May 2, 1997
                                                 


                             GSBCA 13685-RELO


                     In the Matter of MICHAEL J. SPANN


     Michael J. Spann, Gainsville, FL, Claimant.

     Al LaBombard, Chief, Employee Accounts Division, Department of
Veterans Affairs, Austin, TX, appearing for Department of Veterans
Affairs.

GOODMAN, Board Judge.

     Mr. Michael J. Spann is an employee of the Department of
Veterans Affairs.  In May 1993, he was transferred from the VA
Medical Center in West Palm Beach, Florida to the VHA South Region
Office in Jackson, Mississippi.  He constructed a new home and
submitted various real estate expenses for reimbursement.  The
agency denied reimbursement of an amount charged as a loan
origination fee for construction financing, and by letter dated
January 2, 1996, Mr. Spann requested review of the agency's denial
by the General Accounting Office (GAO).

     Mr. Spann paid a one percent loan origination fee ($1,588) on
the construction loan, which the agency did not reimburse, and a
one-half percent loan origination fee ($627.50) on the permanent
loan, which the agency did reimburse.  The settlement statements
for both the construction loan and the permanent loan confirm that
these amounts were charged as origination fees of the respective
loans.  The agency denied the claim stating that any charges
connected with construction are not allowed and that it relied upon
the charges set forth in the settlement sheet to determine the
amounts reimbursable to Mr. Spann, as those were the charges
incurred for permanent financing.  

     Mr. Spann filed a claim for an additional one-half percent
loan origination fee on the construction loan ($627.50).  He
believes he is entitled to the amount claimed because if he had
purchased an existing home, he would have paid a one percent loan
origination fee.  Since he built a home and obtained a construction
loan with a one percent loan origination fee, he states that the
bank only charged him a one-half percent loan origination fee on
the permanent loan.  He included correspondence from bank personnel
as to the arrangements for financing.  The bank confirmed in a
letter dated January 25, 1995, that its normal practice would be to
charge a one percent loan origination fee for a construction loan
and a one percent loan origination fee for permanent financing, but
as an incentive to allow the bank to provide both loans,
origination fees totaling one and one-half percent were charged. 
The bank's representative states further that it is his
understanding that "because of the Bank's arbitrary application of
only one half . . . per cent of the one and one half . . . percent
total, to the permanent financing, Mr. Spann has been penalized on
his reimbursement."

     Pursuant to 5 U.S.C.  5724a(a)(4) (1994), funds are available
for reimbursement of real estate transaction expenses of the
purchase of a home at the new official station required to be paid
by the employee when the old and new official stations are located
within the United States, its territories or possessions, and other
specific locations.  The Federal Travel Regulation (FTR) states, in
relevant part:

     Except as otherwise provided in paragraph (d)(1) of this
     section, the following items of expense are not
     reimbursable:

          . . . .

          (vi)  Expenses that result from construction
          of a residence.

41 CFR 302-6.2(d)(2)(vi) (1996).

     Paragraph (d)(1) reads, in relevant part:

     Reimbursable items. The following expenses are
     reimbursable in connection with the sale and/or purchase
     of a residence, provided they are customarily paid . . .
     by the purchaser of a residence at the new official
     station, to the extent they do not exceed specifically
     stated . . . amounts customarily paid in the locality of
     the residence:

          . . . .
 
          (x)  Expenses in connection with construction
          of a residence, which are comparable to
          expenses that are reimbursable in connection
          with the purchase of an existing residence.

41 CFR 302-6.2(d)(1)(x) (1996).

     The GAO, which reviewed claims of this nature before the
authority to settle these claims was vested in this Board, has
construed these provisions of the FTR to state that an employee who
chooses to construct a home at the new duty station will be
permitted to recover real estate expenses to the same extent as an
employee who purchased an existing home.  Where each stage of the
building process involves a number of expenses which would
appropriately be reimbursed in connection with the purchase of an
existing residence, the employee may be reimbursed only once for
each type of expense that is allowable under the regulations.  See,
e.g., David R. Petak, B-247860 (July 23, 1992); James A. Schampers,
69 Comp. Gen. 573 (1990); Michael D. May, B-223112 (Nov. 25, 1986). 

     The GAO has further concluded that the expenses incurred
incident to permanent financing on the completed house are most
representative of expenses an employee would incur to purchase an
existing residence and that entitlement determinations should be
based primarily on the examination of that settlement.  Schampers; 
Ray F. Hunt, B-226271 (Nov. 5, 1987).  When similar fees and
expenses are incurred more than once as a result of the decision to
construct a new home rather than buy an existing residence, the
duplicate fees are considered to have resulted from the
construction of the new home and are not reimbursable.  Richard T.
Bible, B-208302 (July 17, 1984).  

     This Board has found GAO's interpretation of these FTR
provisions to be sound and follows it.  Thomas S. Cushing, GSBCA
13867-RELO (Apr. 30, 1997).  

     The argument that the bank could have charged Mr. Spann a
smaller origination fee for the construction loan and a larger
origination fee for his permanent loan does not alter the facts of
the transaction which occurred, is inconsistent with the facts as
stated, and is not relevant to the disposition of this matter. 
The Government is not authorized to reimburse its employees for the
hypothetical expenses of a bargain that the parties may have
contemplated but did not make.  Harlan C. Theil, GSBCA 13668-RELO,
97-1 BCA  28,710.  

     The amount on the settlement sheet for the permanent loan
origination fee has been completely reimbursed by the agency as an
allowable cost.  As stated above, an employee may only be
reimbursed once for each type of expense that is allowable.  It is
clear that the amount which Mr. Spann seeks to be reimbursed is a
portion of what was charged as the loan origination fee for the
construction loan.  Loan origination fees for construction loans
have been held not to be reimbursable, as they are expenses arising
in connection with construction which would not have been incurred
had the employee purchased an existing home.  Ray F. Hunt.  Even
though the bank charged Mr. Spann half its usual rate as a loan
origination fee for permanent financing, this does not provide a
basis to increase the amount of reimbursement for permanent loan
financing in excess of actual amounts incurred.  To do so would be
to reimburse additional amounts which were included in
nonreimbursable costs, i.e., a portion of the loan origination fee
for the construction loan. 

     The agency properly denied claimant's request for
reimbursement.





                                   _________________________
                                   ALLAN H. GOODMAN
                                   Board Judge