A-11788, MARCH 6, 1926, 5 COMP. GEN. 696

A-11788, MARCH 6, 1926, 5 COMP. GEN. 696

LEASES - IMPROVEMENTS TO RENTED PREMISES WHERE THE LEASE DID NOT REQUIRE SUCH IMPROVEMENTS TO BE MADE BY THE LESSOR, EXPENDITURES FROM PUBLIC FUNDS MAY BE ALLOWED FOR THE COST OF CONSTRUCTING AN OFFICE ON THE FIRST FLOOR OF A LEASED GARAGE TO TAKE THE PLACE OF AN OFFICE ON THE MEZZANINE FLOOR WHICH WAS INADEQUATE, THE OFFICE SO CONSTRUCTED CONSISTING OF TEMPORARY PARTITIONS WHICH WERE READILY REMOVABLE AND THE RIGHT TO THEIR REMOVAL BEING ASSENTED TO IN WRITING BY THE LESSOR. 5 COMP. GEN. 366, REVERSED.

COMPTROLLER GENERAL MCCARL TO THE POSTMASTER GENERAL, MARCH 6, 1926:

I HAVE YOUR LETTER OF FEBRUARY 15, 1926, IN REFERENCE TO THE DISALLOWANCE OF CREDIT IN THE ACCOUNTS OF THE POSTMASTER AT NEWARK, N.J., FOR EXPENDITURES AMOUNTING TO $189.85, IN CONSTRUCTING AN OFFICE ON THE FIRST FLOOR OF THE POST OFFICE GARAGE UNDER A LEASE AT THAT PLACE WHEREIN IT WAS HELD UNDER DATE OF NOVEMBER 21, 1925, 5 COMP. GEN. 366, QUOTING FROM THE SYLLABUS, THAT:

THE BUILDING BY THE GOVERNMENT OF AN OFFICE ON THE FIRST FLOOR OF A GARAGE, OCCUPIED UNDER A LEASE, TO TAKE THE PLACE OF AN OFFICE ON THE MEZZANINE FLOOR IN THE REAR OF THE BUILDING, WHICH HAD PROVED TO BE INADEQUATE FOR THE PURPOSE FOR WHICH THE BUILDING WAS RENTED, IS IN THE NATURE OF A PERMANENT IMPROVEMENT OF THE PROPERTY AND, IN THE ABSENCE OF A PROVISION IN THE LEASE AGREEMENT FOR THE MAKING OF SUCH IMPROVEMENTS BY THE UNITED STATES AS A PART OF THE RENTAL CONSIDERATION, THE COST THEREOF IS NOT CHARGEABLE TO PUBLIC FUNDS.

YOU REQUEST A RECONSIDERATION OF THE ACTION, AND IN SUPPORT OF THE CONTENTION THAT CREDIT SHOULD BE ALLOWED FOR THE PAYMENTS MADE, SUBMIT THE FOLLOWING:

IT APPEARS THAT YOU ARE OF THE OPINION THAT THE WORK CONSTITUTED A PERMANENT IMPROVEMENT TO THE BUILDING. THE OFFICE IN QUESTION MERELY CONSISTS OF TEMPORARY PARTITIONS ON THREE SIDES, THE WALL OF THE BUILDING ITSELF FORMING THE REMAINDER OF THE INCLOSURE. THE MATERIAL FURNISHED BY THE POSTAL SERVICE IS SEPARABLE FROM THAT USED IN THE OLD OFFICE BELONGING TO THE LESSOR WHICH WAS USED IN CONSTRUCTING THE NEW OFFICE. THE OFFICE IS BUILT RIGHT ON THE FLOOR AND IS NOT ANCHORED IN ANY MANNER EXCEPT TO THE FRONT OF THE BUILDING WHERE TWO BRICKS WERE REMOVED AND TWO PIECES OF 2 BY 4 INSERTED, TO WHICH THE FRONT UPRIGHTS WERE NAILED IN ORDER TO GIVE STABILITY TO THE STRUCTURE. THE HEIGHT OF THE GARAGE FROM THE FLOOR TO THE BOTTOM OF THE ROOF TRUSSES IS 14 FEET 2 1/2 INCHES, WHEREAS THE OFFICE IS ONLY 9 FEET 10 INCHES HIGH. IT CAN BE DISASSEMBLED READILY AND IN THIS CONNECTION, THERE IS ATTACHED, A LETTER ADDRESSED TO THE POSTMASTER, BY THE OWNER OF THE PREMISES, SETTING FORTH HIS UNDERSTANDING THAT THE MATERIALS PURCHASED BY THE GOVERNMENT REMAIN ITS PROPERTY AND ARE SUBJECT TO REMOVAL AT WILL.

I WOULD LIKE TO EMPHASIZE THE POINT THAT THIS BUILDING WAS ORIGINALLY LEASED TO TAKE CARE OF THE TRUCKS ASSIGNED TO THE POST OFFICE AT NEWARK ONLY AND THAT THE OFFICE FURNISHED AT THAT TIME WAS IN ACCORDANCE WITH SPECIFICATIONS AND DRAWINGS APPROVED BY THE POSTAL SERVICE AND WAS IN EVERY RESPECT SATISFACTORY. IT LATER DEVELOPED THAT IT WOULD BE MORE ECONOMICAL TO REPAIR GOVERNMENT-OWNED TRUCKS OPERATING IN THE IMMEDIATE VICINITY OF NEWARK AT THE NEWARK POST OFFICE GARAGE THAN TO HAVE THE WORK DONE LOCALLY, AND THAT OFFICE WAS DESIGNATED TO TAKE CARE OF THE TRUCKS ASSIGNED TO 35 POST OFFICES. AS INDICATED IN MY PREVIOUS LETTER, THIS NECESSITATED EMPLOYING A FORCE OF MECHANICS FOR OVERHAUL WORK AND MADE IT IMPERATIVE THAT THE SUPERVISORS BE LOCATED ON THE GROUND FLOOR WHERE THE EMPLOYEES IN THE SHOPS WOULD BE UNDER OBSERVATION AT ALL TIMES.

FURTHER CONSIDERATION OF THIS MATTER IS REQUESTED IN VIEW OF THE FACT THAT THE OWNER OF THE PREMISES HAS AGREED THAT THE WORK IS NOT A PERMANENT IMPROVEMENT AND THAT THE ITEMS FURNISHED BY THE DEPARTMENT ARE SUBJECT TO REMOVAL AT THE WILL OF THE POSTMASTER GENERAL.

APPROXIMATELY ONE-HALF OF THIS EXPENSE WAS FOR MATERIAL PURCHASED AND ONE -HALF FOR LABOR.

THE LEASE DATED MARCH 23, 1923, BETWEEN THE ALLING CO., PARTY OF THE FIRST PART, AND THE POSTMASTER GENERAL, PARTY OF THE SECOND PART, PROVIDES:

SPACE IN SAID BUILDING PARTITIONED OFF BY THE SAID PARTY OF THE FIRST PART, FOR OFFICE, * * * WITH ALL THE RIGHTS AND PRIVILEGES THEREUNTO BELONGING, FOR THE USE OF THE UNITED STATES, AS AND FOR AN AUTOMOBILE GARAGE OF THE POST OFFICE AT NEWARK, NEW JERSEY, AFORESAID, FOR, DURING, AND UNTIL THE FULL END AND TERM OF TEN (10) YEARS THEN NEXT ENSUING, FROM AND AFTER THE 1ST DAY OF DECEMBER, A.D, NINETEEN HUNDRED AND TWENTY-ONE, *

THE SAID PARTY OF THE FIRST PART HEREBY COVENANTS AND AGREES FOR ITSELF, ITS OFFICERS, THEIR SUCCESSORS IN OFFICE AND ASSIGNS, * * * AND WILL AT ALL TIMES KEEP SAID PREMISES, * * * IN GOOD REPAIR AND CONDITION, TO THE SATISFACTION OF THE PARTY OF THE SECOND PART; AND IN DEFAULT THEREOF THE SAID PREMISES SHALL BE DEEMED UNFIT FOR USE AS A GARAGE AND NO RENT SHALL BE DUE OR PAYABLE THEREUNDER UNTIL THE SAME SHALL BE PUT IN A SATISFACTORY CONDITION FOR SUCH USE. * * *

THE FACTS NOW SUBMITTED SHOW A NEED OF THE GOVERNMENT WHICH THE LESSOR WAS NOT REQUIRED TO SUPPLY UNDER THE TERMS OF THE LEASE. THE CHARACTER OF THE PARTITION OR OFFICE BEING NOW SHOWN TO BE SUCH AS TO BE READILY REMOVABLE, AND NOT PERMANENT, AND THE LESSOR HAVING IN WRITING EXPRESSLY SO ADMITTED, CREDIT SEEMS PROPER. ACCORDINGLY, BASED UPON THIS NEW AND MATERIAL INFORMATION NOW BEFORE THE OFFICE THE FORMER ACTIONS IS REVERSED, AND CREDIT FOR THE PAYMENT WILL BE ALLOWED.