEVERABLE, FURNISHED BY THE LESSOR UNDER THIS LEASE IN GOOD REPAIR AND TENANTABLE CONDITION, EXCEPT IN CASE OF DAMAGE ARISING FROM THE ACT OR THE NEGLIGENCE OF THE GOVERNMENT'S AGENTS OR EMPLOYEES. ***

"9. THE GOVERNMENT SHALL HAVE THE RIGHT TO MAKE ALTERATIONS, ATTACH FIXTURES AND ERECT ADDITIONS, STRUCTURES OR SIGNS IN OR UPON THE PREMISES HEREBY LEASED *** WHICH FIXTURES, ADDITIONS OR STRUCTURES SO PLACED IN, UPON OR ATTACHED TO THE SAID PREMISES SHALL BE AND REMAIN THE PROPERTY OF THE GOVERNMENT AND MAY BE REMOVED OR OTHERWISE DISPOSED OF BY THE GOVERNMENT. *** "

THE RECORD SHOWS THAT POST OFFICE DEPARTMENT OFFICIALS HAVE MET WITH THE CORPORATION'S REPRESENTATIVES TO DISCUSS THE FINANCIAL PROBLEMS WHICH HAVE ARISEN IN CONNECTION WITH THE LEASE TERMS. IT IS REPORTED THAT THE CORPORATION IS UNWILLING TO INSTALL AIR CONDITIONING EVEN THOUGH THE DEPARTMENT HAS OFFERED TO INCREASE THE RENT TO AMORTIZE THIS INVESTMENT. IT IS THE DEPARTMENT'S VIEW THAT THE INSTALLATION OF AIR CONDITIONING IS A RELATIVELY SMALL PROJECT NOT JUSTIFYING A COMPLETE RENEGOTIATION OF THE LEASE. HOWEVER, WE ARE ADVISED THAT THE DEPARTMENT MAY INSTALL A WINDOW TYPE AIR-CONDITIONING UNIT AT ITS EXPENSE.

ALTHOUGH TAXES ON THE PREMISES MAY HAVE INCREASED BEYOND THOSE ORIGINALLY CONTEMPLATED, THERE IS NO AUTHORITY TO INCREASE THE RENTAL TO COMPENSATE THE CORPORATION FOR INCREASED TAXES SINCE THE LEASE SPECIFICALLY PROVIDES THAT THE LESSOR SHALL PAY ALL TAXES AS PART OF THE RENTAL CONSIDERATION.

THE MATTER OF MAIL VOLUME IS NOT RELEVANT TO THE CORPORATION'S REQUEST SINCE THE LEASE MAKES NO MENTION OF MAIL VOLUME AS A FACTOR IN DETERMINING RENTAL. HOWEVER, IT APPEARS THAT THE PRESENT FACILITY IS ADEQUATE SINCE THE FIRST 5-YEAR RENEWAL OPTION WAS EXERCISED BY THE DEPARTMENT ON JUNE 24, 1970.

CONCERNING REPAIRS THAT HAVE BEEN MADE TO THE PREMISES BY THE CORPORATION, WE ARE NOT ADVISED AS TO THEIR NATURE OR EXTENT. IN ANY EVENT, THE LESSOR'S OBLIGATION TO MAINTAIN THE PREMISES IS SET OUT IN PARAGRAPH 7, ABOVE, AND ANY REPAIRS WHICH ARE BELIEVED TO BE WITHOUT THE SCOPE OF THAT PARAGRAPH SHOULD BE PRESENTED TO THE DEPARTMENT FOR ITS CONSIDERATION.

IT IS A WELL-ESTABLISHED RULE THAT AGENTS AND OFFICERS OF THE GOVERNMENT HAVE NO AUTHORITY TO MODIFY AN EXISTING CONTRACT OR TO SURRENDER OR WAIVE CONTRACT RIGHTS THAT HAVE VESTED IN THE UNITED STATES WITHOUT COMPENSATING BENEFIT TO THE GOVERNMENT. SEE 40 COMP. GEN. 309, 311 (1960), AND THE CASES CITED THEREIN. MOREOVER, IT IS A WELL-SETTLED PRINCIPLE OF LAW THAT THE RIGHTS AND OBLIGATIONS OF THE PARTIES TO A LEASE ARE FIXED AND DETERMINED BY ITS WRITTEN TERMS, AND THE FACT THAT SUPERVENING OR UNFORESEEN CAUSES RENDER PERFORMANCE MORE BURDENSOME OR LESS PROFITABLE IS NOT SUFFICIENT TO ENTITLE A LESSOR TO AN INCREASE IN RENT. COLUMBUS RY. & POWER CO. V COLUMBUS, 249 U.S. 399, 412 (1919).

ON THE RECORD BEFORE US, WE FIND NO LEGAL BASIS TO AUTHORIZE AN INCREASE IN THE RENTAL PROVIDED IN THE LEASE IN QUESTION. ACCORDINGLY, THE CORPORATION'S REQUEST FOR RELIEF IS DENIED.