B-68407, SEPTEMBER 27, 1950, 30 COMP. GEN. 122

B-68407, SEPTEMBER 27, 1950, 30 COMP. GEN. 122

LEASES - REPAIRS AND IMPROVEMENTS - LIMITATION WHERE A LEASE ENTERED INTO BY THE GOVERNMENT FOR A TERM OF LESS THAN A YEAR WAS RENEWED FOR THE FOLLOWING FISCAL YEAR, THE NET RENTAL FOR THE FIRST YEAR OF THE RENTAL TERM, AS DISTINGUISHED FROM THE ORIGINAL TERM, IS FOR CONSIDERATION IN THE COMPUTATION OF THE AMOUNT THAT MAY BE PAID UNDER THE 25 PERCENTUM ALTERATION AND IMPROVEMENTS LIMITATION PROVISION OF SECTION 322 OF THE ECONOMY ACT OF JUNE 30, 1932, AS AMENDED, AS THE GOVERNMENT'S PROPORTIONATE COST OF ALTERATIONS MADE BY THE LESSOR TO THE LEASED PREMISES.

COMPTROLLER GENERAL WARREN TO M. D. LEWIS, NATIONAL MEDIATION BOARD, SEPTEMBER 27, 1950:

REFERENCE IS MADE TO YOUR LETTER OF SEPTEMBER 18, 1950, TRANSMITTING A VOUCHER WITH RELATED PAPERS STATED IN FAVOR OF THE SODAK COMPANY IN THE AMOUNT OF $3,021.19, AS THE PROPORTIONATE COST OF ALTERATIONS MADE BY THE LESSOR IN ROOMS 414-425, INCLUSIVE, AND 1425 AND 1426, IN THE 39 SOUTH LA SALLE BUILDING, CHICAGO, ILLINOIS, LEASED TO THE GOVERNMENT UNDER LEASE NO. MBRAB-119, DATED AUGUST 12, 1949, AND REQUESTING A DECISION AS TO WHETHER YOU PROPERLY MAY CERTIFY THE VOUCHER FOR PAYMENT IN THE AMOUNT STATED.

AS INDICATED IN YOUR LETTER, THERE WAS PREVIOUSLY SUBMITTED ANOTHER VOUCHER IN THE AMOUNT OF $3,747.97, AS THE GOVERNMENT'S PROPORTIONATE COST OF THE INVOLVED ALTERATIONS, WHICH VOUCHER WAS THE SUBJECT OF DECISION OF JANUARY 12, 1950, B-68407, REPORTED IN 29 COMP. GEN. 299. THE PERTINENT PROVISIONS OF THE LEASE ARE SET FORTH IN THE REFERRED-TO DECISION AND WILL NOT BE REPEATED HERE. INSOFAR AS HERE MATERIAL, THE DECISION OF JANUARY 12, 1950, HELD THAT IN VIEW OF THE 25 PERCENTUM LIMITATION OF SECTION 322 OF THE ECONOMY ACT OF JUNE 30, 1932, 47 STAT. 412, AS AMENDED BY THE ACT OF MARCH 3, 1933, 47 STAT. 1517, NOT MORE THAN 25 PERCENTUM OF THE NET RENTAL FOR THE ORIGINAL TERM ( OCTOBER 15, 1949, TO JUNE 30, 1950) COULD BE EXPENDED FOR ALTERATIONS, IMPROVEMENTS, AND REPAIRS TO THE LEASED PREMISES. SINCE THERE WAS NOTHING OF RECORD INDICATING THAT THE LEASE HAD BEEN RENEWED FOR THE FISCAL YEAR BEGINNING JULY 1, 1950, AND SINCE THE AMOUNT CLAIMED ON THE ORIGINAL VOUCHER WAS IN EXCESS OF 25 PERCENTUM OF THE NET RENTAL FOR THE ORIGINAL TERM, YOU WERE ADVISED THAT CERTIFICATION OF THAT VOUCHER IN AN AMOUNT IN EXCESS OF $2,135.96 WAS NOT AUTHORIZED.

CONCERNING THE PROPRIETY OF CERTIFYING THE PRESENT VOUCHER FOR PAYMENT, IT IS STATED IN YOUR LETTER THAT YOU ARE STILL DOUBTFUL AS TO THE LEGALITY OF THE PAYMENT OF 25 PERCENTUM OF THE NET RENTAL FOR THE FIRST YEAR OF THE RENTAL TERM, AS DISTINGUISHED FROM THE ORIGINAL TERM WHICH, IN THIS INSTANCE, WAS LESS THAN ONE YEAR. IN THAT CONNECTION, IT APPEARS THAT THE ORIGINAL LEASE NOW HAS BEEN RENEWED FOR THE FISCAL YEAR BEGINNING JULY 1, 1950. IN THE CIRCUMSTANCES, THE NET "RENTAL FOR THE FIRST YEAR OF THE RENTAL TERM," THAT IS TO SAY, FROM OCTOBER 15, 1949, TO OCTOBER 14, 1950, PROPERLY IS FOR CONSIDERATION IN COMPUTING THE AMOUNT THAT MAY BE PAID AS REIMBURSEMENT FOR THE COST OF ALTERATIONS MADE BY THE LESSOR. 20 COMP. GEN. 30; 29 ID. 299, SUPRA. THEREFORE, SINCE THE RECORD SHOWS THAT THE NET ANNUAL RENTAL WAS $12,084.74, AN EXPENDITURE OF $3,021.19 FOR ALTERATIONS IS AUTHORIZED.

ACCORDINGLY, THE VOUCHER IN THE AMOUNT OF $3,021.19 WHICH IS RETURNED HEREWITH MAY BE CERTIFIED FOR PAYMENT IF OTHERWISE FREE FROM OBJECTION.