B-146197, AUG. 14, 1961

B-146197, AUG. 14, 1961

TO THE POSTMASTER GENERAL:

REFERENCE IS MADE TO YOUR LETTER OF JUNE 19, 1961, REQUESTING A DECISION WHETHER A PROPOSED NEGOTIATED 30-YEAR LEASE FOR APPROXIMATELY ONE MILLION SQUARE FEET OF BUILDING SPACE TO BE LOCATED ON THREE TO FIVE FLOORS OF A 10 TO 20-STORY BUILDING TO BE ERECTED BY A PRIVATE INVESTOR IN NEW YORK, NEW YORK, MAY BE CONSIDERED AS AN EXCEPTION TO THE ADVERTISING REQUIREMENTS OF 41 U.S.C. 5.

YOU STATE THAT THE DEPARTMENT DESIRES TO MAKE THE LEASE CONTRACT PURSUANT TO SECTION 203 OF THE POST OFFICE PROPERTY ACT OF 1954, AS AMENDED, 39 U.S.C. 2103; THAT THE SITE OF THE PROPOSED BUILDING IS BOUNDED BY 9TH AND 10TH AVENUES, AND WEST 31ST AND 33RD STREETS; THAT THE PRIVATE INVESTOR CONTROLS THE AIR RIGHTS OVER THE SITE; THAT THE SPACE REQUIRED BY THE DEPARTMENT WILL DEPEND UPON THE AREA TO BE MADE AVAILABLE FOR POSTAL USE ON EACH FLOOR AND THE ACCESSIBILITY TO SURFACE TRANSPORTATION ARTERIES; AND THAT THE PROPOSED BUILDING WILL ALSO BE INTERCONNECTED WITH THE GENERAL POST OFFICE AND THE MORGAN ANNEX VIA UNDERGROUND TUNNELS.

YOU STATE THAT THE ACQUISITION OF THE PROPOSED FACILITY FOR POSTAL PURPOSES WOULD RESOLVE ONE OF THE DEPARTMENT'S MOST ACUTE AND COMPLEX MAIL HANDLING AND DISTRIBUTION PROBLEMS; THAT THE PENNSYLVANIA RAILROAD WHICH IS LOCATED UNDER THE GENERAL POST OFFICE AND THE NEW YORK CENTRAL RAILROAD WHICH IS UNDER MORGAN ANNEX PROVIDE FACILITIES FOR THE RECEIPT AND DISPATCH OF ALL MAILS INVOLVING RAIL MOVEMENTS; THAT THE PRESENT POSTAL FACILITIES IN THIS AREA ARE INADEQUATE TO COPE WITH THE EVER-INCREASING MAIL SERVICE DEMANDS; THAT THE MOST URGENT REQUIREMENT FROM THE STANDPOINT OF MAIL TRANSPORTATION IS A CENTRAL TRUCK TERMINAL FACILITY WITH ADEQUATE PLATFORM SPACE; AND THAT THE OVER-THE-ROAD TRANSPORTATION SYSTEM IS CONSTANTLY ABSORBING A GREATER PERCENTAGE OF THE MAIL TRAFFIC, PROVIDING BETTER SERVICE AT LOWER COSTS.

AS JUSTIFICATION FOR THE PROPOSED LEASE CONTRACT YOU STATE THAT THE INVOLVED SITE IS IDEALLY LOCATED SINCE THE PROPOSED BUILDING WOULD BE CONTIGUOUS TO THE PLANNED HIGHWAY COMPLEX AND A CONNECTING ENTRANCE TO THE LINCOLN TUNNEL WHICH WOULD RUN THROUGH THE CENTER OF THE BUILDING; THAT THE CONNECTION FROM 30TH STREET TO THE LINCOLN TUNNEL HAS ALREADY BEEN BUILT IN ANTICIPATION OF THIS PROPOSED BUILDING; THAT THE STATE OF NEW YORK HAS ALREADY APPROVED THE CONSTRUCTION OF A MID-MANHATTAN OR CROSS- TOWN EXPRESSWAY, APPROVAL OF WHICH BY THE CITY OF NEW YORK IS EXPECTED SHORTLY; THAT THIS EXPRESSWAY WILL CONNECT THE LINCOLN TUNNEL UNDER THE HUDSON RIVER AND THE MIDTOWN TUNNEL UNDER THE EAST RIVER, THEREBY CONNECTING THE NEW JERSEY TURNPIKE WITH THE LONG ISLAND EXPRESSWAY; AND THAT THIS TRANSPORTATION NETWORK WILL AFFORD OVER-THE ROAD MOVEMENTS OF MAIL TO AND FROM THE PROPOSED BUILDING IN ALL DIRECTIONS. IN ADDITION, YOU STATE THAT THE TUNNEL CONNECTIONS WITH THE GENERAL POST OFFICE AND MORGAN ANNEX WILL AFFORD AN INTERCHANGE OF MAIL MOVEMENTS BETWEEN THE RAIL AND THE OVER-THE-ROAD TRANSPORTATION SYSTEMS; THAT NO OTHER SITE IS AVAILABLE TO THIS AREA WHICH WOULD PROVIDE THESE REQUIREMENTS; AND THAT THE PROPOSED LESSOR HAS OFFERED A FAVORABLE RENT FOR A 30-YEAR TERM.

AS FURTHER JUSTIFICATION FOR THE PROPOSED LEASE CONTRACT YOU STATE THAT THE HIGH COST OF LAND MAKES IT NECESSARY TO CONSTRUCT A MULTI STORY, MULTI -TENANT BUILDING IN ORDER THAT THE DEPARTMENT MAY OCCUPY SPACE AT REASONABLE COST. IT IS EXPLAINED THAT IT WOULD BE MOST IMPRACTICABLE FOR THE DEPARTMENT TO PREPARE A UNIFORM SET OF PLANS FOR THIS TYPE OF BUILDING FOR BUILDING PURPOSES IN THE ABSENCE OF KNOWLEDGE AS TO THE NONPOSTAL AREAS; THAT THE BIDDERS PROGRAM FOR THE OCCUPANCY OF THE NONPOSTAL AREAS MAY CONCERN APARTMENTS, OFFICES, OR INDUSTRIAL TYPE TENANTS, OR POSSIBLY A COMBINATION OF THESE; AND THAT IT WOULD BE ALSO MOST IMPRACTICABLE TO PREPARE A UNIFORM SET OF PLANS FOR POSTAL USE WITHOUT SOME KNOWLEDGE OF THE TYPE OF BUILDING PROPOSED, FLOOR AREAS AVAILABLE FOR POSTAL OPERATIONS, AND THE TYPE OF COMMERCIAL TENANTS, SINCE THIS AFFECTS THE STREET TRAFFIC CONDITIONS WHICH ARE OF GREAT IMPORTANCE TO THE DEPARTMENT IN THE MOVEMENT OF THE MAILS.

YOU STATE THAT WHILE THE DEPARTMENT MAY NEGOTIATE A 20-YEAR LEASE WITHOUT ADVERTISING UNDER AUTHORITY OF 39 U.S.C. 2102, USE OF THIS STATUTORY AUTHORITY IS NOT APPROPRIATE IN THIS INSTANCE IN VIEW OF THE UNUSUALLY DIFFICULT PROBLEM OF FINANCING THE CONSTRUCTION OF THIS LARGE PROJECT AND THE CONSEQUENT GREATER COST TO THE GOVERNMENT ON THE SHORTER TERM. YOU FURTHER STATE THAT IN VIEW OF THE FINANCING AND OTHER PROBLEMS INCIDENT TO A PROJECT OF THIS MAGNITUDE THE OWNERS HAVE ADVISED THAT THE SHORTEST BASIC TERM THEY COULD OFFER WOULD BE A 30 YEAR NONCANCELLABLE LEASE; THAT THEREFORE, A SECTION 2102 LEASE WOULD NOT BE APPROPRIATE SINCE SUCH LEASES AE LIMITED TO 20 YEARS; THAT THE DEPARTMENT'S FORESEEABLE OCCUPANCY IS AT LEAST 30 YEARS; AND THAT, IN ANY EVENT, THE DEPARTMENT IS OF THE VIEW THAT THE LONGER TERM WOULD BE IN THE BEST INTERESTS OF THE GOVERNMENT BECAUSE RENT FOR A 20-YEAR TERM PLUS A 10-YEAR RENEWAL TERM WOULD EXCEED THE RENT FOR A 30-YEAR TERM.

WHILE YOU STATE THAT THE DEPARTMENT COULD ACQUIRE THE AIR RIGHTS EITHER BY DIRECT PURCHASE OR CONDEMNATION AND THEREAFTER ADVERTISE FOR LEASE BIDS UNDER 39 U.S.C. 2103, UNDER SUCH PROCEDURE THE LEASE PROPOSALS FOR EXCLUSIVE POSTAL OCCUPANCY WOULD BE EXCESSIVE DUE TO THE HIGH SITE COST. THUS, YOU REASON THAT IF THE DEPARTMENT MUST ACQUIRE THE AIR RIGHTS, THE MONEY FACTOR WOULD PRECLUDE ACQUISITION OF SPACE AT THIS IDEAL LOCATION AND YOU EXPRESS THE VIEW THAT EVEN IF THE SITE SHOULD BE ACQUIRED BY PURCHASE OR CONDEMNATION, FOLLOWED BY INVITATION FOR BIDS FOR CONSTRUCTION OF A MULTI-PURPOSE BUILDING, IT IS DOUBTFUL WHETHER A LEASE BIDDER COULD OBTAIN LEASE COMMITMENTS FOR THE ADDITIONAL FLOORS NECESSARY TO MAKE THIS PROJECT ECONOMICALLY JUSTIFIABLE. YOU STATE THAT THIS IS SO BECAUSE USUALLY NO ONE WILL BID ON A MULTI-OCCUPANCY BUILDING UNLESS HE HAS LEASE COMMITMENTS; THAT GENERALLY AN INTERESTED LESSEE WOULD NOT GIVE A COMMITMENT UNLESS HE WAS CERTAIN OF GETTING THE SPACE; AND THAT ON THE OTHER HAND NO BIDDER CAN ASSURE SPACE TO A PROSPECTIVE LESSEE UNTIL THE BIDDER IS AWARDED THE LEASE CONTRACT. YOU POINT OUT THAT IN THIS CASE THE PROSPECTIVE CONTRACTOR IS READY AND WILLING TO CONSTRUCT THE MORE ECONOMICAL (TO THE GOVERNMENT) MULTI-STORY BUILDING EVEN WITHOUT LEASE COMMITMENTS ON THE NONPOSTAL SPACE.

IN VIEW OF THE ABOVE YOU EXPRESS THE VIEW THAT THE NEGOTIATION OF A 30- YEAR LEASE WOULD BE IN THE BEST INTERESTS OF THE GOVERNMENT AND YOU CONCLUDE THAT NEGOTIATION OF THE PROPOSED LEASE CONTRACT IS AUTHORIZED UNDER ONE OF THE EXCEPTIONS OF 41 U.S.C. 5, PARTICULARLY SUBDIVISION (3).

SECTION 203 (A) (1) OF THE POST OFFICE DEPARTMENT PROPERTY ACT OF 1954, AS AMENDED, 39 U.S. 2103 (A) (1), PROVIDES THAT THE POSTMASTER GENERAL IS AUTHORIZED TO "/1) NEGOTIATE AND ENTER INTO LEASE AGREEMENTS WHICH DO NOT BIND THE GOVERNMENT FOR PERIODS EXCEEDING THIRTY YEARS, ON SUCH TERMS AS THE POSTMASTER GENERAL DEEMS TO BE IN THE BEST INTERESTS OF THE UNITED STATES, FOR THE ERECTION BY THE LESSOR OF THE BUILDINGS AND IMPROVEMENTS FOR POSTAL PURPOSES AS THE POSTMASTER GENERAL DEEMS APPROPRIATE, ON LANDS SOLD, LEASED, OR OTHERWISE DISPOSED OF BY THE POSTMASTER GENERAL TO, OR OTHERWISE ACQUIRED BY, THE LESSOR * * *.'

SECTION 2112 OF TITLE 39 MAKES SECTION 5 OF TITLE 41 (3709 REVISED STATUTES) APPLICABLE TO LEASE AGREEMENTS ENTERED INTO UNDER AUTHORITY OF ITEM (1) OF SECTION 2103 (A) OF TITLE 39.

SECTION 41 U.S.C. 5 (3) PERMITS CONTRACTING WITHOUT ADVERTISING "WHEN ONLY ONE SOURCE OF SUPPLY IS AVAILABLE AND THE GOVERNMENT PURCHASING OR CONTRACTING OFFICER SHALL SO CERTIFY.'

AS INDICATED IN YOUR LETTER, IT HAS BEEN CONSISTENTLY HELD THAT ADVERTISING IS NOT REQUIRED WHERE IT CAN OBVIOUSLY ACCOMPLISH NO USEFUL PURPOSE. 28 COMP. GEN. 470; 33 ID. 90.

IN THE LIGHT OF THE FACTS AND CIRCUMSTANCES REPORTED IN YOUR LETTER AND SINCE YOU STATE THAT NO OTHER SITE IS AVAILABLE IN THE AREA WHICH WOULD MEET THE DEPARTMENT'S REQUIREMENTS, THE PRESENT MATTER MAY BE CONSIDERED AS AN EXCEPTION TO THE ORDINARY ADVERTISING REQUIREMENTS OF 41 U.S.C. 5, SINCE ADVERTISING WOULD SERVE NO USEFUL PURPOSE.

WITH RESPECT TO YOUR DETERMINATION IN THE PRESENT MATTER THAT THE NEGOTIATION OF A 30-YEAR LEASE IS IN THE BEST INTERESTS OF THE UNITED STATES IT MAY BE STATED THAT THE METHOD TO BE USED IN THE ACQUISITION OF SPACE FOR POSTAL PURPOSES WHETHER UNDER THE 1950 ACT, THE 1954 ACT, OR BY DIRECT PURCHASE OR CONDEMNATION IS PRIMARILY AN ADMINISTRATIVE MATTER. THE PRESENT MATTER YOU HAVE DETERMINED THAT THE NEGOTIATION OF A 30-YEAR LEASE IS IN THE BEST INTERESTS OF THE UNITED STATES. IT IS ASSUMED THAT IN REACHING THIS CONCLUSION THE DEPARTMENT HAS MADE OR WILL MAKE ADEQUATE STUDIES PRIOR TO ANY COMMITMENT OR THE EXECUTION OF ANY LEASE AGREEMENT SATISFACTORILY ESTABLISHING THAT THE PROCEDURE PROPOSED TO BE FOLLOWED IS THE MOST ECONOMICAL MANNER OF ACQUIRING ..END :