GRANTED IN PART: September 15, 1992 GSBCA 11251 UNIVERSAL DEVELOPMENT CORPORATION, Appellant, v. GENERAL SERVICES ADMINISTRATION, Respondent. Kenneth K. Takahashi of Takahashi & Associates, P.C., Washington, DC, counsel for Appellant. Gerald L. Schrader, Real Property Division, Office of General Counsel, General Services Administration, Washington, DC, counsel for Respondent. Before Board Judges LaBELLA, Acting Chief Judge, DANIELS, and HYATT. DANIELS, Board Judge. Appellant, Universal Development Corporation (UDC), entered into a contract to lease to respondent, the General Services Administration (GSA), part of a building and a certain number of parking spaces next to the building. UDC contends that GSA directed it to provide additional parking spaces for building occupants, and that it is owed compensation for the lease of those additional spaces. As the case developed, GSA modified its position from outright opposition to acknowledgement that much of the claim is valid. We grant the appeal in part by allowing recovery of the amount conceded by GSA in its posthearing brief. Findings of Fact 1. On or about May 29, 1981, UDC entered into a contract to lease to GSA 29,655 net usable square feet of court space and court related space in a building to be constructed on a specific parcel of land in Biloxi, Mississippi. The lease is for the period from March 1, 1982, to February 28, 2002, and requires annualpayments by GSA of $295,363.80. Appeal File, Exhibits 1, 2. 2. UDC faced two requirements in constructing parking spaces at this building. First, the lease demanded that the firm, as part of the consideration for the specified rental payment, provide twenty parking spaces for use by official vehicles. Of these spaces, a minimum of three were to be for the use of the vehicles of physically handicapped persons. Appeal File, Exhibit 2 at 2 and at 6 of Solicitation for Offers (SFO). Second, the City of Biloxi, which had provided the land for the building, mandated that a quantity of public parking spaces be provided. Transcript at 14-15, 41-42. 3. The lease contains two provisions for escalating rental payments. The first requires GSA to pay a part of any real estate taxes imposed which are additional to those prevailing in a base year. The second requires the Government to make augmented payments, keyed to the consumer price index (CPI), as UDC incurs increases in specified costs -- cleaning services and materials, elevator maintenance, trash removal, landscaping, utilities, insurance, and certain building administration expenses. Appeal File, Exhibit 2 at attachment 3 to schedule A of SFO. UDC's president acknowledged that the lease does not contain any escalation factor pertaining to the twenty parking spaces. Transcript at 47-48. 4. The lease also includes this paragraph, on which UDC bases its contention that payments for the lease of additional parking spaces should be escalated over time: The Lessor shall furnish the Government on 270 days' prior request, 4,650 net usable square feet of expansion space. Rental rate for the additional space will be based on the initial negotiated square foot rate adjusted by the U.S. Department of Labor Consumer Price Index increases or decreases that have been applied to the base escalation rate negotiated in the original lease. Appeal File, Exhibit 2 at 3. 5. On October 18, 1982, when construction was about two- thirds complete, GSA contracting officer Michael Roper asked UDC's president, Bobby Ward, to provide "30 secured parking spaces at the rear entrance to the building." He clarified that the requirement for thirty spaces represented "an increase of 13 spaces over the 20 originally specified."1 Mr. Roper stipulated that the three spaces for the vehicles of handicapped persons would be separately placed at the front of the structure. Appeal ____________________ 1 Later, in correspondence with an agency that would occupy space in the building, Mr. Roper referred to a revised architect's plan that showed twelve additional parking spaces. Appellant's Supplemental Appeal File, Exhibit 15. File, Exhibit 33; Transcript at 13. GSA subsequently asked Mr. Ward to give the agency a plan and a cost proposal for the thirty spaces. Transcript at 13-14, 17. 6. UDC had to redesign the entire parking area to meet the city's demands. Appeal File, Exhibits 5, 36. On January 3, 1983, Mr. Ward wrote to Mr. Roper: Due to the revised layout to comply more fully with the mayor's position on the parking matter, it will be necessary that we lease to you 15 extra parking spaces2 at $15.00 per month or $2,700.00 per annum with the rate being adjusted annually thereafter by the increase or decrease of the consumer price index, as defined elsewhere in the lease contract. Appeal File, Exhibit 6 at 1.3 UDC also sought a lump sum payment for work involved in constructing the parking area. Id. Compensation for this work is not in dispute. 7. On April 11, 1983, Mr. Roper responded: We accept your offer dated January 3, 1983, as amended March 31, 1983, . . . to provide the following items at the subject lease facility: . . . 20 secured parking spaces to include three handicapped spaces . . . . ____________________ 2 Three weeks earlier, Mr. Ward had told Mr. Roper that due to the city's demands, "it will be necessary that we lease to you 14 spaces rather than the additional 10 that you have requested." Appeal File, Exhibit 5. 3 In hearing testimony, Mr. Ward gave this justification for the number fifteen: GSA had orally asked him to provide a total of thirty-two parking spaces. Because UDC was already obligated to provide seventeen, plus the three spaces for handicapped individuals, this request amounted to a direction to increase the number of spaces by fifteen. Transcript at 17-18. This explanation is inconsistent with the one that Mr. Ward gave in writing at the time the matter arose. It is also inconsistent with his testimony that GSA asked UDC "to provide 30 or 32 secured parking spaces." See Transcript at 13. In his ___ testimony, Mr. Ward did not appear to fix on the number thirty- two until after his counsel had suggested it to him through questions that implied that this was the correct number. We give no credence to the justification. Appellant's Exhibit 1; Transcript at 19-22. Several other items are mentioned, but none of them pertains to parking spaces. Appellant's Exhibit 1. The amendment of March 31 is not in the record, and Mr. Ward does not remember whether it pertained to the parking spaces or some other subject. Transcript at 22-23. 8. Two months later, a different GSA contracting officer, Beverly Ross, told Mr. Ward that despite GSA entreaties, UDC had still not submitted a proposal for "the secured parking in Biloxi." Appeal File, Exhibit 37. UDC responded on August 1 by sending what it termed "our proposal to revise the secured parking for the above building." Id., Exhibit 8. This letter states: The lease contract requires that we provide 20 parking spaces as a part of the lease consideration. This layout develops 32 secured spaces, therefore, we ask that you amend the lease to cover the additional 12 parking spaces at $15.00 per month or $180.00 per space per annum or a total rental increase for all 12 spaces of $2,160.00 per annum for the first year, after which the $2,160 should escalate, based upon the consumer price index. Id. 9. The construction of the building and the parking spaces was not completed until November 1983. Transcript at 47. The parking lot includes thirty-four spaces. Id. at 26. 10. Several months later, on March 28, 1984, Ms. Ross sent UDC a proposed supplemental lease agreement amending the contract to increase annual payments by $2,160 ($15 per month for each of twelve additional parking spaces), effective November 3, 1983. Appeal File, Exhibits 10, 11. UDC did not respond until June 27, when it proposed two modifications to the proposal: It should be 15 additional spaces at $15.00 per month or $2,700.00 additional per annum in lieu of the $2,160.00, reflected. . . . The agreement should reflect a 5% per annum or annual CPI increase in accordance with our proposals dated December 14, 1982 and January 3, 1983. Id., Exhibit 12. 11. In August of 1984, the parties exchanged correspondence about the parking spaces. Ms. Ross sent a revised agreement providing for payments for fifteen spaces at $15 per month, but not incorporating any escalation factor. Appeal File, Exhibits 13, 14. UDC refused to accept this offer because it "does not include any CPI increase over the 20 year period." Id., Exhibits 15, 22. Ms. Ross testified that at about this time -- in March or August of 1984 -- she had reached an oral agreement with UDC's president that the Government would lease fifteen parking spaces at a rate of $15 per space per month. Transcript at 96-98. There is no corroboration of this testimony, however -- indeed, the documents indicate that the parties continued to disagree. We find that the testimony is not credible.4 12. In October, a third GSA contracting officer, John M. Sullivan, bluntly told UDC, "GSA will not pay escalation on these parking spaces." Appeal File, Exhibit 18. UDC then suggested that the spaces be leased to GSA under one-year contracts. Id., Exhibit 19. 13. Once in each of 1985, 1987, and 1988, UDC noted to GSA that the matter of annual payments for the parking spaces had not been resolved. Appeal File, Exhibits 22, 24, 25. The record does not contain any response to these letters. 14. On August 10, 1990, UDC proposed to a fourth GSA contracting officer, Richard Palmedo, that the parties amend the contract to provide for annual lease payments for fifteen parking spaces, at the following per space/per month rates: November 1983 through October 1988, $15; November 1988 through October 1993, $18; November 1993 through October 1998, $22; November 1998 through November 2, 2003, $25. Appeal File, Exhibit 26. 15. Mr. Palmedo replied that he could not find in his files any indication that GSA had ever asked for more spaces than were specified in the lease; he said that unless UDC could provide a contract modification regarding rental of such spaces, he would not agree to compensation. Appeal File, Exhibit 27. On December 27, 1990, UDC's Mr. Ward sent the contracting officer several of the documents referenced above (but not Mr. Roper's 1982 letter, see Finding 5). He asked for "a decision so that I can file an appeal and collect my past due monies and interest." Id., Exhibit 28. After reviewing the documents, Mr. Palmedo issued his decision, concluding that the additional spaces had been built to meet the City of Biloxi's demands and that GSA owed UDC nothing in this matter. Id., Exhibit 29; see also Transcript at 52, 72. ____________________ 4 We are mindful, in reaching this conclusion, of testimony by another GSA contracting officer impeaching Ms. Ross's credibility generally. Transcript, GSBCA 11470, at 164- 65, 172-89. Although this testimony was given in a hearing on another appeal by UDC, it is applicable to the record of the instant case as well. GSBCA 11251 and 11470 were two of five appeals that were heard during a three-day period in a single location. The parties requested, and the Board agreed, that testimony taken in any of the cases could be applied whenever relevant in any of the others. 16. At a prehearing conference on June 16, 1992, Government counsel "stated that respondent now admits that it asked appellant to provide thirteen more parking spaces than specified in the contract; he also stated that respondent believes that fifteen dollars per month is a fair rental price for each additional space." Board's Memorandum of Conference of June 16, 1992, at 3-4; see also Respondent's Posthearing Brief at 1-2, 10. 17. As to the value of the parking spaces in question, UDC's Mr. Ward gave this testimony, which pertains to facts allegedly extant in 1992: There is no paid parking lot in Gulfport [Mississippi] or Biloxi. I had an employee go to Mobile, [Alabama,] which is 60 miles away, and check surface parking lots with non-attendant, paved parking lots, no security and I had him check all over town and . . . the lowest rate that he came up with was $35 a month. Transcript at 38. Discussion For nearly ten years, the lessor and appellant, UDC, and the lessee and respondent, GSA, discussed rental for parking spaces additional to the ones specified in the lease, but did not resolve the matter. UDC attempts to construct a resolution from an agency contracting officer's statement, back in 1983, that GSA "accept[s] your offer." See Finding 7. Unfortunately for appellant, what was accepted, with regard to parking spaces, pertained only to the spaces mentioned in the lease. Findings 2, 7. Furthermore, the extensive negotiations which followed that statement belie any theory that either party understood that the issue had been put to rest. See Findings 8-15. Because of the languid pace with which UDC approached this matter, the Board must at this late date settle the dispute through this opinion. From the bits and pieces of evidence that constitute the record in this case, we conclude that GSA directed UDC to provide more parking spaces at the leased building than were required by contract. The appropriate rental amount due is dependent on the number of parking spaces involved and the lease value of each space. The number of spaces was originally designated as thirteen, although a subsequent Government document indicates that it may have been only twelve. Finding 5. UDC asked for payment for fourteen spaces, then fifteen, then twelve, then fifteen again. Findings 6, 8, 10. GSA eventually proposed paying for fifteen spaces, but because UDC considered the per space payment unacceptably low, it did not accept the proposal. Finding 11. We conclude that this record does not establish that the Government ever directed UDC to provide more than thirteen additional spaces. Although the parking lot as eventually constructed includes seventeen more spaces than specified in the lease, Findings 2, 9, we rely on contemporaneous written statements by UDC's president in finding that any number in excess of thirteen was mandated by the City of Biloxi, rather than GSA. Finding 6. As to the rental value of each space, we have no relevant evidence. UDC's best guess is based on the rental rate in Mobile, Alabama, nearly a decade after appellant first provided the spaces. Finding 17. Although we appreciate the difficulty in appraising a market rate where none apparently exists, in the absence of any reason for believing that the rate in Mobile is similar to the rate in Biloxi, we ascribe no particular significance to the rate in the four-times-larger city. The long passage of time between initial valuation and the rate cited in Mobile also mitigates against any reliance on that rate. GSA has stipulated, however, that $15 per month is a fair rental price for a parking space at the building in question. Finding 16. Without any better figure to go on, we accept this amount as concededly appropriate. UDC has maintained throughout the dispute that the $15 figure should increase annually in accordance with increases in the consumer price index (CPI). Findings 6, 8, 10, 11, 14. The record is clear that GSA never agreed to this proposal. Findings 11, 12, 15. In its posthearing brief and reply brief, UDC contends that as a matter of law, the lease requires application of CPI-based increases to the appropriate rate. In the posthearing brief, appellant points to a lease provision which permits the Government to request "4,650 net usable square feet of expansion space," and says that increases in the CPI will be a factor in determining the rental rate for this space. See Finding 4. In the reply brief, UDC focuses on the provision which indexes payments for various maintenance expenses, Finding 3, and contends that maintenance (repainting curbs and space markings, keeping the access gate in good order, and policing the parking lot) is precisely the sort of expense that parking space rental is designed to cover. We do not find UDC's arguments convincing. The first lease clause pertains to payments for a defined area of "expansion space," which is plainly territory within the building and not within the parking lot. Reliance on the second clause is also unwarranted. There is no evidence that rental costs of the parking spaces represent return to labor rather than return to capital. Even if the return-to-labor theory is correct, there is no evidence that the forms of maintenance that appellant contends apply to the spaces fall within any of the categories of costs whose increases are to result in increased rental payments. We cannot discern in any portion of the lease a requirement for indexing of the rental payments for the additional parking spaces. Decision The appeal is GRANTED IN PART. GSA shall pay UDC rental for the thirteen parking spaces that the agency directed the lessor to provide, but were not covered by the original lease instrument. Such rental shall be at the rate of $15 per space per month, from the date on which the building and parking lot were completed (November 3, 1983, Finding 9). The monthly rate is consequently $195, and the total amount due, through September 3, 1992, is $20,670. Interest is also due from the date on which GSA received UDC's letter of December 27, 1990, which we construe to be a claim. 41 U.S.C. 612 (1988); see Finding 15. _________________________ STEPHEN M. DANIELS Board Judge We concur: _________________________ _________________________ VINCENT A. LaBELLA CATHERINE B. HYATT Acting Chief Board Judge Board Judge