B-51630 September 11, 1945

B-51630: Sep 11, 1945

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Is not located on a Government reservation. The furnishing of police protection outside a Federal reservation is a duty or responsibility of the local State. Since the obligation of furnishing such police protection is no a Federal one. The question presented is answered in the negative.". Nebraska wherein the City is to provide police protection. Several other Naval housing projects are affected by the same type of agreement." "4. There is a definite urgent need for police and fire protection in large Navy housing projects and these agreements are entered into with cities or other municipal governments when they are financially unable to provide such services for Navy projects. 1943 held that payment by the Navy of amounts in lieu of taxes to local authorities on Lanham Act housing projects transferred to the Navy are not required or authorized.

B-51630 September 11, 1945

The Honorable, The Secretary of the Navy.

My dear Mr. Secretary:

Consideration has been given to your letter of August 3, 1945, JAG:II:WJG:z JJ55/P16-5, in which you refer to decision of July 6, 1945, B-50384, involving a question as to the availability of the appropriation "Maintenance, Bureau of Yards and Docks," or any other appropriation under the control of your Department, for the purchase of uniforms for volunteer guards at the Roosevelt Terrance Naval Housing Project, Vallejo, California, and for furnishing for the use of such volunteer guards a Government-owned prowl car. The said decision held as follows:

"It has been ascertained informally that the housing project in question - - while Government owned -- is not located on a Government reservation. The furnishing of police protection outside a Federal reservation is a duty or responsibility of the local State, county, or municipal authorities, as the case may be. In that connection see decision of February 7, 1945, 24 Comp. Gen. 599, regarding the furnishing of fire fighting services on Government property located within city limits. Since the obligation of furnishing such police protection is no a Federal one, it follows that no expense connected therewith would b a proper charge against finding [federally] appropriated funds. Cf. 6 Comp. Gen. 741. Therefore, the question presented is answered in the negative."

You transmit a letter dated July 26, 1945, from the Chief, Bureau of Yards and Docks, Navy Department, requesting reconsideration by this office of the decision of July 6, Supra, and decision of December 4, 1943, B-38136, 23 Comp. Gen. 406, for reasons stated as follows:

"3. The broad language in this decision [of July 26, 1945] has raised the question in the Bureau as to the validity of an Agreement executed by the Commanding Officer, Naval Ammunition Depot, Hastings, Nebraska and the City of Hastings, Nebraska wherein the City is to provide police protection, fire protection and sewage disposal for the Navy housing projects known as Spencer Park and Pleasant Hill Trailer Camp located within the City of Hastings and off the Naval Reservation for a total payment by the Navy of $24,200 per year. Several other Naval housing projects are affected by the same type of agreement."

"4. There is a definite urgent need for police and fire protection in large Navy housing projects and these agreements are entered into with cities or other municipal governments when they are financially unable to provide such services for Navy projects. The Comptroller General in his decision B-28136 of December 4, 1943 held that payment by the Navy of amounts in lieu of taxes to local authorities on Lanham Act housing projects transferred to the Navy are not required or authorized. Because, as a result of this decision, the local governments obtained no taxes from these Navy properties, they are financially unable in many cases, to provide police and fire protection for the projects. The Bureau has complied with the latter decision since it was rendered. However, it has operated on the opinion that, even though the Navy has not authority to make payments in lieu of taxes, nevertheless the Navy does have authority to make payments for direct services rendered by local governments and the Bureau has followed the policy of making such agreements for police and fire protection in cases where local governments are financially unable to furnish services without aid from the Navy."

"5. This bureau is of the opinion that the above-cited decision holding that the Navy is not required or authorized to make payment of amounts in lieu of taxes is erroneous, and all of our troubles in dealing with municipalities stem from this decision. It is believed that there is sufficient authority for the Navy to make payments in lieu of taxes on low-cost defense housing projects located off reservations in order that such projects may be furnished with adequate municipal services."

"6. The project at Vallejo, California was constructed by the Navy under authority contained in Title II of the Act of June 28, 1940 (Public No. 671-76th Congress). Section 202(a) of that act provides:

"'Projects may be initiated hereunder by the Navy or War Department to provide dwellings on or near naval or military reservations, posts or bases for rental to the enlisted men or employees of the Navy and War Departments described in section 201. Such projects shall be developed by the Navy or War Department or by the Authority (United States Housing Authority), whichever the President determines is better suited to the fulfillment of the purpose of this title with respect to any particular project. If the development of such project is to be undertaken by the Navy or War Department, the Authority is authorized to aid the development of the project by furnishing technical assistance and by transferring to such Department the funds necessary for the development of the project. Any project developed for the purpose of this section shall be leased to the Navy or War Department by the Authority (Which shall have title to such project until repayment of the cost thereof to the Authority as prescribed in such Lease) upon such terms as shall be prescribed in the lease, which may be the same terms as are authorized by the United States Housing Act of 1937, as amended, with respect to leasen to public housing agencies. All the provisions of said Act which apply to the development of projects by the Authority shall (insofar as applicable and not inconsistent herewith) apply to the development of projects by the Navy or War Department. Notwithstanding other provisions of this or any other law, the Department leasing a project shall have the same jurisdiction over such project as it has over the reservation, post or base in connection with which the project is developed.' (Underscoring added)."

"7. The United States Housing Act of 1937, supra approved September 1, 1937 (50 Stat. 888) reads in part as follows:

"Section 12(d) The Authority (United States Housing Authority) may lease any federal low-rent-housing project, in whole or in part, to a public housing agency. The leases of any project, pursuant to this paragraph, shall assume and pay all management, operation, and maintenance costs. Together with payments, if any in lieu of taxes, and shall pay to the Authority such annual sums as the Authority shall determine are consistent with maintaining the low-rent character of such project. The provisions of section 321 of the Act of June 30, 1932 (U.S.C., 1934 edition, title 40, sec. 303b), shall not apply to any lease pursuant to this act."

"(a) In the administration of any Federal low-rent housing project pending sale or lease, the Authority shall fix the rentals a the amounts necessary to pay all management, operation, and maintenance costs, together with payments, if any, in lieu of taxes, plus such additional amounts as the Authority shall determine are consistent with maintaining the low-rent character of such projects. "

"Section 13(c) The Authority may enter into agreements to pay annual sums in lieu of taxes to any State or political subdivision thereof with respect to any real property owned by the Authority. The Amount so paid for any year upon such property shall not exceed the taxes that would be paid to the State or subdivision, as the case may be, upon such property if it were not exempt from taxation thereby."

"8. The lease of the Vallejo project from the Authority to the Navy, which is dated July 1, 1941, provides in part as follows:

"The lessees shall operate, manage and maintain the Project in accordance with applicable provisions of Title II of said Public No. 671 and other applicable laws to which it is subject."

"9. Although the lease is silent on the subject of payment of sums in lieu of taxes, it is believed that there is sufficient authority in the above-quoted legislation for the Navy to enter into such agreements. This legislation is similar to that contained in the Lanham Act, Public Law 849, 77th Congress. Section 306 of that Act, as amended, provides:

"This Administrator (Federal Works Administrator) shall pay from rentals annual sums in lieu of taxes to any State and/or political subdivision thereof, with respect to any real property acquired and held by him under this Act, including improvements thereon. The amount so paid for any year upon such property, shall approximate the taxes which would be paid to the State and/or subdivision, as the case may be, upon such property if it were not exempt from taxation, with such allowance as may be considered by him to be appropriate for expenditure by the Government for streets, utilities, or other public services to serve such property."

"10. The Vallejo project was transferred to the jurisdiction of the Navy Department by the Federal Public Housing Authority in 1942, pursuant to the authority contained in Paragraph 10 of executive Order 9070 of February 24, 1942, and the 'Bond Account' of the United States Housing Authority was reimbursed for the cost of the Vallejo project with funds provided by the Lanham Act."

"11. It is the Bureau's contention that housing projects transferred to Navy jurisdiction and located off Naval reservations are subject to the same terms and conditions as are imposed upon the Housing Authority. In case of projects located on reservations the problem of police and fire protection is simplified as it is taken care of by the base police force and fire department, out when projects are located off reservations, the problem is aggravated because of the civil and criminal jurisdiction over the project which remains in the State. Furthermore it is more economical to the Navy to have these projects policed and protected by the local police and fire departments. But, as was heretofore stated, because of the non-taxable nature of the property, the municipalities are often unable financially to furnish the additional protection and services necessary for Navy housing projects. It is therefore believed that in case of off-reservation projects the Navy at least has authority to enter into agreement with municipalities for direct services such as police and fire protection when municipalities do not have the funds necessary to furnish adequate services."

"12. It is therefore respectfully requested that the Comptroller General be asked to reconsider his decision on the question of payments in lieu of taxes and to furnish this Bureau with answers to the following questions:"

"(a) Is the Navy authorized to make payments of sums in lieu of taxes to municipalities on Lanham Act and Public 671 housing projects under Navy jurisdiction and located off Naval reservations?"

"(b) If the answer to question (a), should be in the negative, is the Navy authorized to enter into agreements with municipalities for direct services such as police and fire protection for a stated consideration to be paid by the Navy, in cases where municipalities are financially unable to provide the services (The Bureau would exercise this authority with discretion and limit it to cases of actual necessity)."

"(c) Is the Navy authorized to provide uniforms and a Navy owned radio equipped police prowl car for use of volunteer guards at the Vallejo project?"

"13. Another problem arises frequently in connection with furnishing public school facilities for children of tenants of Navy housing projects. The cities or municipalities are unwilling to furnish school services for children of Navy projects without consideration. In some cases the Navy has temporarily solved this problem by collecting tuition from each family having children attending the public schools and entering into an agreement with the municipality to provide the services, which are to be paid for from the special fund collected from the tenants. However, this arrangement has not proven satisfactory as it results in dissatisfaction among the tenants, and resignations, and consequently a loss by the Navy of essential civilian personnel. If payments of sums in lieu of taxes could be made by the Navy, this problem would be solved. * * *"

It may be observed at the outset that the decision of December 4, 1943, supra, dealt solely with the question whether section 306 of and Lanham Act, as amended, 56 Stat. 11, 12, requiring the National Housing Administrator to pay annual sums in lieu of taxes to local taxing authorities on real property acquired by him, authorized or required the payment by your Department of amounts in lieu of taxes in respect to housing units permanently transferred to the Navy Department pursuant to section 4 of said act. Inasmuch as the act of June 28, 1940, 54 Stat. 681, and the United States Housing Act of 1937, cited in the letter quoted above, were in nowise involved in said decision, there is not perceived the relevancy of the provisions of said laws to the question there considered; and since no additional matters are presented in the submission to support the stated contention that said decision was erroneous, I find no legal ground or justification for receding from the conclusion reached therein.

With particular reference to the housing project at Vallejo, California, developed under the authority to Title II of the act of June 28, 1940, supra, while it appears that by the terms of said act the lease of the project to our Department by the United States Housing Authority could have required the payment of sums in lieu of taxes to local taxing authorities, yet, since no provision therefor in fact was made in the lease and, as the project has been permanently transferred to the jurisdiction of the Navy Department, there would seem to be no basis for your Department now to enter into an agreement to make payments of that nature. In that connection, it is understood that all projects developed by the Navy Department under the act of June 28, 1940, have been permanently transferred to its jurisdiction pursuant to paragraph 10 of Executive Order 9070, dated February 24, 1942, thus terminating any lessor -- lessee relationship that may have existed as between your Department and the United States Housing Authority with respect to such projects -- and, such being the case, the fact that the Navy Department, as a lessee, may have been required by a lease to make payments in lieu of taxes no longer is controlling. Under the circumstances, and since the provision for payment of sums in lieu of taxes contained in section 13 (c) of the United States Housing Act, supra, is substantially similar to section 306 of the Lanham Act considered in the decision of December 4, 1943, it would appear that the rationale of that decision is controlling in the present matter. That is to say, consistent with the principle referred to therein that a waiver of the tax immunity of the sovereign is to be strictly construed, the right vested in the United States Housing Authority to make payments in lieu of taxes on said property may not be regarded as having devolved upon the Navy Department upon the transfer of such property to its permanent jurisdiction. Accordingly, question (a), set forth in the submission, is answered in the negative.

With Reference to question (b), it may be stated that the authority to enter into agreements of the nature referred to necessarily is dependent upon the availability of appropriated funds for the purposes contemplated by such agreements. See Section 3678 and Section 3732, Revised Statutes. The current appropriation "Maintenance, Bureau of Yards and Docks," contained in the Navy Appropriation Act, 1946, approved May 29, 1945, Public Law 62, provides, in pertinent part, as follows:

"* * * for expenses of operation and maintenance of housing projects maintained and operated as such by the Navy Department and developed under the provisions of the Acts of June 28, 1940 (54 Stat. 676); September 9, 1940(54 Stat. 872); October 14, 1940 (54 Stat. 1125); March 1, 1941 (55 Stat. 14); May 24, 1941 (55 Stat. 197); and December 17, 1941 (55 Stat. 810), including utilities, roads, walks, and accessories, and expenses found necessary in the disposition of any such property or the removal of temporary housing, $6,000,000; in all $150,000,000."

While the appropriation above quoted is specifically made available for expense of operation and maintenance of housing projects, there would seem to be no room for doubt that the term "operation" and "maintenance" appearing in the appropriation acts, do not, in their normal connotation, embrace police and fire fighting services the furnishing of which is the responsibility of local governments. Decision of February 7, 1945, 24 Comp. Gen. 599; 15 Comp. Gen. 295; 6 Comp. Gen. 741. However, upon examination of the Hearings before the Subcommittee of the Committee on Appropriations, House of Representatives, on the Navy Department Appropriation Bill for 1946, I find at pages 466 and 467 thereof that the estimates submitted to the Congress as a basis for the appropriation item above-quoted included inter alia, an estimate for "fixed charges" which more explained to the Subcommittee as representing--

"Payments for direct services rendered by city, county, or State agencies, for police and fire protection, or educational facilities."

Since it appears that there was appropriated the entire amount estimated as necessary for the operation and maintenance of housing projects under the jurisdiction of the Navy Department, including the amount required for "fixed charges." As reported to the Congress in the estimates and the Hearings, supra, there is a substantial basis for concluding that the Congress contemplated that the said appropriation should be available for police and fire fighting services to be rendered by municipalities. Accordingly, question (b) is answered in the affirmative.

In the light of the conclusion reached with respect to question (b), this office now will not be required to object to providing uniforms and a Navy owned radio equipped police prowl car for use of volunteer guards at the Vallejo project.

The matter of school service for children at Navy housing projects referred to in the final paragraph of the submission, supra, does not -- as in the case of police and fire protection -- directly involve the preservation and maintenance of Government-owned property, and the obligation to pay for such services would seem to be that of the residents of the projects, rather than that of the Government. However, if, as is urged in the submission, the financing of such costs by the Government would be an important contributing factor towards the retention of essential personnel, it may be considered that the Government will directly benefit thereby; and, since it appears from the Hearings, supra, that the estimates for the appropriation here involved included the cost of "educational facilities", it may be concluded that your Department is authorized to enter into agreements with municipalities to pay for school services actually rendered to children of tenants at naval housing projects where the municipalities are financially unable to provide such services.

Respectfully,

Comptroller General of the United States