b201a113_lowability_of_Costs_Activities__Explanation_of_Allowable_Costs
[Items] Rental or Lease of Facilities and Equipment
Allowable subject to the limitations below. Rental costs are allowable to the extent that the rates are reasonable at the time of the decision to lease in light of such factors as rental costs of comparable property, if any; market conditions in the area; the type, life expectancy, condition, and value of the property leased; and available alternatives. Because of the complexity involved in determining the allowable amount under certain types of leases, recipients are encouraged to consult the GMO before entering into leases that will result in direct charges to the grant project. In general, the rental costs for facilities and equipment applicable to each budget period should be charged to that period. However, see Administrative Requirements-Management Systems and Procedures-Procurement System Standards and Requirements for an exception to this general rule. Rental costs under leases that create a material equity in the leased property, as defined in 45 CFR 75 Subpart E, are allowable only up to the amount that would be allowed had the recipient purchased the property on the date the lease agreement was executed. This would include depreciation or use allowances, maintenance, taxes, and insurance, but would exclude unallowable costs. When a recipient transfers property to a third party through sale, lease, or otherwise, and then leases the property back from that third party, the lease costs that may be charged to NIH projects generally may not exceed the amount that would be allowed if the recipient continued to own the property. Rental costs under "less-than-arms-length" leases are allowable only up to the amount that would be allowed under 45 CFR 75 Subpart E had title to the property been vested in the recipient. A less-than-arms-length lease is one in which one party to the lease agreement is able to control or substantially influence the actions of the other. Such leases include, but are not limited to, those between divisions of an organization; between organizations under common control through common officers, directors, or members; and between an organization and its directors, trustees, officers, or key employees (or the families of these individuals), directly or through corporations, trusts, or similar arrangements in which they hold a controlling interest.
7.9 Allowability of Costs/Activities
Explanation of Allowable Costs