Page images
PDF
EPUB

rental the landlord was allowed to charge for the unit during the 90-day freeze; and

(3) The reason for any difference between the base price and the price allowable on or after November 14, 1971.

This ruling is not applicable to transactions occuring after December 28, 1971, or requests for information concerning those transactions. New regulations have been issued which govern those transactions. See Economic Stabilization Regulations, 6 CFR 301.501, 36 F.R. 25386 (December 30, 1971).

This ruling has been approved by the General Counsel of the Price Commission.

[37 F.R. 3770, Feb. 19, 1972]

[Price Commission Ruling 1972-63] 22 PERCENT INCREASE FROM PRIOR PERIOD

Facts. On December 30, 1971, a lease was executed by X and Y calling for a 1-year lease of X's unit of residential housing by Y commencing January 1, 1972. Under the terms of the lease, Y agreed to pay a monthly rent which included a base rent properly computed under Subpart C of Part 301 of the Economic Stabilization Regulations, 6 CFR 301, 36 F.R. 25386 (December 30, 1971), and allowable costs occurring after December 28, 1971, allocable to the residence and attributable to an increase in costs for muncipal services under Economic Stabilization Regulations, 6 CFR 301.102(b) (ii), 36 F.R. 25386 (December 30, 1971). The monthly rent charged did not include an increase of 22 percent of base rent allowable under the Economic Stabilization Regulations, 6 CFR 301.102 (a) (1), 36 F.R. 25386 (December 30, 1971). Under the terms of the lease, on December 1, 1972, X delivered to Y a notification of rental increase, effective January 1, 1973, in the form and manner prescribed by the regulations. However, the proposed increase is 5 percent of base rent which is based upon an allowable 22-percent increase for the 12month period beginning January 1, 1973, and an additional 22 percent of base rent for the previous 12-month period which X neglected to charge under the present lease.

Issue. May a lessor charge, offer to charge, or give notice of intent to charge a rent reflecting an increase of 21⁄2 percent of base rent for a prior 12-month

period (but one which commenced after December 28, 1971) which he failed to charge during such prior period?

Ruling. Under the Economic Stabilization Regulations, 6 CFR 301.102(a) (1), 36 F.R. 25386 (December 30, 1971), a monthly rent for a residence which becomes occupied after December 28, 1971, may reflect 22 percent of the base rent with respect to each 12-month period beginning after that date. The parenthetical statement within paragraph (a) (1) makes it clear that only a 21⁄2percent increase is allowable during any 12-month period beginning after December 28, 1971, i.e., the 21⁄2 percent may not be accumulated from one period to another, and the rent may not be increased by more than 22 percent of base rent under 301.102(a) (1) for any such 12month period. Therefore, X may not increase the rent currently charged by 5 percent of base rent on January 1, 1973, but he may increase the rent currently charged by 21⁄2 percent of base rent.

This ruling has been approved by the General Counsel of the Price Commission.

[37 F.R. 3770, Feb. 19, 1972]

[Price Commission Ruling 1972–64] PARKING UNDER COMMERCIAL AGREEMENT

Facts. X had an agreement with Y under which X parked his car on a specified spot on Y's downtown parking lot at a specified monthly rate, subject to rules posted by Y. Under the agreement, X could lock his car and retain the key. The agreement has lapsed, and both parties seek to adopt another similar agreement.

Issue. Is the monthly rate in the new agreement considered as rent or as fees to a service organization for purposes of the regulations?

Ruling. Amounts paid for parking on a commercial parking lot under the above facts are fees for parking, and not rents. This is because X was entitled only to park his car on the specified spot, and only in accordance with the rules posted by the operator under the proposed agreement. His rights under the contract thus arose under Y's possessory interest. Since X did not have an interest in the property giving him a right to exclusive possession which could be asserted against the whole world, including Y, the agreement cannot be deemed a "lease"; see C.J.S. Landlord & Tenant section 202(6). Therefore the payments under

the agreement are not rent, but payments for the service of granting a license to park on Y's property and the provisions of § 300.14 of the Economic Stabilization Regulations apply to increases in the fees.

This ruling has been approved by the General Counsel of the Price Commission.

[37 F.R. 3771, Feb. 19, 1972]

[Price Commission Ruling 1972-65]
SUBSTANTIAL NUMBER OF

TRANSACTIONS

Facts. A owns 100 apartment units of comparable size and location. During the period beginning July 16, 1971, and ending August 14, 1971, he entered into leases on all 100 units. The rentals on five of the units were $100 per month; another five were rented at the rate of $90 per month; 10 were rented at the rate of $80 per month, and the remainder were rented at $75 per month.

Issue. What is A's "base price" for purposes of the Economic Stabilization Regulations?

Ruling. A's "base price" is $90 per month. Section 300.507(b)(1) of the Economic Stabilization Regulations 6 CFR 300.507, 36 F.R. 23974 (December 16, 1971), provides that the base price for a lease of an interest in real property is the highest price charged by the person with respect to the same or substantially identical rental units in a substantial number of transactions during the freeze base period. As defined in the Economic Stabilization Regulations, 6 CFR 300.5, 36 F.R. 23974 (December 16, 1971), "freeze base period" means the period from July 16 to August 14, 1971. The highest price charged in a "substantial number of transactions" is the highest price at or above which 10 percent of the units were priced in transactions during the freeze base period under § 300.505 (c) of the Economic Stabilization Regulations, 6 CFR 300.505, 36 F.R. 21792 (November 13, 1971).

Since, on these facts, five units were rented at the rate of $100 per month and five more units were rented at $90 per month in transactions occurring during the freeze base period, 10 apartments, or 10 percent of the apartments rented during the freeze base period, were rented at $90 per month or more. Therefore, $90 per month is the highest price at or above which 10 percent of the units

were priced in transactions during the freeze base period, and is the base price.

This ruling is not applicable to transactions occurring after December 28, 1971. New regulations, effective December 29, 1971, control such transactions. See Economic Stabilization Regulations, 6 CFR 301.1 et seq., 36 F.R. 25386 (December 30, 1971).

This ruling has been approved by the General Counsel of the Price Commission.

[37 F.R. 3771, Feb. 19, 1972]

[Price Commission Ruling 1972-66]

TAXI RATE REPORTING
REQUIREMENTS

Facts. Taxi Cab Company, a regulated public utility as defined by Economic Stabilization Regulations, 6 CFR 300.16, 37 F.R. 652 (January 14, 1972), owns and operates a fleet of taxis in a metropolitan area. Its annual revenues are less than $100 million. Its rates and rate increases are regulated by a local agency.

Issue. Is Taxi Cab Company required to report any rate increases to the Price Commission?

Ruling. No. The regulation covering reporting firms, Economic Stabilization Regulations, 6 CFR 300.52(c), 37 F.R. 426 (January 11, 1972), does not apply to public utilities covered by § 300.16. Section 300.16 contains the reporting requirements applicable to public utilities. These requirements only apply to firms with annual revenues of $100 million or more, prenotification firms. While public utilities with less revenue are not required to report under this section, the Price Commission does retain full authority to disapprove a rate increase and/or require the public utility to furnish additional information, but must exercise this authority within 10 days after the public utility has received final approval from the regulatory agency for the price increase or within 10 days, after the price increase has been placed into effect, whichever is earlier. (§ 300.16 (1) and (m)).

Taxi Cab Company must, however, obtain from its regulatory agency a certification for each rate increase it receives or, if necessary, self-certify for each rate increase, as provided in § 300.16 (e) and (f).

This ruling has been approved by the General of the Price Commission. [37 F.R. 3771, Feb. 19, 1972]

[Price Commission Ruling 1972–67]

MUNICIPALITIES-FEES FOR
SERVICES

Facts. Federal authorities required City A to make water and sewage system improvements. In making these improvements City A incurred costs in October, 1971, including construction of sewage treatment facilities and hiring of additional personnel, which will continue in effect for months to come.

Issue. May City A(1) increase its water and sewage fees effective November 14, 1971, to pass on to the property owners and users increased costs in effect on or after that date and (2) bill the owners and users additional charges for the month of October, 1971, to recover the increased expenditures made in October.

Ruling. State and local fees and charges (including those for water and sewage) are prices within the meaning of the Economic Stabilization Act of 1970, as amended, and any increase must conform to Price Commission regulations. The charge for service after November 13, 1971, may be increased to reflect cost increases in effect on or after November 14, 1971, reduced to reflect productivity gains provided the price increase does not increase profit margin. Economic Stabilization Regulations 6 CFR 300.14, 36 F.R. 23976 (December 16, 1971). The increased charges, however, may not be applied retroactively, to preNovember 14, 1971 charges, even if "costjustified" by pre-November 14, 1971, costs. This ruling is effective only from November 14, 1971 to January 26, 1972. As of the latter date Cost of Living Council regulations became effective exempting price adjustments for water and sewage services by State and local governments. See Economic Stabilization Regulations, 6 CFR 101.34 (a) (2), 37 F.R. 1241 (January 27, 1972).

This ruling has been approved by the General Counsel of the Price Commission.

[37 F.R. 3996, Feb. 25, 1972]

[Price Commission Ruling 1972-68] MUNICIPALITIES-ALLOWABLE COSTS

Facts. City A furnishes sewage services. On December 1, 1971, it issues 5 percent bonds to raise funds for the operation of its sewage departments and enters into a

contract with a bank by which the bank will receive interest coupons when due and will disburse the interest payments.

Issue. May City A, in determining whether it may increase its service charges for its sewage service after November 13, 1971, take into account increased cost attributable to the interest and service fees incurred in connection with the bond issue?

Ruling. City A, in determining under Economic Stabilization Regulations, 6 CFR 300.14, 36 F.R. 23976 (December 16, 1971), whether it may increase its sewage service charges, may consider the interest costs and fees paid in connection with the bond issue as "allowable costs."

This ruling is effective only from November 14, 1971 to January 26, 1972. As of the latter date Cost of Living Council regulations became effective exempting price adjustments for sewage disposal services by State and local governments. See Economic Stabilization Regulations, 6 CFR 101.34(a) (2), 37 F.R. 1241 (January 27, 1971.)

This ruling has been approved by the General Counsel of the Price Commis sion.

[37 F.R. 3996, Feb. 25, 1972]

[Price Commission Ruling 1972-69]
RETAIL PRICE INCREASES-
DETERMINING VIOLATIONS

Facts. X is a regular customer of Y department store. Y has posted its base period price for the article X is interested in purchasing. The current asking price is about 20 percent more than the base price. X has heard that a store may increase its selling price for a product to the extent its cost of the product has increased.

Issue. Is X's understanding correct that prices may be increased to reflect increased product costs? How can X determine whether Y is complying with the stabilization regulations?

Ruling. X's understanding is correct. A retailer or wholesaler is allowed to maintain the "customary initial percentage markup" that prevailed during its base period on current sales, so long as the price changes do not, in the aggregate, increase its profit margin over that in its base period. (6 CFR 300.13(a), 36 F.R. 23974 (December 16, 1971.) This means that if, during the freeze base period, Y sold a particular product at 150 percent of the product's cost to it, it may now sell the same product at 150 percent

of its current cost to it. Y may not, however, increase its prices to fully reflect its customary markup if to do so would increase its profitability (expressed as a percent of sales) over that of its base period.

In an effort to encourage retailers to comply with the above requirements, the Price Regulations require the posting of base period prices for many articles sold (6 CFR 300.13(b)) so that the consumer would be alerted to any price increases which appear to be unreasonable.

Since X does not have access to Y's actual costs during the base period and currently, he is not able to compute for himself the business's customary markup then and now. The Internal Revenue Service has been given the task of enforcing the regulations and investigating complaints. Thus, if X believes that a price increase is unreasonable and Y cannot adequately explain (or refuses to explain) the reason for the increase, he should file a complaint with the appropriate District Director of the Internal Revenue Service and the matter will be investigated in accordance with established procedures.

This ruling has been approved by the General Counsel of the Price Commission.

[37 F.R. 3996, Feb. 25, 1972]

[Price Commission Ruling 1972-70] FORMULA RENTAL PAYMENTS Facts. A owns a building with three apartment units. He has a lease with B under the terms of which the monthly rental is determined in part by reference to increases in the assessed value of the property. The assessed value has increased, and under the formula in B's lease, B's monthly rental would be increased. A also has a lease with C providing for an automatic increase in the rent of C's apartment to take effect at December 1, 1971. The leases were both executed January 1, 1971.

Issue. May the rent under either B's lease or C's lease be increased after November 13, 1971?

Ruling. B may be required to make increased payments to take into account the increase in the assessed value for which provision was made in the formula in the lease. Economic Stabilization Regulations 6 CFR 300.204, 36 F.R. 21794 (November 13, 1971) provides that leases of real property entered into prior to August 15, 1971, in which the periodic

rental price is determined by means of a formula specified in the lease agreement may continue with such formula in effect. However, any increases in the periodic rental price due to the passage of time shall not be allowed, and therefore, A may not increase C's rent.

This ruling is effective only from November 14, 1971 to December 29, 1971. As of the latter date new rent regulations became effective. See Economic Stabilization Regulations, 6 CFR 301.104, 36 F.R. 25390 (December 30, 1971).

This ruling has been approved by the General Counsel of the Price Commission.

[37 F.R. 3997, Feb. 25, 1972]

[Price Commission Ruling 1972-71]
RENT-10 PERCENT RULE

Facts. A landlord of a 100-unit apartment building requires a one-year lease from tenants. All leases expiring after January 1, 1971, have been renewed for another term at a 10 percent increase. Five leases expired between July 20 and August 14, 1971, were for the same amount, and all were renewed prior to August 14, 1971, with a 10 percent increase in rent. All units in the building are substantially identical.

Issue. May the landlord after November 13, 1971, demand a 10 percent increase in rent for leases expiring after this date?

Ruling. The landlord may renew leases expiring after November 13, 1971, at a 10 percent increase over the rate of the expiring leases. The base price for a lease of an interest in real property is the highest price charged by the lessor with respect to the same or substantially identical rental units in a substantial number of transactions during the freeze base period. Economic Stabilization Regulations 6 CFR 300.407, 36 F.R. 23979 (December 16, 1971). Since all leases that expired during the freeze base period (beginning July 16 and ending August 14, 1971), were continued at an increased rate of 10 percent over the rate of the previous leases, the base price for the new leases executed after November 13, 1971, is the increased lease amount. This ruling is not applicable to transactions occuring after December 28, 1971, or requests for information concerning those transactions. New regulations have been issued covering transactions after December 28, 1971. See Economic Stabilization Regulations, 6 CFR 301.1 et seq., 36 F.R. 25386 (December 30, 1971).

This ruling has been approved by the General Counsel of the Price Commission.

[37 F.R. 3997, Feb. 25, 1972]

[Price Commission Ruling 1972-72] DETERMINATION OF BASE PRICE WHERE THERE ARE BRANCH STORES

Facts. Stores E. F, and G are owned by Firm Y and are located in the same county. Firm Y establishes maximum prices but gives the store managers wide discretion in establishing special prices to attract custsomers. The manager of Store E has maintained a lower price on one item than the other stores for several years. Store F is in a competitive area and has generally had lower prices than either E or G.

Issue. Whether the base price for all the stores is the highest price permitted to be charged by Firm Y or alternatively, whether the base price must be established by actual prices charged during the base period.

Ruling. The base price determination under the Economic Stabilization Regulations, Subpart F, is to be made on actual prices charged and not on prices which may have been charged. Retailers under 300.5, Economic Stabilization Regulations, 6 CFR 300.5, 36 F.R. 23974 (Dec. 16, 1971), are those selling to ultimate consumers. For purposes of determining the base price for sales of personal property § 300.405, Economic Stabilization Regulations, 6 CFR 300.405, 36 F.R. 23974 (Dec. 16, 1971), indicates the base price will be determined by sales to a specific class of purchasers during the base period. One store is not considered as selling to the same specific class of purchasers as another and each store must determine a base price for each item it sells.

This ruling has been approved by the General Counsel of the Price Commission.

[37 F.R. 3997, Feb. 25, 1972]

[Price Commission Ruling 1972-73] DETERMINATION OF BASE PRICE OF

ADVANCE TICKET SALES

Facts. A professional athletic team begins to solicit advance season ticket sales in July, 1971, for the 1971-72 season. The price of each seat has been raised fifty

cents over the price last year. A substantial number of the solicitations are accepted by persons during the period July 16, 1971 to August 14, 1971.

Issue. Under the post-freeze stabilization program is the transaction, for determining a base price, considered to occur at the time the season tickets are purchased or at the time the events are schdeuled to take place or in fact do take place.

Ruling. Under § 300.5, Economic Stabilization Regulations, 6 CFR 300.5, 36 F.R. 23974 (Dec. 16, 1971), a transaction is considered to occur at the time and place a binding contract is entered into. In the particular case of advance ticket sales the transaction occurs at the time the tickets are sold, because the team is bound to supply the tickets to the given event and here has been consideration. There need be no guarantee that the event occurs and the subscriber does not have to have the right to compel such occurrence. It is enough that the team be bound to supply the agreed number of tickets upon receipt of the subscribers remittance. This definition of transaction is different from the definition of transaction in effect during the freeze which looked to the time goods were shipped or services were performed (OEP Economic Stabilization Regulation No. 1, Circular No. 101, Sec. 302(1), 36 F.R. 18739, Sept. 21, 1971).

This ruling has been approved by the General Counsel of the Price Commission.

[37 F.R. 3997, Feb. 25, 1972]

[Price Commission Ruling 1972-74] F.O.B. PRICES WHICH ANTICIPATE TRANSPORTATION COST REDUCTIONS

Facts. A is a manufacturer, such as a brewer, distiller, paint manufacturer, etc., which customarily establishes its prices f.o.b. the factory so that the f.o.b. factory price, plus transportation costs according to published tariff schedules and an anticipated profit margin for the wholesaler, will result in a price that is competitive in each wholesaler's marketing area. It has in this fashion effectively created a "delivered price" although it does not pay the transportation costs because this is forbidden by State law in many of the States in which it does business. A has built a new factory which is

« PreviousContinue »