Washington, DC
U.S. Office of Personnel Management
Compensation Claim Decision
Under section 3702 of title 31, United States Code
Department of the Army
Sembach, Germany
Damon B. Ford
Compensation and Leave Claims
Program Manager
Agency Compliance and Evaluation
Merit System Accountability and Compliance
03/05/2019
Date
The claimant is a Federal civilian employee of the U.S. Army Element SHAPE, Department of the Army (DA), in Sembach, Germany. He requests the U.S. Office of Personnel Management (OPM) reconsider his agency’s denial of his request to include the rental portion in the amount of living quarters allowance (LQA) he was granted for his personally owned quarters (POQ). We received the claim on November 6, 2017, and the agency administrative report on June 12, 2018. For reasons discussed herein, the claim is denied in part and granted in part.
The claimant’s spouse and her siblings were bequeathed a residence in Germany in November 2007. His spouse purchased the siblings’ shares of the inherited residence for € (Euro) 75,000. The claimant was a Federal contractor stationed in Germany at the time of her inheritance. When he became a Federal civilian employee in Germany on August 31, 2009, the agency determined he was eligible for and authorized LQA for POQ (identified by the agency and hereafter referred to as 1st POQ) based on the buyout amount, identified by the agency as the original purchase price described by Department of State Standardized Regulations (DSSR) section 136a, of €75,000 converted to U.S. Dollars at the exchange rate in force at the time of property acquisition. The agency states that €75,000 converted to $109,917 based on the exchange rate of €1.00 to $1.46556 in force on November 9, 2007, which we presume is the buyout date. After the claimant acquired another POQ in Germany (hereafter referred to as 2nd POQ) in the “general vicinity” of the 1st POQ, the agency authorized LQA starting October 2010 for the 2nd POQ in the amount of €260,000 converted to U.S. dollars at the exchange rate in force at the time of property acquisition. On July 15, 2012, the claimant reoccupied the 1st POQ and his LQA for POQ was reduced to the original purchase price of €75,000 established by the agency in August 2009. However, as a result of a Department of Defense-wide LQA audit, the agency determined he had erroneously been found eligible for LQA. The claimant was granted a waiver and authorized continuation of LQA for the 1st POQ until April 30, 2014. He continued to reside at the 1st POQ until accepting a position, effective July 12, 2015, with the U.S. Army Sustainment Command in Fort Shafter, Hawaii. He resumed occupancy of the 1st POQ upon his return to Germany in 2017. The claimant does not dispute the above facts, as reported by the agency in its administrative report to OPM.
Effective July 23, 2017, the claimant was reassigned to his current Information Technology Specialist (Security), GS-2210-12, position with the U.S. Army Element SHAPE in Sembach, Germany. Upon reassignment to his current position, the agency determined he was eligible for LQA under the provisions of DSSR section 031.11 as an employee recruited in the United States. For reasons explained later in the decision, the agency denied his request for the rental portion, although granting the utilities portion, of the LQA applied towards his POQ.
The claimant requests the agency include the rental portion in determining his LQA for POQ as provided for by DSSR section 136a, which states:
When quarters occupied by an employee are owned by the employee or the spouse, or both, or by the employee or the domestic partner, or both, an amount up to 10 percent of original purchase price (converted to U.S. dollars at original exchange rate) of such quarters shall be considered the annual rate of his/her estimated expenses for rent. Only the expenses for heat, light, fuel, (including gas and electricity), water, garbage and trash disposal and in rare cases land rent, may be added to determine the amount of the employee’s quarters allowance in accordance with Section 134. The amount of the rental portion of the allowance (up to 10 percent of purchase price) is limited to a period not to exceed ten years at which time the employee will be entitled only to above utility expenses, garbage and trash disposal, plus land rent.
The agency explains its denial of the rental portion of the LQA applied towards the claimant’s POQ in its administrative report to OPM:
Mr. Standridge advised this office that he would still have an obligation of €58,230 towards the “1st POQ”, which appeared rather high, given the initial amount and the LQA he received for the dwelling, at least parts of the time. Based on the record available, Mr. Standridge received a total of $99,967.94, initially for the “1st POQ”, from August 2009 until October 2010, and for the “[2nd] POQ” in the same general vicinity of the “1st POQ” thus in the same commuting area to his post of assignment, from October 2010 to July 2012, and then again for the “1st POQ” commencing in July 2012 until the end of April 2014, when the grant was terminated…
Pursuant to the provisions of the DSSR § 112, LQA may only be granted for one set of quarters. Thus, when Mr. Standridge received LQA for the “1st POQ” and later converted the grant to a higher amount for the “[2nd] POQ, followed by a reversal to the “1st POQ”, the agency essentially reimbursed him for the costs of one POQ. The circumstance that Mr. Standridge returned to this “1st POQ”, which was at a lesser amount than the “[2nd] POQ” is beyond the agency’s control. In other words, the personal decision made by an employee cannot be visited upon the government to seek remedy for it. The 10-year period prescribed in DSSR § 136 is cumulative. As a result, Mr. Standridge was reimbursed for “one POQ” between August 31, 2009 and April 30, 2014, a period of nearly five years. Since he re-occupied the “1st POQ” since July 2017 when he returned to Germany, conceivably, he could claim LQA for the remainder of the DSSR § 136 prescribed 10-year period. However, because he already received an amount of $99,967.94 for “a POQ” which is almost the amount that he initially claimed against the “1st POQ”, the agency considers itself in violation of DSSR § 132.5 where the actual costs of quarters may only be paid under the LQA, despite Mr. Standridge claiming that he still has about €58,230 costs against those quarters. What is more, we wish to note that Mr. and Mrs. Standridge obtained a loan for the buy-out in the amount of €85,000 (Encl 5); if the couple still owes €58,230 against that loan, the government would reimburse the employee for a greater amount than would be authorized.
* * * *
The claim should not be allowed. As shown above, Mr. Standridge received a total of $99,967.94 for what must be considered “one POQ” in the spirit and intent of the DSSR from August 2009 through April 2014. His claim of €58,230 remaining as actual costs against the “1st POQ”, would afford him the additional grant of $85,339, using the exchange of 09 November 2007. This additional amount would bring the total reimbursement under LQA for the “a POQ” to $185,306.94, which exceeds the assumed “purchase price” of the inherited quarters, the “1st POQ”, that the agency was willing to reimburse him in August 2009 when he was first hired into Federal civilian service. We find this to be outside the parameters of the DSSR § 136, and therefore, not permissible.
The claimant disagrees with the agency’s rationale, stating in his claim request to OPM:
The [DSSR section 130] provides regulation for POQ up to 10% of the original balance of the quarters for ten years. I have not met the ten year mark. Also the decision from the LQA cell is based on two separate houses during the period. The amount paid in the past was added together and applied to a single domicile as part of the decision.
The DSSR sets forth the basic criteria for the granting and payment of LQA. Within the scope of these regulations, the head of an agency may issue further implementing instructions for the guidance of the agency with regard to the granting of and accounting for these payments. Thus, Department of Defense Instruction 1400.25-V1250 and Army in Europe Regulation (AER) 690 – 500.592 implement the provisions of the DSSR, but may not exceed their scope; i.e., extend benefits that are not otherwise permitted by the DSSR.
The agency and claimant agree the ten-year limitation period prescribed by DSSR section 136a has not terminated in his situation. Rather, the agency concludes that DSSR section 136a and other pertinent regulations limit the grant of LQA to a single POQ, and the claimant received LQA for both POQs in the amount totaling $99,967.94, which the agency states is “almost the amount that he initially claimed” for the 1st POQ. The agency cites DSSR section 112, which affirms the quarters allowance is intended to reimburse an employee for substantially all costs incurred for “one unit of residence quarters ([LQA]).” This is reinforced in DA’s policy regarding POQ, found at 1.b.(6) of the LQA Allowable Cost Guidance, an appendix to AER 690 – 500.592, which states, “POQ LQA is limited to one POQ in theater per employee per lifetime, regardless of amounts received or the duration of payments on that POQ.” It is clear the claimant’s circumstances involving the past grant of LQA for POQ involving multiple consecutive quarters are not addressed by the DSSR. As a result, the agency may properly exercise its discretion in determining the grant of LQA for POQ in such situations. When the agency’s factual determination is reasonable, we will not substitute our judgment for that of the agency. See, e.g., Jimmie D. Brewer, B-205452, March 15, 1982. Because the DSSR and other implementing regulations are silent in their treatment of situations like the claimant’s, we find no reason to disturb the agency’s decision that the total amount of $99,967.94 provided to him for LQA connected to both POQs is to be considered when determining if the threshold for receipt of “one POQ” has been fully met in his situation.
The claimant identified his financial obligation from his 1st POQ as €58,230 at the time of his LQA eligibility determination. The record shows that when his spouse purchased her siblings’ shares from the inherited residence for €75,000, the claimant and his spouse took out an €85,000 loan. If his current financial obligation of €58,230 is the balance from his €85,000 loan, it is evident the current balance cannot be considered the paid-down amount of the original purchase price described by DSSR section 136a, given the loan amount exceeded the buyout amount by €10,000. Because the purpose of LQA is to “defray official residence expenses” pursuant to DSSR section 031, LQA for POQ may not be granted in cases where such expenses may exceed the actual expenses incurred, as in this case, as the €58,230 figure misrepresents the value of the claimant’s actual monetary outlay at the time of purchase. Therefore, claimant’s request for the rental portion of the LQA for POQ based on the total €58,230 financial obligation is denied.
The statutory and regulatory languages are permissive and give agency heads considerable discretion in determining the grant of LQA to agency employees. Wesley L. Goecker, 58 Comp. Gen. 738 (1979). Thus, an agency may withhold LQA payments from an employee when it finds the circumstances justify such action, and the agency’s action will not be questioned unless it is determined the agency’s action was arbitrary, capricious, or unreasonable.
In this case, the record shows the original purchase price for the claimant’s 1st POQ is $109,917 but the agency states he received LQA for both POQs in the amount totaling $99,967.94, a difference of $9,949.06. Notwithstanding the difference, the agency cites DSSR section 112, concluding the claimant met the limitation for the grant of one set of quarters prescribed therein. Another relevant provision, DSSR section 136a, provides that an amount up to 10 percent of the original purchase price shall be considered the annual rental rate for a period not to exceed 10 years, at which time payments cease (presumably as a result of an employee being reimbursed sufficiently to have fully paid for the POQ). Thereafter, the employee is only entitled to utility and other expenses. The $9,949.06 difference between the original purchase price of the 1st POQ for which the agency had authorized LQA and the total LQA grant received leads us to conclude the agency’s denial, in light of DSSR sections 112 and 136a, was arbitrarily made without proper regard to the facts or circumstances.
Since the original purchase price of the claimant’s 1st POQ was $109,917 but a lesser amount in LQA for POQ was authorized, we conclude he was not reimbursed sufficiently in accordance with DSSR section 136a (i.e., up to 10 percent of the original purchase price for up to 10 years). Previous payments were $9,949.06 less than the threshold for receipt of “one POQ” as affirmed by the agency. Therefore, although his request for the rental portion of the LQA for POQ based on the total €58,230 financial obligation is denied for reasons previously discussed, we conclude the claimant’s request for the rental portion of the LQA for POQ is partially granted for the amount of the difference between the original purchase price and total LQA grant received for the 1st POQ.
This settlement is final. No further administrative review is available within OPM. Nothing in this settlement limits the claimant’s right to bring an action in an appropriate United States court.