B-24315, MARCH 18, 1942, 21 COMP. GEN. 880

B-24315, MARCH 18, 1942, 21 COMP. GEN. 880

TEMPORARY DEFENSE HOUSING - STATUS OF COSTS OF DEMOUNTING AND REMOVAL AS "OPERATION AND MANAGEMENT" EXPENSE NO PART OF THE RECEIPTS DERIVED BY THE DISTRICT OF COLUMBIA ALLEY DWELLING AUTHORITY FROM RENTAL AND OPERATION OF TEMPORARY HOUSING ERECTED UNDER AUTHORITY OF THE URGENT DEFICIENCY APPROPRIATION ACT, 1941, AS AMENDED, ON LEASED LAND MAY, UNDER THE AUTHORITY TO USE THE RECEIPTS FOR ADMINISTRATIVE, OPERATION AND MANAGEMENT EXPENSES IN CONNECTION WITH THE HOUSING, BE SET UP AS A RESERVE FUND FOR THE PURPOSE OF DEMOUNTING AND REMOVING THE HOUSING UPON TERMINATION OF THE LEASES.

COMPTROLLER GENERAL WARREN TO THE CHAIRMAN, ALLEY DWELLING AUTHORITY FOR THE DISTRICT OF COLUMBIA, MARCH 18, 1942:

I HAVE YOUR LETTER OF MARCH 4, 1942, AS FOLLOWS:

THE PRESIDENT UNDER AUTHORITY CONTAINED IN PUBLIC, NO. 9, 77TH CONGRESS, FIRST SESSION, APPROVED MARCH 1, 1941," URGENT DEFICIENCY APPROPRIATION ACT, 1941," AS AMENDED BY THE 3RD SUPPLEMENTAL NATIONAL DEFENSE APPROPRIATION ACT OF 1942, HAS ALLOCATED TO THE ALLEY DWELLING AUTHORITY THE SUM OF $18,900,000 FOR THE PROVISION OF TEMPORARY SHELTERS IN THE METROPOLITAN AREA OF THE DISTRICT OF COLUMBIA.

IN PROVIDING 4,500 TEMPORARY DWELLINGS IN THE METROPOLITAN AREA OF THE DISTRICT OF COLUMBIA, THE AUTHORITY IS PROPOSING TO LEASE THE SITES FROM PROPERTY OWNERS FOR THE DURATION OF THE EMERGENCY, PLUS ONE YEAR THEREAFTER. AS A CONSIDERATION AND A CONDITION OF THE LEASE CONTRACT, IT IS THE INTENT OF THE AUTHORITY TO AGREE TO REMOVE THE HOUSES FROM THE SITES WITHIN ONE YEAR AFTER THE PRESIDENT HAS DECLARED THE EMERGENCY TO BE AT AN END. IN ORDER TO MAKE SUCH AN AGREEMENT EFFECTIVE, THE ALLEY DWELLING AUTHORITY PROPOSES TO SET ASIDE OUT OF RENTS A SUM SUFFICIENT TO PAY FOR THE DEMOUNTING AND REMOVING OF THESE BUILDINGS. THE QUESTION IS WHETHER OR NOT THE PROPOSAL TO SET ASIDE SUCH A SUM IS IN CONFLICT WITH THE PROVISIONS OF THE ACT.

THE FIRST PROVISO IN THE ACT READS "THAT ALL RECEIPTS DERIVED FROM THE RENTAL OR OPERATION OF THE FACILITIES PROVIDED FOR HEREIN SHALL BE RETURNED TO THIS APPROPRIATION AND SHALL BE AVAILABLE FOR EXPENSES OF OPERATION AND MANAGEMENT OF SUCH FACILITIES, INCLUDING ADMINISTRATIVE EXPENSES IN CONNECTION THEREWITH, AND THE UNOBLIGATED BALANCE OF SUCH RECEIPTS SHALL BE COVERED INTO THE TREASURY AT THE END OF EACH FISCAL YEAR AS MISCELLANEOUS RECEIPTS: * * *.'

THE CONGRESS EMPHASIZES ITS INTENT THAT THE DWELLINGS CONSTRUCTED UNDER THIS ACT BE TEMPORARY BY EXCLUDING THEIR USE WHEN IT WAS PRACTICABLE TO ACT THROUGH OTHER ACTS PERMITTING THE CONSTRUCTION OF PERMANENT TYPE DWELLINGS. FOR THIS REASON, WE BELIEVE IT INCUMBENT UPON THE AUTHORITY TO PLAN AND DEVELOP THE DWELLINGS IN SUCH MANNER AS WILL REQUIRE THE LEAST INITIAL COST AND THE LEAST ULTIMATE COST TO THE GOVERNMENT. THE LEASE AND REMOVAL CONTRACT WHICH WE ARE GOING TO USE SEEMS TO US TO OFFER THE BEST PLAN. HOWEVER, LACKING SUCH A FUND AS PROPOSED ABOVE, THE AUTHORITY MAY WELL, AT THE END OF THE EMERGENCY, FIND THAT IT HAS ON ITS HANDS DEMOUNTABLE DWELLINGS WHICH IT HAS UNDERTAKEN TO REMOVE, BUT WHICH IT CANNOT REMOVE BECAUSE IT HAS NO MONEY WITH WHICH TO PAY FOR THAT OPERATION. SUCH AN OPERATION MAY WELL BE INCLUDED WITHIN THE MEANING OF THE ACT WHICH MAKES THE RECEIPTS AVAILABLE FOR EXPENSES OF OPERATION AND MANAGEMENT OF SUCH FACILITIES. BECAUSE OF THE URGENCY OF THE SITUATION, WE MUST NECESSARILY CONSTRUCT THESE HOUSES ON SITES WHEREIN HAVE BEEN INSTALLED WATER AND SEWER LINES, BUT IN SECTIONS OF THE CITY WHERE BUILDINGS OF THIS TYPE WOULD NOT BE PERMITTED TO BE CONSTRUCTED IF THEY WERE OF A PERMANENT NATURE OR WHERE THE PURCHASE COST OF THE LAND WOULD BE PROHIBITIVE. THEORETICALLY, OF COURSE, THE AUTHORITY MIGHT, UNDER THE ACT AS AMENDED BY SECTION 312 OF PUBLIC, NO. 409, 77TH CONGRESS, SELL THESE HOUSES ON THE SOLE CONDITION THAT THE PURCHASER WOULD REMOVE THEM, RECEIVING NO OTHER COMPENSATION, BUT

(1) IT MIGHT BE THAT THERE WILL BE A SURPLUS OF THESE HOUSES AND THEREFORE NO MARKET;

(2) THE PURCHASER MIGHT DELAY THE REMOVAL, LEADING TO DISPUTE WITH THE LAND OWNER OR WITH LOCAL AUTHORITIES, AND TO COURT ACTION IN ORDER TO COMPEL HIM TO REMOVE THE HOUSES.

IN VIEW OF THESE FACTS THAT---

(1) ANY COMMITMENT SHOULD BE ACCOMPANIED BY MEANS TO MAKE GOOD ON THAT COMMITMENT (THE PROPOSED COMMITMENT IS IN ACCORD WITH THE PROVISIONS OF THE LANHAM ACT);

(2) THE PROPOSED RESERVE FUND GIVES THE BEST AND CHEAPEST ASSURANCE OF BEING ABLE TO MAKE GOOD ON THAT COMMITMENT, THEREFORE THE AUTHORITY WOULD REQUEST YOUR CONSIDERATION OF THIS MATTER AND OPINION AS TO WHETHER OR NOT IT MIGHT SET UP A RESERVE FUND OUT OF THE RENTS, AS A PART OF THE OPERATING EXPENSE, TO BE AVAILABLE FOR THE REMOVAL OF THESE HOUSES AT THE END OF THE LEASE PERIOD, IN THE EVENT THAT SUCH REMOVAL IS NECESSARY.

THE PROVISO TO WHICH YOU REFER RELATING TO THE USE AND DISPOSITION OF RECEIPTS DERIVED FROM THE RENTAL OR OPERATION OF TEMPORARY SHELTERS APPEARS IN THE " URGENT DEFICIENCY APPROPRIATION ACT, 1941," PUBLIC LAW 9, APPROVED MARCH 1, 1941, 55 STAT. 15. ITS PROVISIONS ARE AS QUOTED IN THE THIRD PARAGRAPH OF YOUR LETTER. THE FUNDS STATED IN YOUR LETTER TO HAVE BEEN ALLOCATED TO ALLEY DWELLING AUTHORITY FOR THE DISTRICT OF COLUMBIA FOR THE PURPOSES STATED APPEAR TO HAVE BEEN ALLOCATED FROM THE APPROPRIATION OF $300,000,000 FOR TEMPORARY SHELTERS MADE BY THE THIRD SUPPLEMENTAL NATIONAL DEFENSE APPROPRIATION ACT, 1942, PUBLIC LAW 353, APPROVED DECEMBER 17, 1941, 55 STAT. 818, WHICH APPROPRIATION IS BY ITS EXPRESS PROVISIONS "SUBJECT TO THE CONDITIONS SPECIFIED UNDER THIS HEADING IN THE URGENT DEFICIENCY APPROPRIATION ACT, 1941, APPROVED MARCH 1, 1941," SUPRA. THE USE AND DISPOSITION OF RECEIPTS DERIVED FROM THE RENTAL OR OPERATION OF FACILITIES CONSTRUCTED FROM THE FUNDS REFERRED TO ARE, THEREFORE, GOVERNED BY THE ABOVE-QUOTED PROVISION OF PUBLIC LAW 9.

THE PROVISO LIMITS THE USE OF RENTALS FROM SUCH FACILITIES TO THE OPERATION AND MANAGEMENT OF THE FACILITIES AND ADMINISTRATIVE EXPENSES IN CONNECTION THEREWITH. ALL UNOBLIGATED BALANCES OF SUCH RECEIPTS OVER AND ABOVE SUCH AUTHORIZED USES ARE REQUIRED BY THE TERMS OF THE ACT TO BE COVERED INTO THE TREASURY AS MISCELLANEOUS RECEIPTS IN ACCORDANCE WITH THE PROVISIONS THEREOF. THEREFORE, UNLESS THE EXPENSE OF DEMOUNTING AND REMOVING THE PROPOSED BUILDINGS CAN BE REGARDED AS AN EXPENSE OF OPERATION, OR OF MANAGEMENT, OR AN ADMINISTRATIVE EXPENSE, IN CONNECTION WITH THE FACILITIES, THERE APPEARS NO AUTHORITY FOR THE USE OF SUCH RENTALS FOR THE PURPOSE OF DEMOUNTING AND REMOVING THE BUILDINGS.

NO CONTENTION IS ADVANCED THAT THE EXPENSE OF DEMOUNTING AND REMOVING THE BUILDINGS WOULD BE AN ADMINISTRATIVE EXPENSE, BUT YOU STATE THAT SUCH EXPENSE MAY WELL BE REGARDED AS AN EXPENSE OF OPERATION AND MANAGEMENT OF SUCH FACILITIES. I AM UNABLE TO CONCUR IN THAT VIEW. IT WOULD SEEM CLEAR THAT THE WORDS "OPERATION AND MANAGEMENT" AS USED IN THE PROVISO ARE TO BE GIVEN THEIR ORDINARY AND USUAL MEANING, THERE BEING NOTHING THEREIN TO JUSTIFY OR EVEN SUGGEST ANOTHER MEANING. GIVEN THEIR ORDINARY AND USUAL MEANING, IT WOULD SEEM CLEAR THAT THEY RELATE ONLY TO THE OPERATING AND THE MANAGING OF THE FACILITIES AFTER THEIR CONSTRUCTION AND WHILE THEY ARE IN USE OR AVAILABLE FOR USE FOR THE PURPOSES FOR WHICH ERECTED--- THAT IS TO SAY, FOR EXPENSES IN CONNECTION WITH THE OPERATION AND/OR MANAGEMENT OF THE FACILITIES AS A GOING ACTIVITY. OBVIOUSLY, THE COST OF ERECTING THE TEMPORARY SHELTERS WOULD NOT BE AN EXPENSE OF OPERATION OR MANAGEMENT WITHIN THE ORDINARY MEANING OF THOSE WORDS AND THERE APPEARS NO MORE REASON TO REGARD THE EXPENSE OF DEMOUNTING AND REMOVAL AS WITHIN THEIR MEANING. THE LATTER WOULD APPEAR MORE IN THE NATURE OF EXPENSES INCIDENT TO THE CONSTRUCTION OR TO THE CLOSING OR WINDING UP OF THE FACILITIES AFTER THE TERMINATION OF THE ACTIVITY FOR WHICH ESTABLISHED.

THEREFORE, IT MUST BE CONCLUDED THAT THE RECEIPTS DERIVED FROM THE RENTAL OR OPERATION OF SUCH FACILITIES WOULD NOT BE AVAILABLE FOR THE DEMOUNTING AND REMOVAL OF THE TEMPORARY SHELTERS AND, ACCORDINGLY, THERE IS NO AUTHORITY TO SET UP A RESERVE FUND FROM SUCH RENTS OR ANY PART THEREOF FOR SUCH PURPOSE.