Appeal of
NATIONWIDE POSTAL MANAGEMENT
LEASE AGREEMENT
PSBCA No. 4015

APPEARANCE FOR APPELLANT:
J. Leonard Spodek

APPEARANCE FOR RESPONDENT:
Samuel J. Schmidt, Esq.

OPINION OF THE BOARD

            Appellant, Nationwide Postal Management, seeks reimbursement of the cost of a boiler inspection and permit fee paid to the City of New York with respect to the boiler in a building leased to Respondent, United States Postal Service.  The contracting officer denied the claim, and Appellant has appealed that denial.

            At the parties’ election, this appeal was submitted on the record without an oral hearing.  Both parties have submitted evidence and briefs in support of their positions.

FINDINGS OF FACT

            1.  In 1973, Respondent leased a building in Staten Island, New York, to use as its Rosebank Station.  The lease was for an original 20-year term followed by six five-year options available to Respondent.  (Appeal File, Tab (“AF”) 1).  Through exercise of options, Respondent leased the property at least through October 31, 1997 (Stipulation of Uncontested Facts (“Stip.”) 2).

            2.  The lease required the lessor to

“furnish heating system of sufficient size and capacity to provide uniform temperature in all portions of the demised premises in accordance with contractual requirements, and if not specifically specified in the contractual requirements to furnish a heating system of sufficient size and capacity to provide uniform temperature of 70 degrees F. in all portions of the demised premises, together with all filters required for proper operation of the system during the continuance of the lease.”  (AF 1, Lease Paragraph 6).

            3.  The building heating system included a boiler, and New York City law requires that boilers be inspected annually by a qualified inspector.  The property owner is required to file an annual statement specifying that each boiler has been inspected and must pay the City of New York a permit fee with the statement.  (AF 8, Administrative Code of the City of New York, sections 26-213 (b), 27-793 (b)(1) and (c)(1); Stip. 3)).

            4.  On December 28, 1995, Appellant filed the annual statement specifying that the boiler at the Rosebank Station had been inspected for 1995 and paid the annual permit fee of $30.  Appellant paid $150 for the 1995 inspection of the Rosebank Station boiler.  (AF 3, 9; Complaint Exhibit B; Answer; Stip. 4).

            5.  Appellant submitted a claim to Respondent for reimbursement of $180 for the permit fee and inspection charge (AF 3, 4, 6), which the contracting officer denied in a final decision of October 3, 1996 (AF 7).  This appeal followed.

DECISION

            Appellant acknowledges its duty under the lease to furnish the heating system equipment (Finding 2), but says that it is Respondent’s duty to pay “recurring and/or consumable” costs, which, Appellant contends, include electricity and fuel as well as the annual permit fee and the required inspection.  Appellant finds support for its position in the absence in the lease of any language requiring the owner to pay these charges.  Appellant also argues that these fees are like the general real estate taxes that are imposed on the owner but which Respondent pays.

            Appellant, as the party seeking entitlement, has the burden of proof in this appeal.  T. W. Cole, PSBCA No. 3076, 92-3 BCA ¶ 25,091; F&B Realty, PSBCA No. 2529, 91-2 BCA ¶ 23,788.  However, Appellant has failed to point to any language in the lease or to refer to other evidence in the record that requires Respondent to pay the boiler-related charges at issue in this appeal.  Moreover, our review of the record does not establish that the parties intended fees such as the boiler permit and inspection charges to be Respondent’s responsibility under the lease.

            Appellant’s position is not helped by comparing the boiler fees to the annual real estate taxes for which Respondent reimburses Appellant.  Respondent’s payment of the general real estate taxes is required by specific language of the Tax Clause Rider of the lease, and there is no comparable language addressing fees such as those for the boiler permit and inspection.  Furthermore, inclusion of the Tax Clause Rider demonstrates that the parties to the lease knew how to transfer the owner’s responsibility for a legal charge against the property to Respondent as the tenant.  That they did not do so expressly with respect to charges such as those at issue in this appeal strongly suggests that the parties did not intend to transfer them to Respondent.

            The obligation to comply with legal requirements affecting leased real property is on the owner.^[1] 2 Friedman on Leases, 3d ed., §11.1, p. 687; Bush Terminal Assoc. v. Federated Department Stores, Inc., 424 N.Y.S.2d 28, 29 (2d Dep’t 1980); see Charles and Lilly Hendlish, PSBCA No. 3661, 96-1 BCA ¶ 28,131.  Where, as here, the lease does not pass that burden to the tenant, Respondent is not liable for the charges.

            Appellant argues that Respondent should pay the boiler inspection and permit fees because they are imposed only if Respondent chooses to use the boiler.  However, the fees in question are not based on any particular manner of Respondent’s use of the premises that might justify imposing liability on it.  Rather, any occupancy of the premises by any tenant would entail use of the boiler and would require the owner to incur the cost of the permit fee and boiler inspection.  See Bush Terminal Assoc. v. Federated Department Stores, Inc., 424 N.Y.S.2d 28, 30 (2d Dep’t 1980).

            The appeal is denied.

Norman D. Menegat
Administrative Judge
Board Member

I concur:
James A. Cohen
Administrative Judge
Chairman

I concur:
David I. Brochstein
Administrative Judge
Vice Chairman

[1]  The New York City laws in question explicitly place the burden of compliance on the owner of the property (Finding 3).