TN 36 (10-23)

DI 39527.015 Privately Owned Space

A. Policy

1. Comparable space

  1. a. 

    Rental charges to SSA must not exceed the rental rate of comparable privately owned space in the same or similar localities.

  2. b. 

    The rental rate:

    • Need not be a fixed rate in any particular locality;

    • May vary within, as well as between, localities; and

    • Must consider inflationary trends in utility and tax costs.

2. Cancellation or conditional clause

A cancellation or conditional clause must be in the rental agreement

unless the RO has approved a lease without a cancellation clause.

3. Billing

a. Cost allocation plan

If the lease is controlled by a central State organization, the cost is included in the cost allocation plan.

b. Direct bill

If the Private Owned building is entirely rented out to a state, the central State organization can still direct bill the DDS for the leased space based on square footage.

If a service can be identified to the space held by the DDS, it can be directly billed.

B. Procedure

1. Comparable rental rate

  1. a. 

    Determine the rental rate of comparable privately owned space.

  2. b. 

    Consider only rates that are based on like elements of cost.

EXAMPLE: Rental charges which include service and maintenance charges must not be compared with rates that do not include such expenses.

2. Inflation

Consider inflationary trends in utility and tax costs.

3. Documentation

  1. a. 

    Provide the RO with the basis and documentation for establishing the rental rate.

  2. b. 

    Retain a copy of (a.) above on file in the DDS.

4. Cancellation clause

In executing or renewing leases, the DDS must:

  1. a. 

    Include a reasonable right of cancellation (less than 90 days), if possible; and

  2. b. 

    Secure a cancellation clause in all leases exceeding 1 year; or

  3. c. 

    If unsuccessful in securing a cancellation clause,secure a lease not to exceed 1 year, with an annual renewal option for an extended period such as 3 to 5 years.

  4. d. 

    If (b.) or (c.) is not possible, consult the RO at least 30 days in advance of the date proposed for the signing of the lease.

To Link to this section - Use this URL:
DI 39527.015 - Privately Owned Space - 10/23/2023
Batch run: 10/23/2023