B-2244, MARCH 24, 1939, 18 COMP. GEN. 744

B-2244, MARCH 24, 1939, 18 COMP. GEN. 744

LEASES - OFFICE-SPACE DECREASE BECAUSE OF FEDERAL-ACTIVITY CURTAILMENT - RESTORATION OF PREMISES VERSUS FITTING OF RETAINED SPACE FOR GOVERNMENT OCCUPANCY - GOVERNMENT'S VERSUS LESSOR'S COST LIABILITY WHERE, DUE TO CURTAILMENT IN THE FEDERAL ACTIVITY INVOLVED, THE ORIGINAL LEASE AGREEMENT HAS BEEN SUPPLEMENTED TO THE EXTENT OF THE RENT PAYABLE FOR THE LESSER AMOUNT OF SPACE NOW OCCUPIED, THE EXPENSE OF CHANGING ELECTRIC LIGHTS AND METERS, THE COST OF PLASTER PATCHING AND CONSTRUCTION OF PARTITION WALLS AND DOORS, AND THE EXPENSE OF VARIOUS OTHER ITEMS, MAY NOT BE PAID FROM FEDERAL FUNDS, AS REQUESTED BY THE LESSOR, IF THE ITEMS DO NOT INVOLVE THE GOVERNMENT'S CONTRACT LIABILITY FOR RESTORATION OF ALTERATIONS MADE BY THE GOVERNMENT DURING ITS OCCUPANCY AND ARE INSTEAD APPARENTLY IN RESTORATION OF THE ABANDONED SPACE TO ITS FORMER CONDITION PRIOR TO THE CHANGES MADE BY THE LESSOR UNDER ITS CONTRACT OBLIGATION TO FIT THE PREMISES FOR GOVERNMENT OCCUPANCY, BUT SUCH PAYMENT IS AUTHORIZED TO THE EXTENT THAT SAID ITEMS REPRESENT THE COST OF FITTING THE PREMISES RETAINED BY THE GOVERNMENT FOR THE PURPOSES LEASED, AND IF ANY ITEM SHOULD BE NECESSARY FOR BOTH THE RESTORATION OF THE PREMISES AND THE FITTING OF THE RETAINED SPACE FOR GOVERNMENT OCCUPANCY THE COST OF SAID ITEM WOULD APPEAR FOR THE APPORTIONING EQUALLY BETWEEN THE GOVERNMENT AND THE LESSOR.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE CHAIRMAN, NATIONAL BITUMINOUS COAL COMMISSION, MARCH 24, 1939:

YOUR LETTER (SERVICE-EBC) OF MARCH 9, 1939, IS AS FOLLOWS:

REFERENCE IS MADE TO LEASE CONTRACT IBC-35, UNDER WHICH OFFICE SPACE IS LEASED FROM MARSHALL FIELD AND COMPANY FOR OPERATION OF OUR STATISTICAL BUREAU NO. 10 IN CHICAGO, ILLINOIS.

DUE TO CURTAILMENT IN THE ACTIVITIES OF THIS STATISTICAL BUREAU, THE LESSOR WAS NOTIFIED BY LETTER DATED JANUARY 25 THAT THE COMMISSION INTENDED TO RELINQUISH ONE-SEVENTH OF THE TOTAL 5,710 UNDER SUPPLEMENT NO. 1 OF THE LEASE. THE LESSOR ACKNOWLEDGED RECEIPT OF THE NOTIFICATION UNDER DATE OF FEBRUARY 2, AND ARRANGEMENTS WERE MADE BY THE LESSOR AND OUR CHICAGO MANAGER TO WORK OUT A PLAN WHEREBY THE SPACE TO BE ELIMINATED FROM FURTHER CONSIDERATION WOULD BE DEFINITELY INDICATED.

THE LESSOR HAS NOW ADVISED OUR CHICAGO MANAGER THAT IT WILL BE NECESSARY FOR THE COMMISSION TO BEAR THE FOLLOWING EXPENSE IN CONNECTION WITH RELINQUISHMENT OF THE SPACE:

CHANGING TWO ELECTRIC LIGHTS (CENTERING) AT $18.00 EA ----------- $36.00

CHANGING THE METER ---------------------------------------------- 10.00

WRECKING -------------------------------------------------------- 8.00

DECORATING AND CLEANING ----------------------------------------- 25.00

CHANGING TWO BASE PLUGS ----------------------------------------- 12.00

CHANGING RAILING FOR RECEPTION ROOM AND SWITCHBOARD ------------ 35.00

PLASTER PATCHING ------------------------------------------------ 10.00

SPLITTING A RADIATOR -------------------------------------------- 50.00

CONSTRUCTION OF FLOOR TO CEILING WALL --------------------------- 90.00

CONSTRUCTION OF TWO DOORS AT $60.00 EACH ------------------------ 120.00

TOTAL ----------------------------------------------------------- 396.00

THE QUESTION ARISES AS TO WHETHER THE EXPENSE INCIDENT TO MAKING THESE ALTERATIONS CONSTITUTES A JUST CHARGE FOR WHICH THE FUNDS OF THE COMMISSION CAN BE OBLIGATED.

ON JUNE 30, 1939, THE LEASE WILL EXPIRE, BUT IS SUBJECT TO RENEWAL FROM YEAR TO YEAR THROUGH THE FISCAL YEAR 1940. THE LEASE IS NOW IN ITS SECOND YEAR.

THE LESSOR HAS CONSENTED TO ACCEPT A 60-DAY NOTIFICATION IN LIEU OF THE 90-DAY NOTICE TO WHICH HE IS ENTITLED UNDER THE PROVISIONS OF THE LEASE. THE EXPIRATION DATE OF THE NOTIFICATION WILL THEREFORE BE MARCH 25, 1939, AND IT WILL BE APPRECIATED IF DECISION IN THIS CASE CAN BE EXPEDITED.

THE ORIGINAL LEASE (EXECUTED ON STANDARD FORM NO. 2 (REVISED) (, DATED JULY 1, 1937, COVERS ,5,986.66 SQUARE FEET OF FLOOR SPACE CONSISTING OF ROOM NUMBERED 706" FOR THE TERM BEGINNING JULY 15, 1937, AND ENDING JUNE 30, 1938, AT A MONTHLY RENTAL OF $548.77. IT APPEARS FROM AN EXAMINATION OF THE LESSOR'S BID ATTACHED TO THE LEASE THAT THE RENTAL STIPULATED IN THE LEASE IS INCLUSIVE OF CERTAIN REPAIRS AND ALTERATIONS NECESSARY TO FIT THE PREMISES FOR OCCUPANCY BY THE COMMISSION, AND IN THIS CONNECTION PARAGRAPH 6 OF THE LEASE AND A "RIDER" ATTACHED THERETO PROVIDES THAT THE LESSOR SHALL FURNISH THE GOVERNMENT DURING THE OCCUPANCY OF SAID PREMISES, UNDER THE TERMS OF THE LEASE, AS PART OF THE RENTAL CONSIDERATION---

* * * WINDOW SHADES FOR ALL WINDOWS; A SUFFICIENT NUMBER OF ELECTRIC LIGHT FIXTURES WIRED AND LAMPED TO FURNISH A MINIMUM OF TEN (10) FOOT CANDLES ILLUMINATION THIRTY (30) INCHES ABOVE THE FLOOR THROUGHOUT THE ENTIRE RENTED AREA; AN ADEQUATE NUMBER OF BASE PLUGS COMPLETELY WIRED, IN ADDITION TO WIRING, CABINETS, SWITCHES, ETC., TO PROVIDE THE NECESSARY NUMBER OF OUTLETS FOR THE OPERATION OF ALL NECESSARY OFFICE EQUIPMENT, FANS, ETC., ALL OF WHICH SHALL BE WIRED FOR ALTERNATING CURRENT OF 110-220 VOLTS; SPACE SHALL BE SEPARATELY METERED AS DIRECTED AND ELECTRIC CURRENT SHALL BE FURNISHED AT RATES NOT TO EXCEED CURRENT PUBLIC-UTILITY RATES FOR SIMILAR TYPES OF SERVICE; ELECTRIC LAMPS AND LAMP RENEWALS; ADEQUATE SUPPLY AND EXHAUST MECHANICAL VENTILATION WHERE NECESSARY; * * * THE SUBDIVIDING AND/OR PARTITIONING OFF OF SPACE SHALL BE AS SHOWN ON ATTACHED DRAWING; SPACE SHALL BE NEWLY CLEANED AND DECORATED AND ALL CONSTRUCTION WORK COMPLETED PRIOR TO OCCUPANCY AND SUCH ADDITIONAL PAINTING AND DECORATING SHALL BE DONE FROM TIME TO TIME AS MAY BE NECESSARY TO KEEP THE PREMISES IN FIRST CLASS CONDITION AND APPEARANCE.

ON MAY 27, 1938, THE ORIGINAL LEASE, INCLUDING "ALL TERMS AND CONDITIONS," WAS RENEWED FOR THE FISCAL YEAR 1939, AND ON NOVEMBER 1, 1938, THE SUPPLEMENTAL AGREEMENT REFERRED TO IN YOUR LETTER WAS ENTERED INTO, PROVIDING AS FOLLOWS:

IN ACCORDANCE WITH THE VERBAL AGREEMENT BETWEEN MARSHALL FIELD AND COMPANY, A CORPORATION, AND THE NATIONAL BITUMINOUS COAL COMMISSION, IT IS HEREBY FORMALLY AGREED THAT PARAGRAPHS 2, 5, AND 9 OF LEASE CONTRACT IBC- 35, DATED JULY 1, 1937, ARE HEREBY AMENDED TO READ AS FOLLOWS:

2. THE LESSOR HEREBY LEASES TO THE GOVERNMENT THE FOLLOWING DESCRIBED PREMISES, VIZ: 5,710 SQUARE FEET OF FLOOR SPACE CONSISTING OF ROOM NUMBERED 706, LOCATED ON THE SEVENTH (7TH) FLOOR OF THE BUILDING KNOWN AS THE MERCHANDISE MART, 222 WEST NORTH BANK DRIVE, CHICAGO, COOK COUNTY, ILLINOIS.

5. THIS LEASE MAY, AT THE OPTION OF THE GOVERNMENT, BE RENEWED FROM YEAR TO YEAR AT A RENTAL OF $523.42 PER MONTH, AND OTHERWISE UPON THE TERMS AND CONDITIONS HEREIN SPECIFIED, PROVIDED NOTICE BE GIVEN IN WRITING TO THE LESSOR AT LEAST THIRTY DAYS BEFORE THIS LEASE OR ANY RENEWAL THEREOF WOULD OTHERWISE EXPIRE: PROVIDED, THAT NO RENEWAL THEREOF SHALL EXTEND THE PERIOD OF OCCUPANCY OF THE PREMISES BEYOND THE 30TH DAY OF JUNE 1940.

9. THE GOVERNMENT SHALL PAY THE LESSOR FOR THE PREMISES RENT AT THE FOLLOWING RATE: $523.42 PER MONTH. PAYMENT SHALL BE MADE AT THE END OF EACH MONTHLY RENTAL PERIOD.

IT IS FURTHER AGREED BY THE PARTIES HERETO THAT ALL OTHER PROVISIONS OF THE SAID LEASE IBC-35 SHALL REMAIN AS ORIGINALLY WORDED AND OTHERWISE BE IN FULL FORCE AND EFFECT.

IT IS FURTHER AGREED BY THE PARTIES HERETO THAT THIS AGREEMENT SHALL TAKE EFFECT ON NOVEMBER 5, 1938.

THE SUPPLEMENTAL AGREEMENT QUOTED ABOVE WAS ENTERED INTO PURSUANT TO THE PROVISIONS OF A RIDER" ATTACHED TO PARAGRAPH 11 OF THE LEASE AS FOLLOWS:

THE GOVERNMENT MAY, DURING THE TERM OF THIS LEASE OR ANY RENEWAL THEREOF, UPON NINETY (90) DAYS' WRITTEN NOTICE TO THE LESSOR, TERMINATE THE OCCUPANCY OF ANY RENTED SPACE WHICH THE GOVERNMENT NO LONGER NEEDS BY REASON OF THE DISCONTINUANCE OR CURTAILMENT OF THE ACTIVITIES OF THIS AGENCY OR THE REMOVAL OF THIS AGENCY FROM THE CITY, AND THAT IN SUCH CASE THE TOTAL CONSIDERATION PAID BY THE GOVERNMENT SHALL BE DECREASED BY THE PROPORTION THAT SUCH RELEASED SPACE BEARS TO THE TOTAL SPACE ORIGINALLY PROVIDED FOR BY THIS LEASE. * * *

IT APPEARS OBVIOUS FROM AN EXAMINATION OF THE ITEMS LISTED IN YOUR LETTER THAT THE COST THEREOF IS NOT AN OBLIGATION OR EXPENSE OF THE GOVERNMENT AS CONTEMPLATED BY PARAGRAPH 8 OF THE LEASE, THE REQUIREMENT FOR RESTORATION UNDER SAID PARAGRAPH RELATING ONLY TO ANY ALTERATIONS MADE BY THE GOVERNMENT DURING ITS OCCUPANCY OF THE LEASED PREMISES. HOWEVER, IT IS NOT CLEAR FROM YOUR LETTER WHAT PART OF THE AMOUNT OF $396 CLAIMED BY THE LESSOR IS INCIDENTAL TO THE RESTORATION OF THE VACATED SPACE TO ITS FORMER CONDITION--- THAT IS TO SAY, THE CONDITION OF THE PREMISES BEFORE THE LESSOR MADE THE NECESSARY REPAIRS TO FIT THE PREMISES FOR GOVERNMENT OCCUPANCY--- OR WHAT PART IS INCIDENTAL TO FITTING THE PART OF THE LEASED PREMISES RETAINED BY THE GOVERNMENT FOR THE PURPOSES FOR WHICH THEY ARE LEASED. TO THE EXTENT THAT THE AMOUNT CLAIMED IS ATTRIBUTABLE TO THE RESTORATION OF THE ABANDONED SPACE TO ITS FORMER CONDITION PRIOR TO THE CHANGES MADE BY THE LESSOR TO FIT THE PREMISES FOR GOVERNMENT OCCUPANCY, THERE IS NO LEGAL BASIS FOR PAYMENT OF SUCH EXPENSE, IT APPEARING THAT THE LEASE DOES NOT REQUIRE THE UNITED STATES TO REMOVE ALTERATIONS SO MADE AND THAT THE COST OF MAKING SUCH ALTERATIONS IS INCLUDED IN THE RENTAL STIPULATED IN THE LEASE. SEE A-50086, JULY 21 AND SEPTEMBER 29, 1933. HOWEVER, TO THE EXTENT THE AMOUNT CLAIMED REPRESENTS THE COST OF FITTING THE PREMISES RETAINED BY THE GOVERNMENT FOR THE PURPOSES LEASED THERE WOULD APPEAR TO BE NO LEGAL OBJECTION TO PAYMENT OF SUCH AMOUNT, IF OTHERWISE PROPER AND FUNDS ARE AVAILABLE THEREFOR. IN THE EVENT THAT ANY PARTICULAR ITEM MAY BE NECESSARY FOR BOTH PURPOSES SUCH AS THE ERECTION OF A PARTITION BETWEEN THE SPACE RETAINED BY THE GOVERNMENT AND THE ABANDONED SPACE THERE WOULD APPEAR TO BE NO LIABILITY ON THE GOVERNMENT TO PAY MORE THAN ONE-HALF OF THE AMOUNT CLAIMED FOR SUCH ALTERATIONS, AND PAYMENT IN EXCESS OF THAT RATIO IS NOT AUTHORIZED. IF THE ALTERATIONS HAVE NOW BEEN MADE BY THE LESSOR AND THERE IS ANY DOUBT AS TO THE ITEMS PROPERLY FOR PAYMENT BY THE GOVERNMENT THE LESSOR'S CLAIM, TOGETHER WITH A DETAILED STATEMENT OF THE NATURE AND COST OF EACH ITEM, MAY BE SUBMITTED TO THIS OFFICE FOR SETTLEMENT.