B-128522, DEC. 10, 1956

B-128522, DEC. 10, 1956

TO HONORABLE LEWIS L. STRAUSS, CHAIRMAN, UNITED STATES ATOMIC ENERGY COMMISSION:

REFERENCE IS MADE TO THE ACTING GENERAL MANAGER'S LETTER OF SEPTEMBER 13, 1956, REQUESTING OUR ADVICE CONCERNING THE PROPRIETY OF POSTPONING REAPPRAISALS OF RENT SCHEDULES AT OAK RIDGE, TENNESSEE, AND RICHLAND, WASHINGTON, IN VIEW OF THE CONTEMPLATED DISPOSAL OF THESE COMMUNITIES UNDER THE ATOMIC ENERGY COMMUNITY ACT OF 1955.

AS IS POINTED OUT IN THE GENERAL MANAGER'S LETTER, BUDGET CIRCULAR NO. A- 45 IS MADE APPLICABLE TO THE ATOMIC ENERGY COMMISSION BY SECTION 208 OF PUBLIC LAW 578, 84TH CONGRESS, 70 STAT. 281. THAT CIRCULAR SETS FORTH THE GENERAL PRINCIPLE THAT RENTS CHARGED FOR GOVERNMENT OWNED QUARTERS FURNISHED TO FEDERAL EMPLOYEES SHOULD BE APPROXIMATELY THE SAME RENTS PREVAILING IN THE SAME AREA FOR COMPARABLE PRIVATE HOUSING, AND STATES THAT REAPPRAISALS OF RENT SCHEDULES SHALL BE MADE AT LEAST EVERY THREE YEARS TO INSURE THAT RENTALS ARE KEPT UP TO DATE. THE LAST REAPPRAISALS AND READJUSTMENTS OF RENTS AT OAK RIDGE AND RICHLAND WERE IN FEBRUARY 1954 AND OCTOBER 1953, RESPECTIVELY. THUS, REAPPRAISALS AND CONSEQUENT READJUSTMENTS IN RENTS, IF ANY, SHOULD BE MADE BY NEXT FEBRUARY AT OAK RIDGE AND SHOULD ALREADY HAVE BEEN MADE AT RICHLAND, ASSUMING THE APPLICABILITY OF BUDGET CIRCULAR NO. A-45.

THERE IS REASON FOR CONSIDERING THE BUDGET CIRCULAR NO. A-45 SHOULD NOT APPLY TO HOUSING IN PROCESS OF DISPOSAL UNDER THE ATOMIC ENERGY COMMUNITY ACT. THE FACT THAT CERTAIN HOUSING IS TO BE SOLD OR OTHERWISE DISPOSED OF RAISES THE QUESTION WHETHER IT IS PRACTICABLE OR DESIRABLE TO HAVE A REAPPRAISAL AND RENT READJUSTMENTS MADE IF THE TIME BETWEEN REAPPRAISAL AND DISPOSITION OF THE HOUSING IS OF RELATIVELY SHORT DURATION. FURTHERMORE, WHERE, AS IN THE INSTANT CASE, THE HOUSING IS EXPECTED TO BE SOLD TO THE PRESENT OCCUPANTS AND THE SALES PROGRAM NECESSARILY WILL TAKE SOME TIME TO COMPLETE, IT IS PROBABLE THAT READJUSTMENTS IN RENTS, IF MADE DURING THE SALES PROGRAM, WOULD UNDULY COMPLICATE OR IMPEDE SALES. SHOULD BE NOTED THAT UNDER SECTION 56 OF THE ATOMIC ENERGY COMMUNITY ACT TENANTS WHO CHOOSE NOT TO PURCHASE THE HOUSING THEY OCCUPY ARE GIVEN THE RIGHT TO A ONE YEAR LEASE OF THAT PROPERTY. OBVIOUSLY A READJUSTMENT OF RENT SCHEDULES WHICH MIGHT RESULT IN DIFFERENT RENTALS FOR SIMILAR PROPERTIES DEPENDING ON WHETHER LEASES THEREFOR WERE MADE BEFORE OR AFTER THE READJUSTMENT WOULD HAVE AN ADVERSE EFFECT ON THE SALES PROGRAM.

ON THE OTHER HAND, IF IT IS MERELY CONTEMPLATED THAT CERTAIN GOVERNMENT- OWNED HOUSING WILL BE DISPOSED OF SOMETIME IN THE FUTURE, AND IT IS IMPROBABLE THAT ACTUAL DISPOSITION OF THE PROPERTY WILL BEGIN WITHIN A REASONABLY SHORT TIME, THERE WOULD APPEAR TO BE NO VALID REASON WHY THE PROVISIONS OF BUDGET CIRCULAR NO. A-45 SHOULD NOT BE CONSIDERED APPLICABLE. UNDER SECTION 51 OF THE ATOMIC ENERGY COMMUNITY ACT A SALES PROGRAM CANNOT BEGIN AT A COMMUNITY UNTIL A FINDING HAS BEEN MADE BY THE ADMINISTRATOR, HOUSING AND HOME FINANCE AGENCY, THAT THERE IS A REASONABLE POSSIBILITY SUCH A PROGRAM WILL BE SUCCESSFUL. SUCH A FINDING OF FEASIBILITY WAS MADE WITH RESPECT TO OAK RIDGE EFFECTIVE JULY 11, 1956, AND THE SALES PROGRAM THERE IS WELL UNDER WAY. IN THE CIRCUMSTANCES, AND FOR THE REASONS STATED ABOVE, WE WILL NOT OBJECT IF NO REAPPRAISAL OF RENTAL RATES IS MADE AT OAK RIDGE.

NO FINDING OF FEASIBILITY HAS YET BEEN MADE WITH RESPECT TO RICHLAND. WERE INFORMED BY THE ADMINISTRATOR, HHFA, IN A LETTER DATED OCTOBER 19, 1956, THAT BECAUSE OF CIRCUMSTANCES ARISING IN CONNECTION WITH THE APPRAISALS MADE BY FHA AT RICHLAND HE WAS NOT ABLE TO INDICATE HOW SOON A DISPOSAL PROGRAM WOULD BE UNDERTAKEN AT THAT COMMUNITY. SINCE THEN, HOWEVER, WE UNDERSTAND THAT THE AGENCY HAS CONTRACTED FOR AN ANALYSIS OF THE RICHLAND APPRAISALS, WHICH SHOULD BE COMPLETED THIS MONTH. PRESUMABLY THE ADMINISTRATOR IS AWAITING THE RESULTS OF THE ANALYSIS BEFORE DETERMINING WHETHER OR NOT TO MAKE A FINDING OF FEASIBILITY. WE ASSUME THAT ANY RENTAL REVIEW WHICH MIGHT BE MADE AT THE PRESENT TIME WOULD BE WITH THE ADVICE OF FHA AND WOULD TAKE INTO CONSIDERATION THE FHA APPRAISALS. IN VIEW OF THE POSSIBILITY THAT THERE MAY BE SOME CHANGES IN THOSE APPRAISALS, AND THE FURTHER LIKELIHOOD THAT A FINDING OF FEASIBILITY OR NON-FEASIBILITY WILL SOON BE MADE BY THE ADMINISTRATOR, IT IS OUR VIEW THAT YOU WOULD BE JUSTIFIED IN POSTPONING A REVIEW OF RICHLAND RENTALS FOR THE TIME BEING. HOWEVER, IF THE ADMINISTRATOR HAS NOT MADE A FINDING OF FEASIBILITY BY FEBRUARY 1, 1957, OR IF HE MAKES A FINDING OF NON FEASIBILITY BEFORE THEN, WE WOULD SEE NO PROPER BASIS FOR FURTHER POSTPONEMENT OF REVIEW OF THE RENTAL SCHEDULES IN ACCORDANCE WITH THE REQUIREMENTS OF BUDGET CIRCULAR A-45.