Use of leased property when completed and placed in service will be reviewed by the Oversight Officer or other appropriate department head or designee. Use of leased property must be measured separately for each lease.
A. Limit On Private (Nonexempt) Use: Average annual private use of leased property over the life of the lease cannot exceed ten percent (10%) of the proceeds (or 5 percent if the use is unrelated to the governmental use or disproportionate to the governmental use). Private use will be determined annually as a percentage of total use of proceeds of the lease.
B. Review Of Contracts And Agreements: Contracts and agreements with private business users for the sublease, management, sponsored research, or any other potential private/nonexempt use of leased property will be reviewed before execution for compliance with the private use limits. This review will include a determination of whether any arrangement meets the safe harbors of Internal Revenue Service Rev. Proc. 97-13, as modified by Rev. Proc. 2001-39, or, with respect to research arrangements, Rev. Proc. 2007-47. It will also include a determination of whether any arrangement meets the exception for incidental use under Treasury Regulations section 1.141-3(d)(5), the exception for general public use under Treasury Regulations section 1.141-3(c), or the exception for certain short term arrangements under Treasury Regulations section 1.141-3(d)(3).
C. Tracking Private (Nonexempt) Use: Agreements with private business users or nonprofit organizations for sublease or management or services contracts or other private business use involving leased property will be tracked and aggregated with other private business uses for compliance with the ten percent (10%) (or 5 percent) limit, as set forth in any tax certificate for the applicable lease.
D. Change In Use: No item of leased property will be sold or transferred to a nonexempt party without advance arrangement of a "remedial action" under the applicable Treasury Regulations (see Treasury Regulations section 1.141-12). (2019 Compilation)