On April 5, 1969, Mr. Wm. Ayer prepared handwritten notes showing the "status as of April 5, 1969" (Exhibit VII-21). The notes reflected the following: "for legal descriptions Jim Dahlquist-T.I.”; "survey incl. mean high tide. Make boundary for future ATA extended coverage title report. See Dick Lindholm or Dick Parker, T.I."; and "when we have boundary, Jim Dahlquist will come down after survey. Important (1) anything adverse to prop. (2) proof of establishment of boundaries."

The field work for this survey was performed on six different days, May 2 through May 21 and a survey plat prepared dated May 1969. Mr. W. Ayer thereafter went to Los Angeles on May 22, 1969 where he met in the offices of T.I. in connection with the title to the property. South Coast billed (Exhibit VII-22) Kalmbach on June 9, 1969, in the amount of $3,050.60 for the boundary survey. Follow-up billings were sent to Kalmbach on July 10 and September 2, 1969 for an additional boundary survey, the structural report, and miscellaneous services. (Exhibits VII-23 and VII-24) On the same day, Marilyn R. Correa, Mr. Kalmbach's secretary, sent the vouchers to Mr. Hathaway, GSA, stating, "Mr. Kalmbach requested that I send you the attached billing by South Coast Engineering Service for payment by GSA per agreement with Mr. Hal Lynch." (Exhibit VII-25)

On August 19, Mr. Ayer's handwritten notes indicate he was to prepare a survey map in connection with the purchase of property from the Elmores by the President (Exhibit VII-26). They indicate that Mr. Lynch wanted a map by Friday morning in order to meet with Mr. Elmore and that President Nixon was interested in additional property of about four acres.

On September 16, Mr. Ayer's notes indicate that he talked to Richard Hathaway, GSA Building Manager at San Clemente, who said the bill for $3,050.60 would by returned to Mr. Kalmbach (Exhibit VII-27). On October 10, Marilyn Correa wrote to Mr. Kalmbach, "Talked to Hal Lynch today (couldn't reach him yesterday) and he will call Elmore. I also had him call Hathaway about money to Bill Ayer. He called me back and said that Bill will be paid in full for the entire bill some time next week. I called Bill and told him also and that if he didn't receive it, to call me again." (Exhibit VII-28)

On October 17 and 21, Mr. Hathaway prepared two purchase orders for which bills were later received, one for $1,525.30 and one for $1,684.30-a total of $3,209.60 (Exhibits VII-29 and VII-30). These were in payment of the May boundary survey of $3,050.60 and $159 for work done on the Elmore survey.

W. Ayer advised that professional ethics prohibit him from selling the same survey to more than one client. If GSA wanted copies of the Cotton and Elmore surveys, Mr. Kalmbach could have given a release so that such surveys could be made available to GSA. Handwritten notes (believed to be in the handwriting of Jack Galuardi) of a GSA-SS personnel meeting on June 9, 1969, indicate: "Wm. Ayers-survey of property. Iacavoni will get a release." (Exhibit VII-31)

Staff Conclusion

The staff believes that of the cost of these surveys paid by GSA ($8,388.09), $5,472.59 should be taxable income to the President.

Basis for Conclusion

From the facts obtained, it seems clear that Mr. Kalmbach ordered these two surveys in April, 1969, in conjunction with the purchase and closing of the property in connection with title coverage.

In addition, the Secret Service did not initiate the ordering of the boundary and structural surveys. As pointed out in the Government. Activities Subcommittee Hearings, it appears that the Secret Service could have obtained copies from South Coast Engineering Service for a nominal amount ($1.50 in the case of the boundary survey) after receiving authorization from Mr. Kalmbach to have South Coast release them. On the other hand, the topographical survey was initiated by GSA in connection with GSA improvements on the property.

As a result of these factors, the staff believes that these two surveys primarily benefit the President but does not believe that the topographical survey primarily benefited the President. Consequently, the staff concluded that the entire cost of the boundary and structural surveys should be treated as income to the President if he does not reimburse the United States.

F. SEWER

In July, 1969, certain sewer work, including the installation of a new sewer line, was performed by the Sturtevant Corporation at a cost of $9,845. Of this total cost, $3,800 was paid by GSA.

Facts

In a letter dated June 18, 1969, to Mr. John Ehrlichman, Mr. Hal Lynch, the President's architect, forwarded a list of various projects to be performed by the Sturtevant Corporation. The letter states that the Sturtevant Corporation will "be working under the direction of this (Hal Lynch's) office." (Exhibit VII-11)

Item #2 in the above letter indicated that, "The sewer work will include a 6-inch line from the sewer main to the main residence and continuing on with a 4-inch line to pick up the Guest House, laundry room, two outrooms, pool drain and future bath house, also includes pumping, filling and crushing of existing septic tanks." The letter estimates the cost of this work at $10,184.

On August 6, 1969, the Sturtevant Corporation sent a partial billing to Kalmbach, DeMarco, Knapp & Chillingworth for work completed at the President's San Clemente residence. This bill included $9,845 for sewer work. (Exhibit VII-32)

On September 6, 1969, Mr. Herb Kalmbach wrote Mr. John Ehrlichman (Exhibit VII-33), mentioning the dead end he had reached on getting GSA to pick up the cost of the sewer line on the property (excluding the cost allocable to the swimming pool). This letter mentions that Mr. Ehrlichman had earlier asked for some backup material demonstrating why GSA should pay for part of the expenditure. Mr. Kalmbach enclosed a letter (Exhibit VII-34) dated September 4, 1969, from Mr. Hal Lynch which stated that the "existing septic tank system at the Cotton Estate would not adequately service the increase in sanitary requirement and an overload of the existing system would result. This overload would be brought about by the the frequent gathering of large numbers of visitors, coupled with the loss of a septic tank

as a result of the construction of the swimming pool. The net result would be a potential hazard to the general health and welfare of the occupants of the residence." Mr. Lynch further stated that due to this reason, the decision was made to connect the existing sanitary system to the sewer main and the total cost was $9,700. Mr. Lynch stated that "of this amount, $2,800 was for sewer expenses for the swimming pool and should be paid by the owner. The balance would be an expense charged to GSA."

In a memorandum to the file dated September 12, 1969, Mr. John F. Galuardi of the GSA reported he had discussed the sewer and other matters with Mr. Myers, the Commissioner of Public Buildings Service for GSA, who had met and discussed them with Mr. Robert Kunzig, the Administrator of GSA. It was stated that the sewer was installed on the residence property under the auspices of Mr. Lynch and the cost of this sewer line should be prorated. Mr. Galuardi said in a memorandum (Exhibit VII-35) that he would discuss this with Mr. Lynch. On September 29, Mr. Sturtevant wrote (Exhibit VII-36) to Mr. Galuardi to request that GSA pay $3,800 "as per Hal Lynch" for its share of the sewer line.

In a memorandum to the file dated October 13, 1969, Mr. James Wilson of GSA recorded the justification to modify the general contract with Sturtevant Corporation to include the amount of $3,800 for sewer work. The memorandum stated, "GSA share of $3,800 was computed by Mr. Hal Lynch and agreed by Mr. Galuardi as follows:" (Exhibit VII-37)

On October 14, 1969, GSA modified its contract with Sturtevant to include this amount of $3,800. (Exhibit VII-38)

Staff Conclusion

The Staff believes that the amount paid by GSA for the sewer work-$3,800-should be includible in the President's taxable income. Basis for Conclusion

The staff believes that the sewer work was necessitated by the construction of the swimming pool, which destroyed one of the septic tanks which had previously been used at San Clemente while, at the same time, substantially increasing the workload on the sewage system there. The construction of the sewer obviously had no security purpose. Nor is there any evidence that the cost of the sewer line was increased by the large number of visitors to San Clemente (even assuming these visitors were entertained at governmental functions), since the construction of the lines would have been necessitated, in any case, by the construction of the swimming pool. Because of these factors, the staff believes that the cost of the sewer paid by GSA should be treated as income to the President.

G. HANDRAILS

In 1969 the wrought iron handrail leading to the "family gazebo" was removed and replaced by a new wrought iron handrail. In addition, the redwood handrail leading down to the beach was stained and certain designs were carved in the redwood. The entire cost, or $998.50, was paid by GSA.

Facts

On October 16, 1969, the Sturtevant Corporation submitted a bill in the amount of $998.50 to GSA. The bill provided "removing existing handrail, replace with wrought iron, remodel existing handrail, and paint". (Exhibit VII-39.)

On October 24, 1969, GSA issued a purchase order to the Sturtevant Corporation to furnish the necessary labor and material to complete this job. (Exhibit VII-40.)

There was some confusion as to where the new wrought iron handrail was installed. In testimony before the Government Activities Sub-committee, GSA representatives indicated that the new wrought iron handrail was located on the steps leading to the President's library. In a conversation with the Joint Committee staff, Mr. Warren Sturtevant stated that the new wrought iron handrail was installed along the pathway from the President's residence to the family gazebo and that it was installed because the old one was rusted out. Mr. Sturtevant told the Joint Committee staff that this work also included remodeling an existing redwood handrail leading down the steps to the beach.

Staff Conclusion

The staff believes that the entire cost, or $998.50, should be taxable income to the President.

Basis for Conclusion

The installation of the new wrought iron handrail and the remodeling of the existing redwood handrail leading to the beach were not for security purposes. While there is a safety element present, the hazard involved is the same as anyone having a private beach would face, i.e., the danger of slipping, and is not related to the President's position. Conceivably, these handrails might be used by official guests at San Clemente, but there was no evidence submitted to the staff that this was the case, and, in any event, it appears that the primary purpose of the handrails was to provide for the safety and comfort of the President and his family. Thus, the staff believes that the full cost of these improvements should be taxable income to the President.

H. PAVING

In the years 1969 to 1971, substantial paving was performed on the President's grounds at San Clemente at a total cost of $20,429.03. Of this total amount, GSA paid $19,386.03.

Facts

In a letter dated June 18, 1969, from Mr. Hal Lynch, the President's architect, to Mr. John Ehrlichman, Mr. Lynch forwarded a list of items to be performed on the President's property by the Sturtevant Corporation. The letter states that the Sturtevant Corporation will be "working under the direction of this office." (Exhibit VII-11.) Item 5 of this letter refers to paving and provides for the "removal of all asphalt paving in the driveway and replacing with new in the areas indicated on the attached drawing and patching walks." The letter estimates the cost of this to be $3,130 and further states "This cost is

to be shared equally by the contractor, General Services, and the Secret Service." Under this agreement the President would pay onethird of the total paving costs.

An additional $1,010 was added to the original estimate of $3,130 (totalling $4,140) because of additional work that had to be done to the circle driveway. In a letter to Mr. Richard Hathaway (GSA) dated September 11, 1969, Mr. Warren Sturtevant explained that this additional cost was incurred because "the area in front of the house was so torn up by GSA and/or security ditches that the only way to do the job properly was to remove more paving and do more patching." (Exhibit VII-41.) Of the total $4,140, the President paid $1,043 and GSA paid $3,097.

At the same time that the circle driveway was being paved, it was decided that additional areas on the residence would also be paved. These areas included the main road from the main gate to the caretaker's house, certain walkways around and behind the garages, and the road from the circle driveway to the Western White House office complex. As a result of this, GSA paid an additional $7,515. (Exhibit VII-42.) The contractor who performed the resurfacing described the paving as being about 30 years old.34

Subsequent to this paving work, certain repairs were made at an additional cost of $2,039.60. The total amount of these repairs was paid by GSA.

In September or October of 1971, the paving had once again settled, partially due to a break in the water main, and the circle driveway was again completely repaved at a cost of $6,278. In addition, certain other miscellaneous work was performed. (Exhibit VII-43). The entire cost of this work was paid by GSA.

In addition to the above, it appears an additional $1,500 was paid by GSA for paving work at San Clemente. In their report to Congress, GAO indicated that this amount represented paving on a new road from the circle driveway to the Western White House office complex. The staff was told by the contractor that the cost of paving this new road was included as part of the $7,515 contract. The staff was unable to ascertain what this $1,500 expenditures for paving represented. Staff Conclusion

The staff believes that of the total cost for paving on the President's grounds, or $20,429.03, $5,866.66 should be taxable income to the President.

Basis for Conclusion

The staff believes that the paving work performed on the President's grounds at San Clemente provided a personal benefit to the President in that the entire road (which appeared to be 30 years old) from the caretaker's house to the main gate at the entrance to Cyprus Shores was newly paved. It is also clear to the staff that substantial paving in the area of the circle driveway was required because of the damage caused by construction for security installations. In addition, government personnel were the primary users of the road. The staff does not believe that any of this restoration work done to repair the damage caused by this construction should be taxable income to the President.

34 United States General Accounting Office Report to the Congress: Protection of the President at Key Biscayne and San Clemente (With Information on Protection of Past Presidents) B-155950 44 (Dec. 18, 1973).