B-3090, AUGUST 23, 1940, 20 COMP. GEN. 105

B-3090: Aug 23, 1940

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WHILE PARTITIONS INSTALLED IN GOVERNMENT-RENTED BUILDINGS WHICH ARE OF SUCH TYPE AND SO PLACED AS NOT INTENDED TO BECOME A PART OF THE BUILDING. REMOVABLE AT WILL WITHOUT ANY SPECIAL AGREEMENT WITH THE LESSOR. ARE NOT ALTERATIONS OR IMPROVEMENTS WITHIN THE MEANING OF THE LIMITATION OF SECTION 322 OF THE ECONOMY ACT OF JUNE 30. STRUCTURES INSTALLED BY THE GOVERNMENT IN LEASED PREMISES IS NOT SUCH AS TO JUSTIFY THEIR REMOVAL. THERE IS NO OBJECTION TO THE ABANDONMENT OF SUCH INSTALLATIONS TO AVOID THE EXPENSE OF REMOVING SAME. 1940: REFERENCE IS MADE TO YOUR LETTER OF JUNE 28. A COPY OF THE ABOVE-MENTIONED CONTRACT IS ON FILE IN THE GENERAL ACCOUNTING OFFICE. THE RENTAL TERM WAS TO BEGIN ON NOVEMBER 1.

B-3090, AUGUST 23, 1940, 20 COMP. GEN. 105

LEASES - BUILDING ALTERATION, ETC., LIMITATION ORDINARILY PARTITIONS INSTALLED IN GOVERNMENT-RENTED BUILDINGS MUST BE CONSIDERED ALTERATIONS OR IMPROVEMENTS WITHIN THE MEANING OF THE LIMITATION OF SECTION 322 OF THE ECONOMY ACT OF JUNE 30, 1932, ON THE AMOUNT WHICH MAY BE EXPENDED FOR "ALTERATIONS, IMPROVEMENTS," ETC., OF RENTED PREMISES. WHILE PARTITIONS INSTALLED IN GOVERNMENT-RENTED BUILDINGS WHICH ARE OF SUCH TYPE AND SO PLACED AS NOT INTENDED TO BECOME A PART OF THE BUILDING, AND REMOVABLE AT WILL WITHOUT ANY SPECIAL AGREEMENT WITH THE LESSOR, ARE NOT ALTERATIONS OR IMPROVEMENTS WITHIN THE MEANING OF THE LIMITATION OF SECTION 322 OF THE ECONOMY ACT OF JUNE 30, 1932, ON THE AMOUNT WHICH MAY BE EXPENDED FOR ,ALTERATIONS, IMPROVEMENTS," ETC., OF RENTED PREMISES, ANY DOUBT AS TO THEIR CHARACTER MUST BE RESOLVED STRICTLY IN FAVOR OF THEIR BEING ALTERATIONS OR IMPROVEMENTS WITHIN THE MEANING OF SAID ACT. COMP. GEN. 144, AND PRIOR DECISIONS, AMPLIFIED. WHERE THE TENURE UNDER AN ORIGINAL LEASE FOR LESS THAN A YEAR, AS RENEWED, TOTALS 1 YEAR OR MORE, THE AMOUNT WHICH THE GOVERNMENT MAY EXPEND FOR REPAIRS, ETC., TO THE LEASED PROPERTY UNDER THE LIMITATION OF SECTION 322 OF THE ECONOMY ACT OF JUNE 30, 1932, MAY BE BASED ON THE RENT FOR THE FIRST ENTIRE YEAR OF ACTUAL TENURE, AND NOT MERELY ON THE RENT FOR THE PERIOD OF THE ORIGINAL LEASE. WHERE THE VALUE OF FIXTURES, ADDITIONS, AND STRUCTURES INSTALLED BY THE GOVERNMENT IN LEASED PREMISES IS NOT SUCH AS TO JUSTIFY THEIR REMOVAL, AND THE LESSOR DOES NOT REQUIRE REMOVAL UNDER THE TERMS OF THE LEASE, THERE IS NO OBJECTION TO THE ABANDONMENT OF SUCH INSTALLATIONS TO AVOID THE EXPENSE OF REMOVING SAME. WHERE UNDER THE TERMS OF A LEASE IT BECOMES NECESSARY FOR THE GOVERNMENT TO REMOVE ALTERATIONS, FIXTURES, ADDITIONS, AND STRUCTURES, INSTALLED BY THE GOVERNMENT IN LEASED PREMISES, SUCH REMOVAL WOULD NOT BE CONSIDERED "REPAIRS, IMPROVEMENTS, OR ALTERATIONS" WITHIN THE MEANING OF SECTION 322 OF THE ECONOMY ACT OF JUNE 30, 1932, LIMITING THE AMOUNT WHICH THE GOVERNMENT MAY EXPEND FOR THE LATTER PURPOSES.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE SECRETARY OF THE INTERIOR, AUGUST 23, 1940:

REFERENCE IS MADE TO YOUR LETTER OF JUNE 28, 1940, AS FOLLOWS:

ON AUGUST 1, 1938, THE BONNEVILLE POWER ADMINISTRATION ENTERED INTO AN AGREEMENT, IDENTIFIED AS CONTRACT NO. IBP-23, WITH THE LLOYD CORPORATION, LTD., FOR THE RENTAL OF CERTAIN PREMISES IN PORTLAND TO BE USED FOR OFFICE SPACE. A COPY OF THE ABOVE-MENTIONED CONTRACT IS ON FILE IN THE GENERAL ACCOUNTING OFFICE.

UNDER THE PROVISIONS OF THIS LEASE, THE RENTAL TERM WAS TO BEGIN ON NOVEMBER 1, 1938, AND TO END ON JUNE 30, 1939, THE GOVERNMENT BEING GRANTED THE OPTION TO RENEW THE LEASE FROM YEAR TO YEAR, PROVIDED SUCH RENEWAL DID NOT EXTEND THE PERIOD OF OCCUPANCY BEYOND JUNE 30, 1943.

NOTWITHSTANDING THE CONTRACTUAL STIPULATION THAT THE RENTAL TERM WAS TO BEGIN NOVEMBER 1, 1938, THE BUILDING WAS NOT READY FOR OCCUPANCY BY THE GOVERNMENT UNTIL JANUARY 1, 1939, AND THE GOVERNMENT HAS PAID RENT ONLY FROM THAT DATE.

ON MAY 25, 1939, THE LESSOR WAS NOTIFIED OF THE GOVERNMENT'S DECISION TO EXTEND AND RENEW THE ABOVE-MENTIONED LEASE IN ACCORDANCE WITH THE TERMS THEREOF FOR THE PERIOD JULY 1, 1939, TO JUNE 30, 1940. UNDER DATE OF JUNE 13, 1939, THE LESSOR AGREED TO THE RENEWAL OF THE LEASE AND THE BUILDING HAS BEEN CONTINUOUSLY OCCUPIED BY THE ADMINISTRATION FROM THE ACTUAL BEGINNING OF THE RENTAL TERM, JANUARY 1, 1939, TO THE PRESENT TIME. IT IS ANTICIPATED THAT FURTHER EXTENSION OF THE RENTAL PERIOD WILL BE NECESSARY AND WILL BE EFFECTED UPON THE EXPIRATION OF THE PRESENT LEASE.

FROM TIME TO TIME, CERTAIN ALTERATIONS HAVE BEEN MADE TO THE RENTED PROPERTY WHICH WERE NOT THE RESPONSIBILITY OF THE LESSOR, BUT WHICH THE GOVERNMENT WAS PERMITTED TO MAKE UNDER THE TERMS OF THE LEASE. THE MAJOR PART OF THESE ALTERATIONS CONSISTED OF INSTALLATION OF PARTITIONS OF THREE -QUARTER HEIGHT, IN ORDER FURTHER TO SUBDIVIDE EXISTING OFFICE SPACE. THESE PARTITIONS ARE OF A REMOVABLE NATURE, AND ARE THUS TEMPORARY ADDITIONS RATHER THAN PERMANENT IMPROVEMENTS.

THIS SUBDIVISION OF THE OFFICES RENTED WAS NOT CONTEMPLATED AT THE TIME OF THE LEASE. IT WAS MADE NECESSARY BECAUSE OF THE RAPID GROWTH OF THIS ORGANIZATION AND WAS NEEDED IN ADAPTING THE PREMISES TO THE PARTICULAR NEEDS OF THIS ORGANIZATION. IN 18 COMP. GEN. 144, A-96582 (1938) YOUR OFFICE HELD THAT ALTERATIONS REQUIRED FOR THE ADAPTION OF RENTED QUARTERS TO "SPECIAL USE" WERE NOT "ALTERATIONS, IMPROVEMENTS, OR REPAIRS" OF THE LEASED PREMISES WITHIN THE PURVIEW OF SECTION 322 OF THE ECONOMY ACT. YOUR OPINION IS REQUESTED AS TO WHETHER THESE ALTERATIONS ARE WITHIN THE SCOPE OF THAT OPINION.

IF YOU SHOULD DECIDE THAT THE LIMITATIONS IMPOSED BY SEC. 322 OF THE ECONOMY ACT ARE APPLICABLE TO THE EXPENSES INCURRED IN THE ADAPTION OF THE PROPERTY TO THE GOVERNMENT'S SPECIAL NEEDS, WILL YOU KINDLY ADVISE THIS OFFICE YOUR OPINION AS TO THE FOLLOWING QUESTION. AS STATED ABOVE, THE PREMISES WERE FIRST OCCUPIED AND THE PAYMENT OF RENT BEGAN ON JANUARY 1, 1939. THE LEASE WAS RENEWED ON JUNE 30, 1939. IS THIS OFFICE LIMITED IN ITS EXPENDITURES FOR "ALTERATIONS, IMPROVEMENTS, AND REPAIRS" TO 25 PERCENT OF THE RENTAL FOR THE PERIOD FROM JANUARY 1, 1939, TO JUNE 30, 1939, OR TO 25 PERCENT OF THE FIRST TWELVE MONTHS' RENT? YOU WILL NOTE THAT THE LEASE HAS ALREADY BEEN RENEWED AND THE PERIOD OF OCCUPANCY HAS ALREADY BEEN IN EXCESS OF ONE YEAR.

IN 16 COMP. GEN. 644 (A-82209) (1937), YOU HELD THAT EXPENDITURES FOR ALTERATIONS COULD NOT EXCEED 25 PERCENT OF THE TOTAL RENT PAID FROM THE DATE OF OCCUPANCY TO THE END OF THE FISCAL YEAR. IN THAT CASE, HOWEVER, IT WAS NOT ESTABLISHED THAT THE LEASE WOULD BE RENEWED AT THE BEGINNING OF THE NEXT FISCAL YEAR. IN A LATER DECISION, 18 COMP. GEN. 675 (B-1098) (1938), YOU HELD THAT WHEN A LEASE WAS EXTENDED BY RENEWAL AT THE BEGINNING OF THE NEXT FISCAL YEAR, THE RENTAL TERM WITHIN THE MEANING OF SECTION 322, SUPRA, WAS THE FIRST 12 MONTHS OF ACTUAL OCCUPANCY, AND YOU AUTHORIZED EXPENDITURE FOR REPAIRS UP TO 25 PERCENT OF THAT AMOUNT. YOU DID NOT INDICATE SPECIFICALLY, HOWEVER, THAT THIS LATER DECISION WAS INTENDED TO MODIFY THE EARLIER HOLDING.

THE INSTANT PREMISES HAVE ALREADY BEEN OCCUPIED FOR MORE THAN A YEAR, AND IT IS BELIEVED THAT THIS PERMITS A TOTAL EXPENDITURE FOR ALTERATIONS AND IMPROVEMENTS OF NOT TO EXCEED 25 PERCENT OF THE FIRST 12 MONTHS' RENT. WHERE LEASED PREMISES HAVE ALREADY BEEN OCCUPIED FOR MORE THAN A YEAR, THERE WOULD SEEM NO USEFUL PURPOSE IN CONSTRUING THE ECONOMY ACT SO AS TO LIMIT THE EXPENDITURE FOR REPAIRS TO 25 PERCENT OF THE RENTAL PERIOD FROM THE DATE OF OCCUPANCY TO THE END OF THE FIRST FISCAL YEAR. THIS WOULD PENALIZE GOVERNMENT AGENCIES WHICH ENTER INTO LEASES IN THE MIDDLE OF THE FISCAL YEAR TO THE ADVANTAGE OF OTHER AGENCIES WHICH FIND IT CONVENIENT TO BEGIN A LEASE IN THE FIRST MONTH OF A FISCAL YEAR.

IN ACCORDANCE WITH THE TERMS OF CONTRACT IBP-23, ANY ADDITIONS MADE TO THE PROPERTY BY THE GOVERNMENT MAY BE REMOVED BY IT PRIOR TO THE EXPIRATION OF THE LEASE. HOWEVER, IT IS NOW APPEARS THAT THE SALVAGE VALUE OF THE PARTITIONS, WHICH AS WAS STATED HERETOFORE, COMPRISE THE MAJOR PORTION OF THE ADDITIONS, MAY NOT JUSTIFY THE EXPENSE OF THEIR REMOVAL AT THE TERMINATION OF THE LEASE. THE LEASE, OF COURSE, GRANTS THE LESSOR THE RIGHT TO DEMAND THE RESTORATION OF THE PROPERTY TO ITS ORIGINAL CONDITION. IF, HOWEVER, THE LESSOR SHOULD FAIL TO EXERCISE THAT RIGHT, WOULD THE GOVERNMENT BE OBLIGATED TO REMOVE THE PARTITIONS IN VIEW OF THEIR DOUBTFUL SALVAGE ALUE? THE ATTORNEY GENERAL HAS RECENTLY HELD THAT WHEN THE SALVAGE VALUE OF REMOVABLE ADDITIONS TO RENTED PROPERTY WILL NOT COMPENSATE THE GOVERNMENT FOR THE COST OF REMOVAL, THE GOVERNMENT IS NOT OBLIGATED TO ATTEMPT SALVAGE. SEE OP. ATTY. GEN. SEPT. 6, 1939. DOES THE GENERAL ACCOUNTING OFFICE CONCUR IN THAT OPINION?

IF IT IS ADMINISTRATIVELY DETERMINED AT THE END OF THE LEASE THAT THE PARTITIONS WILL BE WORTH THE SALVAGE COST OR IF THE LESSOR INSISTS UPON THEIR REMOVAL, WILL YOU INFORM THIS OFFICE WHETHER THE EXPENSE OF REMOVAL IS TO BE CONSIDERED AN EXPENSE FOR "ALTERATIONS, IMPROVEMENTS, AND EPAIRS" WITHIN THE LIMITATIONS OF SECTION 322 OF THE ECONOMY ACT.

THIS OFFICE IS OF THE OPINION THAT THIS EXPENDITURE SHOULD NOT BE SO CONSIDERED.

THE ECONOMY ACT WAS APPARENTLY INTENDED TO LIMIT EXPENDITURES DURING THE COURSE OF THE GOVERNMENT- OCCUPANCY WHICH NEITHER THE GOVERNMENT NOR THE LESSOR WERE OTHERWISE OBLIGATED TO MAKE. THE EXPENSES OF REMOVING PARTITIONS AT THE END OF THE LEASE ARE A PART OF AN OBLIGATION WHICH THE GOVERNMENT IS REQUIRED BY CONTRACT TO PERFORM. THEY ARE NOT IN THE NATURE OF REPAIRS OR ALTERATIONS BUT ARE IN THE NATURE OF A RENTAL PAYMENT SINCE THIS OBLIGATION WAS A PART OF THE CONSIDERATION WHICH THE GOVERNMENT ASSUMED TO PAY WHEN IT ENTERED THE LEASE.

FOR CONVENIENCE, THE QUESTIONS UPON WHICH YOU ARE ASKED TO GIVE YOUR OPINION, ARE BRIEFLY RESTATED.

(1) ARE THE ALTERATIONS TO THE RENTED OFFICE SPACE ALTERATIONS TO FIT THE BUILDING FOR ,SPECIAL USE," AND THUS NOT WITHIN THE SCOPE OF SECTION 322 OF THE ECONOMY ACT?

(2) IS THE GOVERNMENT LIMITED IN MAKING "ALTERATIONS, IMPROVEMENTS, OR REPAIRS" TO 25 PERCENT OF THE RENT PAID FROM THE DATE OF OCCUPANCY TO THE END OF THE FISCAL YEAR, OR TO 25 PERCENT OF THE RENTAL PAID FOR THE FIRST 12 MONTHS OF OCCUPANCY?

(3) IS THE GOVERNMENT OBLIGATED TO REMOVE DETACHABLE PARTITIONS IF IT IS DOUBTFUL WHETHER THE SALVAGE VALUE EQUALS THE COST OF REMOVAL, AND IF THE LESSOR IS WILLING TO ALLOW THEM TO REMAIN ON THE PREMISES?

(4) IF THE GOVERNMENT IS REQUIRED TO REMOVE THESE PARTITIONS OR CHOOSES TO DO SO IN ORDER TO SALVAGE THEM, WOULD THE EXPENSE OF REMOVING BE CONSIDERED "REPAIRS, IMPROVEMENTS, OR ALTERATIONS," WITHIN THE LIMITATIONS OF SECTION 322 OF THE ECONOMY ACT?

AN EARLY REPLY TO THESE REQUESTS FOR OPINION WILL BE APPRECIATED.

SECTION 322 OF THE ECONOMY ACT OF JUNE 30, 1932, 47 STAT. 412, PROVIDES:

HEREAFTER NO APPROPRIATION SHALL BE OBLIGATED OR EXPENDED FOR THE RENT OF ANY BUILDING OR PART OF A BUILDING TO BE OCCUPIED FOR GOVERNMENT PURPOSES AT A RENTAL IN EXCESS OF THE PER ANNUM RATE OF 15 PERCENTUM OF THE FAIR MARKET VALUE OF THE RENTED PREMISES AT DATE OF THE LEASE UNDER WHICH THE PREMISES ARE TO BE OCCUPIED BY THE GOVERNMENT NOR FOR ALTERATIONS, IMPROVEMENTS, AND REPAIRS OF THE RENTED PREMISES IN EXCESS OF 25 PERCENTUM OF THE AMOUNT OF THE RENT FOR THE FIRST YEAR OF THE RENTAL TERM, OR FOR THE RENTAL TERM IF LESS THAN ONE YEAR: PROVIDED, THAT THE PROVISIONS OF THIS SECTION SHALL NOT APPLY TO LEASES HERETOFORE MADE, EXCEPT WHEN RENEWALS THEREOF ARE MADE HEREAFTER, NOR TO LEASES OF PREMISES IN FOREIGN COUNTRIES FOR THE FOREIGN SERVICES OF THE UNITED STATES. SAID SECTION WAS AMENDED BY THE ACT OF MARCH 3, 1933, 47 STAT. 1517, RESTRICTING APPLICATION OF ITS PROVISIONS "AS APPLICABLE TO RENTALS" TO LEASES "WHERE THE RENTAL TO BE PAID SHALL EXCEED $2,000 PER ANNUM.'

IN ANSWER TO THE QUESTIONS SUBMITTED IN YOUR LETTER I HAVE TO ADVISE AS FOLLOWS:

(1) THE SPECIFICATIONS ATTACHED TO THE INVITATION ON WHICH BIDS WERE REQUESTED FOR HOUSING THE ACTIVITIES OCCUPYING THE DEMISED PREMISES ARE AS FOLLOWS:

A. SPACE REQUIRED: ( MINIMUM OF 10,000 SQUARE FEET (

( MAXIMUM OF 16,000 SQUARE FEET ( TO BE DIVIDED AS FOLLOWS: 1,200 SQUARE FEET IN ONE ROOM HAVING LIGHT REQUIREMENTS OF NOT LESS THAN 50 FCP; THIS SPACE IS TO BE USED FOR A DRAFTING ROOM. BALANCE OF SPACE TO BE DIVIDED IN ROOMS OF APPROXIMATELY 250 SQUARE FEET EACH, HAVING LIGHT REQUIREMENTS OF NOT LESS THAN 30 FCP; THIS SPACE IS TO BE USED FOR GENERAL OFFICE WORK. IN ADDITION TO ABOVE, THERE IS REQUIRED IN THE SAME BUILDING APPROXIMATELY 3,000 SQUARE FEET OF SPACE FOR STORAGE OF OFFICE SUPPLIES, EQUIPMENT, ETC. THIS SPACE MAY BE IN BASEMENT OR OTHER LOCATION NOT ADJACENT TO GENERAL OFFICES. IT IS UNDERSTOOD THAT PRICE BID ON MINIMUM AND MAXIMUM REQUIREMENTS WILL INCLUDE STORAGE SPACE AS STATED.

B. BUILDING MUST COMPLY WITH ALL CITY ORDINANCES AS REGARDS FIRE HAZARDS AND FIRE PROTECTION, AND BE RATED AS AT LEAST A CLASS FOUR (4) STRUCTURE.

E. ANY ALTERATIONS NECESSARY TO MEET THE REQUIREMENTS OF THE GOVERNMENT AND THE INTENT OF THESE SPECIFICATIONS MUST BE MADE AT THE EXPENSE OF THE CONTRACTOR.

F. BUILDING MUST BE WIRED FOR BASE OUTLETS OF SUITABLE NUMBER FOR USE OF ELECTRICAL OFFICE EQUIPMENT, SUCH AS ADDING MACHINES, CALCULATING MACHINES, ETC. ELECTRIC CURRENT, TOGETHER WITH THE NECESSARY LIGHTING FIXTURES, SOCKETS, BULBS, ETC., IS TO BE PROVIDED. WINDOW SHADES FOR ALL WINDOWS, DRAFT DEFLECTORS, AND AWNINGS OR VENETIAN BLINDS FOR WINDOWS WHERE FOUND NECESSARY BY THE OCCUPANTS, ARE ALSO TO BE PROVIDED.

H. PROPER AND ADEQUATE TOILET AND LAVATORY FACILITIES FOR MEN AND WOMEN MUST BE PROVIDED. SUCH LAVATORIES SHALL BE EASILY ACCESSIBLE, WELL VENTILATED, LIGHTED AND ARRANGED FOR HEATING. HOT WATER FACILITIES MUST BE AVAILABLE IN WASHROOM. DRINKING FOUNTAINS OR OTHER SANITARY METHODS OF DISPENSING DRINKING WATER MUST BE AVAILABLE OUTSIDE OF THE TOILET ROOMS.

IN VIEW OF THE STATEMENT IN YOUR LETTER THAT THE ALTERATIONS MADE FROM TIME TO TIME WERE NOT THE RESPONSIBILITY OF THE LESSOR, IT IS ASSUMED THAT SUCH ALTERATIONS ARE NOT IN ANY WAY INCLUDED IN THE LESSOR'S OBLIGATIONS UNDER THE SPECIFICATIONS QUOTED ABOVE, OR UNDER PARAGRAPH 7 OF THE LEASE WHICH PROVIDES---

THE LESSOR SHALL, UNLESS HEREIN SPECIFIED TO THE CONTRARY, MAINTAIN THE SAID PREMISES IN GOOD REPAIR AND TENANTABLE CONDITION DURING THE CONTINUANCE OF THIS LEASE, EXCEPT IN CASE OF DAMAGE ARISING FROM THE ACT OR THE NEGLIGENCE OF THE GOVERNMENT'S AGENTS OR EMPLOYEES. FOR THE PURPOSE OF SO MAINTAINING THE PREMISES, THE LESSOR RESERVES THE RIGHT AT REASONABLE TIMES TO ENTER AND INSPECT THE PREMISES AND TO MAKE ANY NECESSARY REPAIRS THERETO.

PARAGRAPH 8 OF THE LEASE PROVIDES:

THE GOVERNMENT SHALL HAVE THE RIGHT, DURING THE EXISTENCE OF THIS LEASE, TO MAKE ALTERATIONS, ATTACH FIXTURES, AND ERECT ADDITIONS, STRUCTURES, OR SIGNS, IN OR UPON THE PREMISES HEREBY LEASED (PROVIDED SUCH ALTERATIONS, ADDITIONS, STRUCTURES, OR SIGNS SHALL NOT BE DETRIMENTAL TO OR INCONSISTENT WITH THE RIGHTS GRANTED TO OTHER TENANTS ON THE PROPERTY OR IN THE BUILDING IN WHICH SAID PREMISES ARE LOCATED); WHICH FIXTURES, ADDITIONS, OR STRUCTURES SO PLACED IN OR UPON OR ATTACHED TO THE SAID PREMISES SHALL BE AND REMAIN THE PROPERTY OF THE GOVERNMENT AND MAY BE REMOVED THEREFROM BY THE GOVERNMENT PRIOR TO THE TERMINATION OF THIS LEASE, AND THE GOVERNMENT, IF REQUIRED BY THE LESSOR, SHALL, BEFORE THE EXPIRATION OF THIS LEASE OR RENEWAL THEREOF, RESTORE THE PREMISES TO THE SAME CONDITION AS THAT EXISTING AT THE TIME OF ENTERING UPON THE SAME UNDER THIS LEASE, REASONABLE AND ORDINARY WEAR AND TEAR AND DAMAGES BY THE ELEMENTS OR BY CIRCUMSTANCES OVER WHICH THE GOVERNMENT HAS NO CONTROL, EXCEPTED: PROVIDED, HOWEVER, THAT IF THE LESSOR REQUIRES SUCH RESTORATION, THE LESSOR SHALL GIVE WRITTEN NOTICE THEREOF TO THE GOVERNMENT THIRTY DAYS BEFORE THE TERMINATION OF THE LEASE. IN THE DECISION REPORTED AT 18 COMP. GEN. 144, REFERRED TO IN YOUR LETTER, IT WAS HELD, QUOTING FROM THE SYLLABUS, AS FOLLOWS:

WHERE THE PROPOSED ALTERATIONS TO A LEASED BUILDING FOR ADAPTING THE QUARTERS TO SPECIAL USES ARE NOT REPAIRS, ETC., THE COST OF WHICH IS REQUIRED UNDER THE LEASE TO BE BORNE BY THE LESSOR, NOR SUCH AS FOR CONSIDERATION AS AN ALTERATION, IMPROVEMENT, OR REPAIR OF THE LEASED PREMISES WITHIN THE EXPENDITURE LIMITATIONS OF SECTION 322 OF THE ECONOMY ACT OF JUNE 30, 1932, AS AMENDED BY ACT OF MARCH 3, 1933, 47 STAT. 1517, AND DO NOT CONSTITUTE AN IMPROVEMENT PERMANENTLY ATTACHED TO THE REALTY WHICH MAY NOT BE READILY REMOVED UNDER THE LEASE AUTHORIZATION WITHOUT DESTROYING THE USEFULNESS OR DAMAGING THE PROPERTY, APPROPRIATED FUNDS OF A GOVERNMENT AGENCY, OTHERWISE AVAILABLE FOR THE PURPOSE, MAY BE CONSIDERED AVAILABLE FOR REIMBURSING THE NATIONAL PARK SERVICE FOR THE COST OF THE ALTERATIONS--- IN THIS CASE, THE INSTALLATION OF SPECIAL EQUIPMENT FOR PHOTOGRAPHIC LABORATORIES, ETC.

THE WORD "ALTERATION" AS APPLIED TO BUILDINGS HAS BEEN DEFINED AS A CHANGE OR SUBSTITUTION IN A SUBSTANTIAL PARTICULAR OF ONE PART OF A BUILDING FOR ANOTHER PART OF A BUILDING DIFFERENT IN THAT PARTICULAR; A CHANGE OR CHANGES WITHIN THE SUPERFICIAL LIMITS OF AN EXISTING STRUCTURE; AN INSTALLATION THAT BECOMES AN INTEGRAL PART OF THE BUILDING AND CHANGES ITS STRUCTURAL QUALITY; A SUBSTANTIAL CHANGE THEREIN; A VARYING OR CHANGING THE FORM OR NATURE OF SUCH BUILDING WITHOUT DESTROYING ITS IDENTITY. 3 WORDS AND PHRASES, PERMANENT EDITION, 290.

THE WORD "REPAIR" HAS BEEN DEFINED AS MEANING TO MEND, TO RESTORE TO A SOUND STATE WHATEVER HAS BEEN PARTIALLY DESTROYED, TO MAKE GOOD AN EXISTING THING, RESTORATION AFTER DECAY, INJURY, OR PARTIAL DESTRUCTION, WHEREAS THE WORD "IMPROVEMENT" HAS BEEN DEFINED AS MEANING A VALUABLE AND USEFUL ADDITION, SOMETHING MORE THAN A MERE REPAIR OR RESTORATION TO THE ORIGINAL CONDITION. 20 WORDS AND PHRASES, PERMANENT EDITION, 330.

ORDINARILY PARTITIONS ARE BUILT IN, ATTACHED TO, AND BECOME A PART OF, THE REALTY, AND, THEREFORE, MUST BE CONSIDERED ALTERATIONS OR IMPROVEMENTS WITHIN THE 25-PERCENT RESTRICTION OF THE ECONOMY ACT, SUPRA. THE FACT THAT THE GOVERNMENT MAY RESERVE THE RIGHT TO REMOVE SUCH PARTITIONS, OR THAT THE LESSOR MAY REQUIRE THEIR REMOVAL AND RESTORATION OF THE PREMISES TO THEIR FORMER CONDITION UPON EXPIRATION OF THE LEASE, WOULD NOT CHANGE THEIR ESSENTIAL CHARACTER AS ALTERATIONS OR IMPROVEMENTS AT THE TIME OF INSTALLATION. ON THE OTHER HAND, PARTITIONS MAY BE NOTHING MORE THAN WHOLLY UNATTACHED MOVABLE SCREENS, OR DETACHABLE PANELS TEMPORARILY HELD IN PLACE BY LIGHT BRACES AND SCREWS AND READILY REMOVABLE WITHOUT INJURING OR DEFACING EITHER THE PANELS THEMSELVES OR THE FLOORS, WALLS, OR CEILINGS OF THE BUILDING, AND THUS EVIDENTLY INTENDED TO BE TEMPORARILY PLACED AND REMOVABLE AT WILL BY THE TENANT, IRRESPECTIVE OF ANY SPECIAL AGREEMENT, AND NOT INTENDED IN ANY EVENT TO BECOME A PART OF THE BUILDING. PARTITIONS OF THIS LATTER CHARACTER WOULD BE REGARDED AS TENANT'S FIXTURES, OR EQUIPMENT, TO WHICH THE TENANT WOULD RETAIN TITLE AND THE RIGHT OF REMOVAL, WITHOUT ANY SPECIAL AGREEMENT, AND AS THEY WOULD THUS, IN NO EVENT, BE REGARDED AS BECOMING A PART OF THE BUILDING, THEY WOULD NOT CONSTITUTE ALTERATIONS OR IMPROVEMENTS OF THE RENTED PREMISES, AND WOULD NOT FALL WITHIN THE 25-PERCENT LIMITATION CLAUSE OF THE ECONOMY ACT. WHETHER IN ANY PARTICULAR CASE PARTITIONS PLACED IN A RENTED BUILDING AT GOVERNMENT EXPENSE ARE TO BE REGARDED AS ALTERATIONS OR IMPROVEMENTS OF THE PREMISES WITHIN THE CONTEMPLATION OF THE ECONOMY ACT RESTRICTION, OR MERELY AS TENANT'S FIXTURES, DEPENDS, OF COURSE, ON THE PARTICULAR CIRCUMSTANCES OF THAT CASE. BUT IN VIEW OF THE ECONOMY ACT PROHIBITION, ANY EXPENDITURE FOR PARTITIONS WHICH, IN ADDITION TO OTHER EXPENDITURES, WOULD BE IN EXCESS OF THE 25-PERCENT LIMITATION WOULD HAVE TO BE SUPPORTED AND JUSTIFIED BY CLEAR AND CONVINCING EVIDENCE THAT THE PARTITIONS WERE NOT, IN FACT, ALTERATIONS OR IMPROVEMENTS BUT ARE MERELY FIXTURES, AND, TO MAKE CERTAIN THERE WOULD BE NO VIOLATION OF THE ECONOMY ACT RESTRICTION, ANY DOUBT AS TO THEIR CHARACTER IN SUCH RESPECT MUST BE RESOLVED STRICTLY AGAINST THE EXPENDITURE. FROM THE DESCRIPTION GIVEN IN YOUR LETTER, IT IS NOT CLEAR THAT THE PARTITIONS INVOLVED ARE MERELY FIXTURES. YOU SAY THEY ARE PARTITIONS OF THREE-QUARTER HEIGHT AND ARE "OF A REMOVABLE NATURE.' BUT PARTITIONS OF ANY CHARACTER, EVEN OF THE MOST SUBSTANTIAL BUILT-IN TYPE, MAY PHYSICALLY BE REMOVED; AND FROM THE FURTHER STATEMENT IN YOUR LETTER THAT THE SALVAGE VALUE OF THE PARTITIONS MAY NOT JUSTIFY THE EXPENSE OF THEIR REMOVAL AT THE TERMINATION OF THE LEASE, IT WOULD APPEAR THAT SUCH PARTITIONS ARE SO BUILT IN AND ATTACHED TO THE REALTY THAT THEY MAY NOT BE REMOVED WITHOUT SUBSTANTIAL INJURY OR DESTRUCTION. ON THESE FACTS IT IS NOT ESTABLISHED THAT THE PARTITIONS ARE OF A CHARACTER ORDINARILY REGARDED AS TENANT'S FIXTURES, AND, ACCORDINGLY, THE COST THEREOF MUST BE VIEWED AS COMING WITHIN THE 25-PERCENT LIMITATION IN THE ECONOMY ACT ON THE AMOUNT WHICH MAY BE EXPENDED "FOR ALTERATIONS, IMPROVEMENTS, AND REPAIRS OF THE RENTED PREMISES.' THE CITED DECISION, 18 COMP. GEN. 144, SUPRA, WAS DECIDED ON THE PREMISE, INTER ALIA, THAT THE CHANGES THERE INVOLVED WERE NOT OF A CHARACTER TO CONSTITUTE THEM ALTERATIONS OR IMPROVEMENTS WITHIN THE ECONOMY ACT RESTRICTION, BUT TO THE EXTENT THAT SUCH DECISION OR OTHER PRIOR DECISIONS MAY BE VIEWED AS INDIRECTLY INDICATING ANY DIFFERENT EFFECT OF THE STATUTORY RESTRICTION IN THIS PARTICULAR THAN AS HERE FURTHER AMPLIFIED, THEY SHOULD NOT BE REGARDED AS CONTROLLING IN SUCH RESPECT.

(2) IN DECISION OF JULY 18, 1940, B-10599, TO THE SECRETARY OF THE TREASURY, 20 COMP. GEN. 30, IT WAS HELD, QUOTING FROM THE SYLLABUS, IN PERTINENT PART AS FOLLOWS:

THE "FIRST YEAR OF THE RENTAL TERM" CONTEMPLATED BY THE LIMITATION IN SECTION 322 OF THE ECONOMY ACT OF JUNE 30, 1932, ON THE PERCENTAGE OF THE RENT THAT THE GOVERNMENT MAY PAY FOR REPAIRS, ETC., OF LEASED PROPERTY, IS THE FIRST ENTIRE YEAR OF ACTUAL TENURE UNDER THE ORIGINAL LEASE, AND ANY PROPER RENEWALS, WHERE THE ORIGINAL LEASE IS FOR A PERIOD LESS THAN A YEAR, AND NOT MERELY THE PERIOD OF THE ORIGINAL LEASE.

UNDER THE LIMITATION IN SECTION 322 OF THE ECONOMY ACT OF JUNE 30, 1932, ON AMOUNT THE GOVERNMENT MAY PAY FOR REPAIRS, ETC., OF LEASED PROPERTY, NOT MORE THAN 25 PERCENT OF RENT FOR ORIGINAL LEASE PERIOD OF LESS THAN ONE YEAR MAY BE EXPENDED BEFORE THE LEASE IS ACTUALLY RENEWED, AND IF WHOLE PERIOD, INCLUDING RENEWALS, IS LESS THAN A YEAR, NOT MORE THAN 25 PERCENT OF RENT FOR SUCH WHOLE PERIOD MAY BE EXPENDED FOR REPAIRS, ETC.

THE HOLDING IN THE DECISION AS ABOVE QUOTED APPEARS TO ANSWER YOUR SECOND QUESTION.

(3) UNDER PARAGRAPH 8 OF THE LEASE THE GOVERNMENT HAS THE RIGHT TO REMOVE ANY FIXTURES, ADDITIONS, OR STRUCTURES WHICH IT HAS PLACED ON OR AFFIXED TO THE PREMISES DURING OCCUPANCY UNDER THE LEASE, AND, ALSO, THE LESSOR HAS THE RIGHT TO REQUIRE THE REMOVAL OF THE SAME AND INSIST THAT THE PREMISES BE RESTORED TO THE SAME CONDITION EXISTING AT THE TIME OF ENTERING UPON THE SAME BY THE GOVERNMENT PROVIDED NOTICE OF RESTORATION IS TIMELY GIVEN AS PROVIDED IN THAT PARAGRAPH. IF IT BE DETERMINED ADMINISTRATIVELY, HOWEVER, THAT THE VALUE OF SUCH INSTALLATIONS IS NOT SUCH AS TO JUSTIFY REMOVAL, AND THE LESSOR FAILS TO GIVE TIMELY NOTICE OF RESTORATION AND AVAIL HIMSELF OF THE RIGHT TO REQUIRE REMOVAL, THERE WOULD APPEAR TO BE NO LEGAL REASONS WHY THE GOVERNMENT SHOULD NOT ABANDON SUCH INSTALLATIONS AND THUS AVOID THE EXPENSE OF REMOVING THEM. THEREFORE, QUESTION 3 IS ANSWERED IN THE NEGATIVE.

(4) IN CASES WHERE IT IS FOUND TO BE ADMINISTRATIVELY NECESSARY TO REMOVE ALTERATIONS, FIXTURES, ADDITIONS, AND STRUCTURES INSTALLED BY THE GOVERNMENT IN LEASED PREMISES UNDER PROVISIONS SUCH AS PARAGRAPH 8 OF THE PRESENT LEASE, SUCH REMOVAL WOULD NOT BE CONSIDERED "REPAIRS, IMPROVEMENTS, OR ALTERATIONS" WITHIN THE MEANING OF SECTION 322 OF THE ECONOMY ACT, AND, THEREFORE, THE PERCENTAGE RESTRICTIONS OF SAID SECTION WOULD HAVE NO APPLICATION TO THE COST OF SUCH REMOVAL.