________________________________________ GRANTED: November 9, 1995 ________________________________________ GSBCA 13237 1425 NEW YORK AVENUE ASSOCIATES, Appellant, v. GENERAL SERVICES ADMINISTRATION, Respondent. Merle M. DeLancey, Jr., of Dickstein, Shapiro & Morin, Washington, DC, counsel for Appellant. Jeffrey H. Dunn, Office of Regional Counsel, General Services Administration, Washington, DC, counsel for Respondent. Before Board Judges PARKER, HYATT, and GOODMAN. PARKER, Board Judge. Appellant, 1425 New York Avenue Associates, claims that the General Services Administration (GSA) erred in calculating rent increases due as a result of an increase in real estate taxes in the District of Columbia during 1993. Respondent contends that no real estate tax increase occurred in that year. For the reasons discussed below, we hold that appellant is correct. There was a real estate tax increase in the District of Columbia in 1993 and, by the terms of appellant's leases with GSA, appellant is entitled to a commensurate increase in rent. Findings of Fact GSA leases from appellant office and related space at 1425 New York Avenue, Northwest, Washington, D.C. GSA has five leases which cover eighty-three percent of the space in the building. Appeal File, Exhibits 1-5. 2 The leases' Tax Adjustment Clause provides as follows: "The Government shall pay additional rent for its share of increases in real estate taxes over taxes paid for the calendar year in which its lease commences (base year)." Appeal File, Exhibits 1-5. For these leases, the base year for calculating tax adjustments is calendar year 1992, the year the leases commenced. Id. To calculate rent increases, the taxes paid for the base year are subtracted from the taxes paid for the current year. That figure is then multiplied by the Government's percentage share of occupancy, in this case eighty-three percent. Id. For calendar year 1992, the parties agree that appellant paid $1,294,633.25 in District of Columbia real estate taxes. Appeal File, Exhibit 7. Calendar year 1993 was somewhat more complicated. The District of Columbia taxes real estate on a fiscal, rather than a calendar, year basis. Prior to 1993, the District of Columbia's fiscal year ran from July 1 through June 30. Property owners would receive two bills each calendar year: a March bill covering the period from January 1 through June 30, and a September bill covering the period from July 1 through December 31. In 1993, the District of Columbia changed its fiscal year to one which runs from October 1 through September 30. In that year, property owners received the same bills, at the same times, but some of the bills covered different months than they had in the past. In March 1993, the District of Columbia billed appellant in the amount of $614,115.25 for real estate taxes covering the period from January 1, 1993 through June 30, 1993. Appellant's Exhibit J. Both parties agree that this amount should be included in the lease calculation. In September 1993, the District of Columbia billed appellant for $620,381.59. Unlike the other real estate tax bills, however, the September bill did not indicate the time period covered by the bill. Id., Exhibit K. Then, in March 1994, the District of Columbia billed appellant in the amount of $620,381.59 for real estate taxes covering the period from October 1, 1993 through March 31, 1994. Id., Exhibit L. The parties agree that one-half of this amount, $310,190.80, should be included in the calculation of taxes paid for calendar year 1993 because that amount covers the period from October 1, 1993 through December 31, 1993. The dispute centers around the September 1993 tax bill: appellant claims that it must cover the "missing" three month period from July 1 through September 30, 1993; respondent contends that, because the bill was for an amount equal to six months' real estate taxes, it must cover something more that the three-month "gap" or transition period between fiscal years. 3 The September 1993 tax bill was issued pursuant to the Omnibus Budget Support Emergency Act of 1993, 40 D.C. Reg. 3658, which provided for a payment equal to one-half of "the tax year 1993 tax rate for the real property upon which real property tax is levied multiplied by the assessed value for tax year 1994 of the real property upon which real property tax is levied." Appellant's Exhibit P. In other words, this last bill under the old fiscal year was equal to six months' real estate taxes, even though the new fiscal year would start just three months later. At the time, District of Columbia officials described the change as "strictly an accounting change which resulted in a $180 million 'revenue' increase for fiscal year 1993." Respondent's Exhibit 2. During this appeal, however, the District of Columbia was somewhat more forthcoming about the September 1993 tax bill: according to the sworn testimony of the Acting Director of the District of Columbia's Department of Finance and Revenue, the September 1993 payment was for real estate taxes covering the gap or transition period from June 30, 1993 through September 30, 1993. Appellant's Exhibit C at 46-47. To summarize, appellant received and paid three real property tax bills for calendar year 1993: (1) a March 1993 bill for the time period January 1, 1993 through June 30, 1993; (2) a September 1993 bill for the time period July 1, 1993 through September 30, 1993; and (3) a March 1994 bill for the time period October 1, 1993 through March 31, 1994. Based upon these three real property tax bills, but including only the 1993 portion of the last bill, appellant paid the District of Columbia a total of $1,544,687 for calendar year 1993. Discussion Respondent contends that appellant's real estate taxes for calendar year 1993 did not increase because the September 1993 tax bill, which was for an amount equal to six months' taxes, must have covered more than just the three month transition period between the end of the District of Columbia's old fiscal year and the beginning of its new one. According to respondent, because the District of Columbia did not change either the assessed value of the property or the real estate tax rate, the additional monies paid by appellant for 1993 must have been a special assessment rather than a real estate tax increase. Appellant contends that the September 1993 tax bill was in fact for real estate taxes which, when combined with other taxes applicable to calendar year 1993, caused an increase in appellant's real estate taxes for calendar year 1993. Thus, appellant argues, under the terms of its leases with GSA, appellant is entitled to an increase in rent to cover the tax increase. The evidence supports appellant's position. The record shows that the District of Columbia, while changing its fiscal 4 year, charged property owners for fifteen months of real estate taxes in calendar year 1993. There is nothing in the record to suggest, as respondent contends, that the September 1993 tax bill was for anything other than real estate taxes. By the terms of appellant's leases with GSA, appellant is entitled to additional rent to cover real estate tax increases. The record shows that the tax increase between the base year, calendar year 1992, and calendar year 1993, was $250,054.39. Because the Government occupies eighty-three percent of the leased premises, the Government's percentage share of the real estate tax increase is $207,545.15. Decision For the reasons discussed above, the appeal is GRANTED. Appellant is entitled to $207,545.15 plus interest in accordance with the Contract Disputes Act. _______________________ ROBERT W. PARKER Board Judge We concur: ______________________ ________________________ CATHERINE B. HYATT ALLAN H. GOODMAN Board Judge Board Judge