B-154459, JUN. 14, 1965
Highlights
WE STATED THAT IN OUR OPINION TO THE EXTENT THAT EXISTING PLEDGES MADE TO THE CENTER ARE CONVERTED OR REDUCED TO CASH BY THE CENTER'S BOARD OF TRUSTEES (BOARD) WITHOUT CREATING A CORRESPONDING LIABILITY CHARGEABLE TO THE CENTER. THE GENERAL COUNSEL STATES THAT YOU HAVE FINALIZED THE PLAN OF CONVERSION OF PLEDGES TO CASH WITHOUT ANY CORRESPONDING LIABILITY TO THE CENTER. ARE ADVISED THAT UNDER THE AGREEMENT INVOLVED THE AMERICAN SECURITY AND TRUST CO. RIGGS NATIONAL BANK WILL PURCHASE THE PLEDGES WITHOUT RECOURSE AND THAT THE CENTER WILL HAVE A RIGHT TO REPURCHASE ANY UNPAID PLEDGES UNDER CERTAIN CONDITIONS. A FINAL DRAFT OF THE AGREEMENT WAS ENCLOSED WITH THE GENERAL COUNSEL'S LETTER. OUR ATTENTION IS DIRECTED TO A PROVISION IN THE AGREEMENT TO THE EFFECT THAT IN EXERCISING THE OPTION TO REPURCHASE THE TRUSTEES WILL NOT USE APPROPRIATED FUNDS OR FUNDS USED TO MATCH APPROPRIATED FUNDS.
B-154459, JUN. 14, 1965
TO THE HONORABLE ROGER L. STEVENS, CHAIRMAN OF THE BOARD OF TRUSTEES JOHN F. KENNEDY CENTER FOR THE PERFORMING ARTS:
LETTER DATED JUNE 2, 1965, FROM THE GENERAL COUNSEL OF THE JOHN F. KENNEDY CENTER FOR THE PERFORMING ARTS (CENTER) REFERS TO OUR LETTER OF APRIL 6, 1965, B-154459, 44 COMP. GEN. - , TO YOU, CONCERNING THE MATCHING OF FEDERAL FUNDS FOR THE CENTER, AS REQUIRED BY PERTINENT LAW.
IN OUR LETTER OF APRIL 6, WE STATED THAT IN OUR OPINION TO THE EXTENT THAT EXISTING PLEDGES MADE TO THE CENTER ARE CONVERTED OR REDUCED TO CASH BY THE CENTER'S BOARD OF TRUSTEES (BOARD) WITHOUT CREATING A CORRESPONDING LIABILITY CHARGEABLE TO THE CENTER, THE CASH OBTAINED BY THE BOARD THEREBY WOULD CONSTITUTE THE ACQUISITION OF FUNDS AVAILABLE TO MATCH THE FEDERAL APPROPRIATION (FOR THE CENTER) CONTAINED IN THE DEPARTMENT OF THE INTERIOR AND RELATED AGENCIES APPROPRIATION ACT, 1965, PUB.L. 88-356, 78 STAT. 273, 289. WE FURTHER STATED THAT PENDING YOUR FORMULATION OF A SPECIFIC PLAN WE WOULD EXPRESS NO OPINION AS TO WHETHER "ANY ARRANGEMENT" FOR CONVERTING OR REDUCING PLEDGES TO CASH NOT RESULTING IN ANY CORRESPONDING LIABILITY TO THE CENTER WOULD OTHERWISE BE IN COMPLIANCE WITH, OR AUTHORIZED BY THE JOHN F. KENNEDY CENTER ACT.
THE GENERAL COUNSEL STATES THAT YOU HAVE FINALIZED THE PLAN OF CONVERSION OF PLEDGES TO CASH WITHOUT ANY CORRESPONDING LIABILITY TO THE CENTER. ARE ADVISED THAT UNDER THE AGREEMENT INVOLVED THE AMERICAN SECURITY AND TRUST CO. AND RIGGS NATIONAL BANK WILL PURCHASE THE PLEDGES WITHOUT RECOURSE AND THAT THE CENTER WILL HAVE A RIGHT TO REPURCHASE ANY UNPAID PLEDGES UNDER CERTAIN CONDITIONS, AT ITS OPTION. A FINAL DRAFT OF THE AGREEMENT WAS ENCLOSED WITH THE GENERAL COUNSEL'S LETTER. OUR ATTENTION IS DIRECTED TO A PROVISION IN THE AGREEMENT TO THE EFFECT THAT IN EXERCISING THE OPTION TO REPURCHASE THE TRUSTEES WILL NOT USE APPROPRIATED FUNDS OR FUNDS USED TO MATCH APPROPRIATED FUNDS. WE NOTE THAT UNDER SECTION 6 OF THE AGREEMENT THE BANKS, IN EFFECT, MIGHT, DEPENDING UPON THE CIRCUMSTANCES RECEIVE COMPENSATION INCIDENT TO THEIR PURCHASE OF THE PLEDGES. WE ARE ALSO ADVISED THAT AT THIS TIME YOU ARE UNABLE TO INDICATE THE AMOUNT OF PLEDGES DESIRED TO BE CONVERTED FOR MATCHING PURPOSES, SINCE THIS WILL DEPEND UPON THE AMOUNT OF MONEY NEEDED TO MATCH THE FEDERAL FUNDS AFTER THE RECEIPT OF OTHER GIFTS AND ASSETS, INCLUDING GIFTS FROM FOREIGN COUNTRIES AND OTHERS.
IT IS THE OPINION OF THE GENERAL COUNSEL THAT---
"* * * THIS AGREEMENT IS AN APPROPRIATE METHOD OF CONVERTING THE PLEDGES INTO ASSETS WITHOUT RECOURSE TO THE BOARD OF TRUSTEES OF THE CENTER, OR RESULTING IN ANY LIABILITY TO THE CENTER. * * *"
HE REQUESTS TO BE ADVISED WHETHER WE CONCUR IN HIS OPINION.
WE EXPRESS NO OPINION AS TO THE DESIRABILITY OF THE PROPOSED METHOD OF CONVERTING THE PLEDGES INTO CASH, SINCE THAT IS A MATTER FOR DETERMINATION BY THE BOARD OF TRUSTEES. AS TO THE AUTHORITY OF THE BOARD TO CONVERT THE PLEDGES INTO CASH UNDER THE PROPOSED PLAN, WE FIND NOTHING IN THE JOHN F. KENNEDY CENTER ACT (FORMERLY THE NATIONAL CULTURAL CENTER ACT),72 STAT. 1698, AS AMENDED BY PUB.L. 88-260, 78 STAT. 4, WHICH WOULD PRECLUDE THE TRUSTEES FROM ENTERING INTO THE PROPOSED AGREEMENT WITH THE BANKS. MOREOVER, SECTION 5 (A) OF THE ACT PROVIDES, IN PART, AS FOLLOWS:
"SEC. 5. (A) THE BOARD IS AUTHORIZED TO SOLICIT AND ACCEPT FOR THE SMITHSONIAN INSTITUTION AND TO HOLD AND ADMINISTER GIFTS, BEQUESTS, OR DEVISES OF MONEY, SECURITIES, OR OTHER PROPERTY OF WHATSOEVER CHARACTER FOR THE BENEFIT OF THE JOHN F. KENNEDY CENTER FOR THE PERFORMING ARTS. UNLESS OTHERWISE RESTRICTED BY THE TERMS OF THE GIFT, BEQUEST, OR DEVISE, THE BOARD IS AUTHORIZED TO SELL OR EXCHANGE AND TO INVEST OR REINVEST IN SUCH INVESTMENTS AS IT MAY DETERMINE FROM TIME TO TIME THE MONEYS, SECURITIES, OR OTHER PROPERTY COMPOSING TRUST FUNDS GIVEN, BEQUEATHED, OR DEVISED TO OR FOR THE BENEFIT OF THE JOHN F. KENNEDY CENTER OF THE PERFORMING ARTS. THE INCOME AS AND WHEN COLLECTED SHALL BE PLACED IN SUCH DEPOSITARIES AS THE BOARD SHALL DETERMINE AND SHALL BE SUBJECT TO EXPENDITURE BY THE BOARD.'
UNDER THE APPROPRIATION ACT MENTIONED ABOVE THE FEDERAL FUNDS FOR THE CENTER CONTAINED THEREIN ARE AVAILABLE FOR MATCHING PURPOSES ONLY TO THE EXTENT OF CERTAIN FUNDS OR PROPERTY AS DISTINGUISHED FROM PLEDGES, RECEIVED BY THE BOARD PRIOR TO JULY 1, 1965. TO THE EXTENT THAT THESE FEDERAL FUNDS ARE NOT MATCHED BY THAT DATE, SUCH FUNDS WILL BE NO LONGER AVAILABLE FOR MATCHING PURPOSES. WE UNDERSTAND THAT IT IS DEEMED DESIRABLE TO REDUCE OR CONVERT THE UNREDEEMED PLEDGES FOR CASH, TO THE EXTENT NECESSARY, BEFORE JULY 1, 1965, IN ORDER TO INSURE MEETING THE MATCHING OBLIGATION AND PRECLUDE THE LOSS OF ANY FUNDS FOR THE CENTER.
UNDER THE CIRCUMSTANCES AND IN VIEW OF THE AUTHORITY VESTED IN THE BOARD BY THE ABOVE-QUOTED PROVISION OF LAW TOGETHER WITH THE FACT THAT UNDER THE PROPOSED AGREEMENT THERE WILL BE NO RIGHT OF RECOURSE AGAINST THE BOARD, OR THE CENTER, WE FIND NO LEGAL OBJECTION TO THE PROPOSED ARRANGEMENT FOR CONVERTING THE PLEDGES TO CASH AND THE USE OF THE FUNDS THUS OBTAINED FOR MATCHING ..END :