B-124050, NOV. 16, 1955

B-124050, NOV. 16, 1955

TO HOUSING AUTHORITY OF THE CITY OF VALLEJO:

REFERENCE IS MADE TO YOUR LETTER OF MAY 17, 1955, FILE NO. 112, WITH ENCLOSURES, CONCERNING YOUR CLAIM FOR REFUND OF $6,083.25, WITH INTEREST, REPRESENTING A DISPUTED CHARGE FOR FUEL OIL INCLUDED IN THE MORTGAGE GIVEN BY YOU ON HARRY FLOYD TERRACE, CAL-4767, IN CONNECTION WITH YOUR ACQUISITION OF THE PROJECT FROM THE PUBLIC HOUSING ADMINISTRATION ON JUNE 30, 1953.

IT APPEARS THAT UNDER AN INDENTURE OF LEASE, HA/CAL-4219/MPH-104, DATED SEPTEMBER 11, 1945, AS AMENDED, THE HOUSING AUTHORITY OPERATED FOR THE GOVERNMENT, ACTING THROUGH THE PUBLIC HOUSING ADMINISTRATION, A GROUP OF HOUSING PROJECTS LOCATED IN AND NEAR VALLEJO. THE PROJECTS WERE DEVELOPED UNDER THE PROVISIONS OF THE LANHAM ACT OF OCTOBER 14, 1940, AS AMENDED, 42 U.S.C. 1521-1590. TWO OF THE PROJECTS INCLUDED IN THE LEASE ARE INVOLVED IN THE PRESENT CLAIM, NAMELY, HARRY FLOYD TERRACE, CAL-4767, AND CHABOT TERRACE, CAL-4211. WHILE OPERATING PROJECT CAL-4211 DURING THE FISCAL YEAR ENDED JUNE 30, 1951, THE HOUSING AUTHORITY PURCHASED FUEL OIL AT AN AVERAGE COST OF $0.1205 PER GALLON AND RESOLD SAME TO THE TENANTS OF THE PROJECT AT $0.10 PER GALLON, RESULTING IN A LOSS OF $2,836.54. IN THE FOLLOWING FISCAL YEAR, THE HOUSING AUTHORITY PURCHASED FUEL OIL AT AN AVERAGE COST OF $0.1330 PER GALLON WHICH IT RESOLD TO THE TENANTS AT $0.10 PER GALLON, RESULTING IN A LOSS OF $3,246.71. THE AUDITORS FOR THE PUBLIC HOUSING ADMINISTRATION TOOK EXCEPTION TO THE ABOVE PRACTICE AND SET UP A DEFERRED CHARGE FOR $6,083.25 AGAINST THE HOUSING AUTHORITY FOR REIMBURSEMENT TO THE PUBLIC HOUSING ADMINISTRATION. THE HOUSING AUTHORITY PROTESTED SUCH ACTION ON THE GROUND, AMONG OTHERS, THAT INSTALLATION OF METERED OIL PUMPS WAS NECESSITATED BY THE FAILURE OF THE ADMINISTRATION TO INSTALL GAS SPACE HEATERS. IT HAS SINCE CONTINUED TO OBJECT TO THE CHARGE, BUT THE ADMINISTRATION HAS NEVER CHANGED ITS POSITION, AND WHEN THE AUTHORITY APPLIED FOR RELINQUISHMENT OF PROJECT 4767 TO IT, THE ADMINISTRATION REQUIRED THE AMOUNT OF THE CHARGE TO BE INCLUDED IN THE NOTE AND MORTGAGE TO BE EXECUTED BY THE AUTHORITY. THE AUTHORITY URGED THAT SINCE THE INDEBTEDNESS OCCURRED INCIDENT TO THE OPERATION OF PROJECT CAL-4211, COLLECTION OF SUCH INDEBTEDNESS COULD NOT BE EFFECTED INCIDENT TO THE RELINQUISHMENT AND TRANSFER OF THE GOVERNMENT'S INTEREST IN PROJECT CAL-4767. THE AUTHORITY ALSO URGES NOW THAT THE ITEM FOR $6,083.25 WAS IMPROPERLY INCLUDED IN THE NOTE AND MORTGAGE SECURING THE PURCHASE PRICE OF PROJECT CAL-4767, IN VIEW OF THE RESTRICTIVE PROVISIONS OF SECTION 601 (F) OF THE LANHAM ACT, AS AMENDED, 42 U.S.C. 1581 (F). THAT SECTION PROVIDES IN PART THAT "THE ADMINISTRATOR MAY CHARGE TO THE TRANSFEREE THE COST TO THE UNITED STATES OF ANY SURVEY, TITLE INFORMATION, OR OTHER ITEM INCIDENTAL TO THE TRANSFER.' IN ADDITION REFERENCE IS MADE TO A TELEGRAM OF FEBRUARY 8, 1953, WHEREIN THE HOUSING AUTHORITY WAS NOTIFIED TO DISREGARD THE ADMINISTRATION'S LETTER OF FEBRUARY 6, 1953, WHICH DIRECTED CERTAIN ACCOUNTING ENTRIES WITH RESPECT TO THE CHARGE IN QUESTION.

THE RECORD SHOWS THAT APPLICATION FOR RELINQUISHMENT OF PROJECT CAL 4767 WAS MADE BY THE HOUSING AUTHORITY PURSUANT TO TITLE VI, SECTION 601 (B) OF THE LANHAM ACT AS AMENDED, 52 U.S.C. 1581 (B). THAT SECTION AUTHORIZES TRANSFER OF THE GOVERNMENT'S INTEREST UPON ACQUISITION OF THE UNDERLYING LAND AND FULFILLMENT OF THE CONDITIONS THEREIN SPECIFIED. BY LETTER OF JUNE 29, 1953, YOU WERE NOTIFIED THAT YOUR APPLICATION HAD BEEN APPROVED AND THAT YOU WOULD BE REQUIRED TO EXECUTE A NOTE AND DEED OF TRUST IN THE AMOUNT OF $33,440.55, WHICH AMOUNT INCLUDED THE ITEM FOR $6,083.25 REPRESENTING THE ABOVE DEFERRED CHARGES FOR FUEL OIL. THE NOTE AND DEED OF TRUST WERE EXECUTED BY YOU ON JUNE 30, 1953, AND THE NOTE WAS PAID IN FULL AFTER THE ADMINISTRATION, UPON REVIEW, SUSTAINED ITS AUDIT ACTION CONCERNING THE DEFERRED CHARGE OF $6,083.25.

AS INDICATED ABOVE THIS RELINQUISHMENT WAS EFFECTED UNDER SECTION 601 (B) OF THE LANHAM ACT. RELINQUISHMENTS EFFECTED UNDER THAT SECTION ARE NOT MANDATORY, BUT, ON THE CONTRARY, THE RELINQUISHMENT AUTHORITY CONFERRED UPON THE ADMINISTRATOR UNDER THAT SECTION IS DISCRETIONARY. THE ADMINISTRATOR, HOUSING AND HOME FINANCE AGENCY, IN RESPONSE TO OUR REQUEST FOR A REPORT IN THE MATTER, STATES THAT FOR SOUND POLICY REASONS THE SATISFACTION OF ANY OUTSTANDING INDEBTEDNESS OF THE HOUSING AUTHORITY WAS MADE A CONDITION OF THE EXERCISE OF THIS DISCRETION. HE STATES FURTHER THAT HAD THE HOUSING AUTHORITY NOT ELECTED TO ACCEPT SUCH CONDITION IN EXECUTING THE NOTE AND DEED OF TRUST REFERRED TO, WHICH SPECIFICALLY INCLUDED THE ITEM FOR $6,083.25, NO RELINQUISHMENT WOULD HAVE BEEN CONSUMMATED. IN OTHER WORDS, THE ADMINISTRATOR STATES THAT THE DISCHARGE OF THE GOVERNMENT'S CLAIM FOR $6,083.25 ARISING INCIDENT TO YOUR OPERATION OF PROJECT CAL-4211 WAS MADE A CONDITION OF, AND AN INDUCEMENT TO, THE EXERCISE OF HIS DISCRETIONARY AUTHORITY IN RELINQUISHMENT AND TRANSFER OF THE GOVERNMENT'S INTEREST IN PROJECT CAL-4767 TO THE HOUSING AUTHORITY. CONSEQUENTLY, THE ADMINISTRATOR STATES THAT THE ITEM FOR $6,083.25 CANNOT BE ISOLATED OR TREATED AS A SEPARATE CLAIM WITHOUT REOPENING THE ENTIRE RELINQUISHMENT INCIDENT TO PROJECT CAL-4757, TO WHICH ACTION THE ADMINISTRATOR IS OPPOSED SINCE THERE IS NO BASIS THEREFOR IN THE LAW OR IN THE PUBLIC INTEREST.

SECTION 304 OF THE LANHAM ACT, AS AMENDED, 42 U.S.C. 1544, PROVIDES, AS FOLLOWS:

"NOTWITHSTANDING ANY OTHER PROVISION OF LAW, WHETHER RELATING TO THE ACQUISITION, HANDLING, OR DISPOSAL OF REAL OR OTHER PROPERTY BY THE UNITED STATES OR TO OTHER MATTERS, THE ADMINISTRATOR, WITH RESPECT TO ANY PROPERTY ACQUIRED OR CONSTRUCTED UNDER THE PROVISIONS OF SUBCHAPTER II-VII OF THIS CHAPTER, IS AUTHORIZED BY MEANS OF GOVERNMENT PERSONNEL, SELECTED QUALIFIED PRIVATE AGENCIES, OR PUBLIC AGENCIES * * * (B) TO PURSUE TO FINAL COLLECTION BY WAY OF COMPROMISE OR OTHERWISE, ALL CLAIMS ARISING THEREFROM. * * *"

IN VIEW OF THE ABOVE STATUTORY PROVISIONS IT IS IMMATERIAL WHETHER YOUR INDEBTEDNESS ARISING FROM THE RESALE OF THE FUEL OIL COULD BE REGARDED AS INCIDENTAL TO THE TRANSFER WITHIN THE MEANING OF SECTION 601 (F) OF THE ACT. WITH RESPECT TO THE TELEGRAM OF FEBRUARY 12, 1953, THE ADMINISTRATOR HAS REPORTED THAT THIS TELEGRAM WAS DISPATCHED BECAUSE OF A TECHNICAL PROCEDURAL QUESTION OF ACCOUNTING RATHER THAN BECAUSE OF ANY QUESTION AS TO THE LIABILITY OF THE HOUSING AUTHORITY TO THE ADMINISTRATION AND THAT THE ACCOUNTING QUESTION WAS FULLY EXPLAINED IN A SUBSEQUENT SELF- EXPLANATORY LETTER OF DECEMBER 7, 1953, TO THE HOUSING AUTHORITY.

IN THE LIGHT OF THE FOREGOING YOUR CLAIM MUST BE AND IS DISALLOWED.