Policy 6112 - District Entering into Rental or Lease Agreements
A. Rental or Lease of District Real Property
When real property of the Richland School District (the “District”) is not needed, the Richland School District’s Board of Directors (the “Board”) has the authority to call for bids to rent or lease any surplus real property. A notice of the intent to rent or lease property will be published in a newspaper of general circulation in the District at least 45 days before the rental or lease takes effect, if the value of the rental or lease is $10,000.00 or more. The District may establish a minimum acceptable bid based upon the fair market value, provided that such minimum bid is non-discriminatory within classes of users.
Such property will be rented or leased for lawful purposes. The rental or lease will be in the best interests of the District and not interfere with the conduct of the District's educational program and related activities. The lease or rental agreement shall permit the recapture of the leased or rented surplus property should such property be needed for school purposes in the future unless proximity to an international airport precludes the possible or appropriate use of the property for a school, or the property is leased or rented for affordable housing purposes.
Proceeds from rental or lease of district property which are in excess of the operational costs incurred for such rental or lease will be deposited in the capital projects fund or debt service fund.
At the option of the Board, after evaluating the sufficiency of the District’s capital projects fund for purposes of meeting demands for new construction and improvements, moneys derived from the lease or rental of real property may be deposited into the District’s general fund to be used exclusively for nonrecurring costs related to operating school facilities, including but not limited to, expenses for maintenance.
B. Capitalization Threshold for Leases and Subscription-Based Information Technology Arrangements (SBITAs)
In accordance with the Governmental Accounting Standards Board (GASB) Statements 87 and 96, covering Leases and Subscription-Based Information Technology Arrangements (SBITAs). Within the guidelines of these Statements, the district may establish a liability threshold for reporting either a lease or a SBITA that are considered to be de minimis when compared to the district’s financial capacity. These leases or SBITAs must have a maximum possible term of greater than one year to be included.
For the purpose of this policy, the following definitions are used, in accordance with the Statements referenced above:
- A lease is a contract which conveys control of the right to use another entity’s nonfinancial asset for the time specified in the contract for an exchange or exchange-like transaction.
- A subscription-based information technology arrangement (SBITA) is a contract that conveys the right to use another entity’s software, alone or in combination with tangible capital assets, for the time specified in the contract for an exchange or exchange-like transaction. Software that is insignificant to the cost of the underlying asset is excluded.
The value of leases or SBITAs under this policy will be determined using the methodology outlined in the original Statements and current accepted industry practice. Each lease or SBITA will be considered individually.
For capitalization purposes, those leases with a value that equals or exceeds $2.15 million (approximately 1% of budgeted expenditures) and has a maximum possible term in excess of one year will be capitalized and recorded as a liability on the district’s financial statements in accordance with the Statements referenced above.
For capitalization purposes, those SBITA’s with a value that equals or exceeds $2.15 million (approximately 1% of budgeted expenditures) and has a maximum possible term in excess of one year will be capitalized and recorded as a liability on the district’s financial statements in accordance with the Statements referenced above.
Any lease or SBITA that does not meet these thresholds, or which has a maximum term of less than one year, will not be reported as a liability on the district’s financial statements.
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