Board of Contract Appeals General Services Administration Washington, D.C. 20405 _______________________________________________ July 18, 2000 _______________________________________________ GSBCA 15337-RELO In the Matter of DAVID B. YORKOWITZ David B. Yorkowitz, Palmdale, CA, appearing for Claimant. Gregory M. Miller, Treasury Inspector General for Tax Administration, Office of Chief Counsel, Internal Revenue Service, Washington, DC, appearing for Department of the Treasury. BORWICK, Board Judge. Claimant David B. Yorkowitz is an employee of the Department of the Treasury, Internal Revenue Service (agency). Claimant contests the agency's determination that, after his permanent change of station from the Washington, D.C. metropolitan area to Los Angeles, California, he was not entitled to a one-year extension of the two-year time limitation to incur real estate transaction expenses for the sale of his home. The agency determined that the claimant had not shown the existence of extenuating circumstances required by the Federal Travel Regulation (FTR) to be entitled to an extension of the two-year time limitation. The FTR vests broad discretion in agency officials in making that determination, which we will not overturn unless it is shown to be arbitrary and capricious. Claimant has not made that showing here. In this matter, the agency permanently transferred claimant from the Washington, D.C. metropolitan area to Los Angeles, California, and granted claimant an allowance for real estate transactions, including use of a relocation services contractor. Claimant's reporting date was April 27, 1998. Under the FTR, to be entitled to real estate transaction expenses for the sale of his house at his old station, claimant was required to sell it no later than April 27, 2000. According to the Department of Housing and Urban Development's (HUD's) survey of real estate market conditions for the mid-Atlantic region, for the twelve-month period ending in March 1998, home values in the Washington, D.C. metropolitan area were expected to rise between three to five percent. Single- family building permit activity in the Washington area for the first quarter of 1998 increased fourteen percent over the first quarter of 1997. For the twelve-month period ending in March 1999, Federal Housing Administration (FHA) single-family mortgage activity was "exceptionally strong" in the mid-Atlantic region, with FHA home sales in Virginia jumping forty-seven percent and home sales in Maryland increasing more than eleven percent. For that period, first-time FHA home-buying increased thirty percent in the District of Columbia. HUD reported that for the twelve- month period ending in March 1999, the sales market in the Washington area continued to be one of the most active in the nation. For the period from February 1999 to February 2000, HUD reported that in the Washington, D.C. area, with many buyers chasing limited inventory, the strong sellers' market boosted housing prices over six percent in Montgomery County, Maryland and three percent in Prince George's County, Maryland. The number of single-family building permits in the Washington metropolitan area increased by more than nine percent over the comparable period in 1999. In March 2000, the agency's Deputy Inspector General for Audit received a memorandum from claimant seeking a one-year extension of time to sell his house in the Washington, D.C. area. Claimant did not explain why he had been unable to sell his home in the two-year period after his reporting date and provided no justification for the requested extension. The Deputy Inspector General considered the possibility that claimant may have been unable to obtain a buyer for his house. The Deputy Inspector General rejected this possibility because of what she understood to be the strong housing market in the Washington, D.C. metropolitan area during the two year period. She also believed that the two year-period established by the FTR provided ample time for a relocating employee to find a buyer, even in a flat housing market, when the employee uses a relocation services contractor. Accordingly, on March 8, 2000, she rejected the request for an extension. On April 4, 2000, claimant requested the agency to reconsider his request, stating that "the reason I could not sell the home when I first moved was due to a bad market. I could not sell it. I had to rent it for the last year and a half. At this point the market is better and I can sell the house." Upon receipt of the request for reconsideration, the Deputy Inspector General again rejected the request. The FTR provides that to be entitled to reimbursement of real estate transaction expenses, "the settlement dates for the sale and purchase . . . transactions for which reimbursement is requested are not later than 2 years after the date that the employee reported for duty at the new official station." 41 CFR 302-6.1(e)(1) (1997). Employees may submit a written request for a one-year extension of the two year period, 41 CFR 302- 6.1(e)(2), but "approval of this additional period of time shall be based on a determination that extenuating circumstances, acceptable to the agency concerned, have prevented the employee from completing the sale . . . and that the residence transactions are reasonably related to the transfer of official station." 41 CFR 302-6.1(e)(2)(iii). Under the FTR, the agency must decide if extenuating circumstances prevented the employee from completing the transaction within two years from the date on which he reported for duty at the duty station. Second, the agency must decide whether the extenuating circumstances are acceptable to the agency. Third, the agency must decide whether the transaction is reasonably related to the transfer to the new station. Larry E. Olinger, GSBCA 14566-RELO, 98-2 BCA 28,877. We have consistently held that the FTR vests discretion in agency officials in making these determinations, and the exercise of this discretion will not be overturned unless a determination was arbitrary or capricious. Janice E. Miller, GSBCA 14670-RELO, 99- 1 BCA 30,365; Shashikant D. Naik, GSBCA 14581-RELO, 99-1 BCA 30,240. Here, the Deputy Inspector General concluded that claimant had not demonstrated that the requisite extenuating circumstances--an allegedly soft housing market--prevented the sale of his house. Claimant has not shown that conclusion to be arbitrary or capricious, particularly in light of the HUD surveys showing a strong housing market in the Washington, D.C. metropolitan area during the relevant period. Claimant relies on the phrase "regardless of the reasons therefor" in an agency relocation manual as granting him a right to a one year extension. The manual states: The settlement date for each sale . . . must not be later than two years after the date on which the employee reported for duty at the new official station. Upon written request by the employee, this two year limitation may be extended by the official designated under Delegation Order No. 19, as revised, for an additional period not to exceed one year, regardless of the reasons therefor, so long as it is determined that the particular residence transaction is reasonably related to the transfer of official station. IRS Manual at 1764-67 ( 920). Claimant misinterprets the manual. The phrase "regardless of the reasons therefor" does not mean there is an automatic entitlement to a one-year extension; rather, it says merely that the longest possible extension of time is one year, regardless of the reason for the request.[foot #] 1 The agency's determination is sustained. __________________________ ANTHONY S. BORWICK Board Judge ----------- FOOTNOTE BEGINS --------- [foot #] 1 The three year maximum time limit is absolute and neither an agency nor this Board may waive it. Marlene L. __________ Barger, GSBCA 15036-RELO, 99-2 BCA 30,423. ______