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Space Rental Calculation

Occasionally an outside company will want to rent lab space at ISU. The most common scenario is that they plan to move to the research park at some time in the future but are waiting for space to open up or be remodeled. With the support of a university department, we permit these rentals. Below is the process that should be followed:

    • Sponsoring department contacts us for a rate. The sponsor needs to know the specific room in which the company would be housed.
    • We calculate the monthly rate for the room.
    • The sponsoring department contacts Madeline Burkhardt for the space rental contract template.
    • Outside company completes contract which is signed by company, sponsoring department, College dean and Senior Vice President for University Services, Kate Gregory.
    • Sponsoring department will bill the Company through Accounts Receivables Office. Company pays rent. All rental income goes centrally into account 202-12-65 that will be earmarked for building repair for the college. Each rental will be segregated within the account which will be managed by the Controller's Department.

The rate per square foot will consist of four elements and will be computed by the Controller's Department:

    • The basic O&M rate charged under the budget model. This will be consistent across all buildings. For FY17, this is $10.22 per square foot.
    • The average utility rate per square foot for the building being rented per Dave Miller.
    • The depreciation per square foot for the building being rented per the annual depreciation schedules compiled by Hirons & Associates. Building square footage is found on the FP&M website.
    • The interest expense per square foot for the building being rented per the most recent Facilities & Administrative rate proposal.

Annual room cost is the cost per square foot times the square footage of the room. Monthly rate is 1/12th of that calculation. A clause will be added to the lease agreement that allows the rates to be adjusted annually.

The model described above is just for the rent of space. If equipment will also be used by the company, we will also need to know the equipment number and whether this will be exclusive use. If exclusive use and the book value is greater than $5,000, we will verify that the equipment was not purchased with Federal funds. If not exclusive use, determine the intended usage and we will compute a depreciation factor based on anticipated use. Equipment depreciation expense and any other expenses to the department (i.e.Telecommunication charges) can go directly into the department's own fund account.

Please contact the Financial Accounting and Reporting staff with any questions regarding the space rental process.