41 C.F.R. Subpart D—Rent Charges
Title 41 - Public Contracts and Property Management
Unless an exemption is granted under the authority of the Administrator of General Services, the Rent charged approximates commercial charges for comparable space and space-related services as follows: (a) Generally, Rent for Federally owned space provided by GSA is based on market appraisals of fully serviced rental values for the predominant use to which space in a building is put; e.g., general use, warehouse use, and parking use. In cases where market appraisals are not practical; e.g., in cases involving unique space or when market comparables are not available, GSA may establish Rent on the basis of alternate commercial practices. See the discussion of alternate valuation methods in §102–85.125. Amortization of tenant improvements, parking fees, and security charges are calculated separately and added to the appraised shell Rent to establish the Rent charge. Customer agencies also pay for a pro rata share of joint use space. (b) Generally, Rent for space leased by GSA is based on the actual cost of the lease, including the costs (if any) of services not provided by the lessor, plus a GSA fee, and security charges and parking (if not in the lease). (1) The Rent is based on the terms and conditions of the OA, starting with the shell Rent. (2) In addition to the shell Rent, the Rent includes amortization of TI allowances used, real estate taxes, operating costs, extra services, parking, GSA fee for its services, and charges for security, joint-use, and other applicable rental charges (e.g., antenna site, land, wareyard). Shell Rent is that portion of GSA Rent charged for the building envelope and land. (See §102–85.35 for the definition of building shell.) Alternate methods of establishing Rent are based on private sector models. They include, but are not limited to: (a) Return on investment (ROI) approach or a similar cost recovery method used when market comparables are not available and/or GSA must “build to suit” to fulfill customer agency requirements; e.g., border stations; and (b) Rent schedules for the right to use rooftops and other floor areas not suitable for workspace; e.g., antenna sites and signage. Exemptions from Rent are rare. However, the Administrator of General Services may exempt any GSA customer from Rent after a determination that application of Rent would not be feasible or practical. Customer agency requests for exemptions must be addressed to the Administrator of General Services and submitted in accordance with GSA Order PBS 4210.1, “Rent Exemption Procedures,” dated December 20, 1991, or in accordance with any superseding GSA order. A copy of the order may be obtained from the Office of Portfolio Management, General Services Administration, 1800 F Street, NW., Washington, DC 20405. Any executive agency other than GSA providing space and services is authorized to charge the occupant for the space and services at rates approved by the Administrator of General Services and the Director of the Office of Management and Budget. If space and services are of the type provided by the Administrator of General Services, the executive agency providing the space and services must credit the monies derived from any fees or charges to the appropriation or fund initially charged for providing the space or services, as prescribed by Subsection 210(k) of the Federal Property and Administrative Services Act of 1949, as amended (40 U.S.C. 490(k)). (a) If Rent changes in ways that are identified in the OA, then no change to the OA is required. Typically, OAs state that certain components of Rent are subject to annual escalation; e.g., operating expenses, real estate taxes, parking charges, the basic security charge, and building-specific security operating and amortized capital expenses which do not entail a change in service level. Also, in Federally-owned space, OAs state that the shell rent is re-marked to market every five years. In leased space, the OA will identify any programmed changes in the lease contract rent (such as pre-set increases or steps in the contract rent rate) that will translate into a change in the customer agency's Rent. Changes in Rent specified in OAs will serve as notice to agencies of future Rent changes for budgeting purposes. For a discussion of budgeting for Rent, see §102–85.160. (b) Changes to Rent other than those identified in paragraph (a) of this section typically require an amended OA. There are many events that might occasion a change in Rent, and an amended OA, such as: (1) An agency expands or contracts at an existing location; (2) PBS agrees to fund additional tenant improvements that are then amortized over the remaining OA term, or over an extended OA term; (3) Upon physical re-measurement, the true square footage of the space assignment is found to be different from the square footage of record; (4) The amount of joint use space in the building changes; (5) The level of building-specific security services changes; or (6) PBS undertakes new capital expenditures for new or enhanced security countermeasures. (a) When a customer agency occupies cancelable space, it is responsible for Rent charges until: (1) The date of release specified in the OA, or until the date space is actually vacated, whichever occurs later; or (2) Four months after having provided GSA written notice of release; or (3) The date space is actually vacated, whenever occupancy extends beyond the date agreed upon under either paragraph (a)(1) or (2) of this section. (b) When a customer agency releases non-cancelable space, it is responsible for all attributable Rent and other space charges until the OA expires. This responsibility is mitigated to the extent that GSA is able to assign the space to another user or dispose of it. (See §102–85.65 How does an OA obligate the customer agency?) (c) When a customer agency commits to occupy space in an OA or other binding document, but never occupies that space, that agency is responsible for: (1) Non-cancelable space: Rent payments due for the space until the OA expires, unless GSA can mitigate; or (2) All other space: Either GSA's space charges for 4 months plus the cost of tenant improvements or GSA's actual costs, whichever is less. Rent charges are billed monthly, in arrears, based on an annual rate which is divided by 12. Billing commences the first month in which the agency occupies the space for more than half of the month, and ends in the last month the agency occupies the space. (a) If a customer agency does not agree with the way GSA has determined its Rent obligation (e.g., the agency does not agree with GSA's space classification, appraised Rent, or the allocation of space), the agency may appeal its Rent bill to GSA. (b) GSA will not increase or otherwise change Rent for any assignment, except as agreed in an OA, in the case of errors, or when the OA is amended. However, customer agencies may at any time request a regional review of the measurement, classification, service levels provided, or charges assessed that pertain to the space assignment without resorting to formal procedures. Such requests do not constitute appeals and should be directed to the appropriate GSA Regional Administrator. (c) If a customer agency still wants to pursue a formal appeal of Rent charges, they may do so, but with the following limitations: (1) Terms, including rates, to which the parties agree in an OA are not appealable; (2) In leased space, the contract rent passed through from the underlying lease cannot be appealed; (3) In GSA-owned space, when the fully-serviced shell Rent is established through appraisal, the appraised rate must exceed comparable commercial square foot rates by 20 percent. When shell Rent in owned space is established on the basis of ROI at the inception of an OA, and the customer agency executes the OA, then the ROI rate cannot later be appealed. Other components of Rent that are established on the basis of actual cost—eg., amortization of TIs and building specific security charges—also cannot be appealed. (4) Additionally, the customer agency is required to compare its assigned space with other space in the surrounding community that: (i) Is available in similar size block of space in a comparable location; (ii) Is comparable in quality to the space provided by GSA; (iii) Provides similar service levels as part of the charges; (iv) Contains similar contractual terms, conditions, and escalations clauses; and (v) Represents a lease transaction completed at a similar point in time. (5) Data from at least three comparable locations will be necessary to demonstrate a market trend sufficient to warrant revising an appraised Rent charge. (d) A customer agency filing an appeal for a particular location or building must develop documentation supporting the appeal and file the appeal with the appropriate Regional Administrator. The GSA regional office will verify all pertinent information and documentation supporting the appeal. The GSA Regional Administrator will accept or deny the appeal and will notify the appealing agency of his or her ruling. (e) A further appeal may be filed by the customer agency's headquarters level officials with the Commissioner, Public Buildings Service, if equitable resolution has not been obtained from the initial appeal. A head of a customer agency may further appeal to the Administrator of the General Services. Documentation of the procedures followed for prior resolution must accompany an appeal to the Administrator. Decisions made by the Administrator are final. (f) Adjustments of Rent resulting from reviews and appeals will be effective in the month that the agency submitted a properly documented appeal. Adjustments in Rent made under this section remain in effect for the remainder of the 5-year period in which the charges cited in the OA were applicable. GSA normally provides customer agencies an estimate of Rent increases approximately 2 months prior to the agencies' Office of Management and Budget (OMB) submission for the fiscal year in which GSA will charge Rent. This gives the affected customer agencies an opportunity to budget for an increase or decrease. However, GSA must obtain the concurrence of OMB for such changes prior to notifying customer agencies. In the event GSA is unable to provide timely notice of a future Rent increase, customer agencies are nonetheless obligated to pay the increased Rent amount. For existing assignments in owned buildings, GSA charges for fully serviced shell Rent, in aggregate, shall not exceed the bureau level budget estimates provided to the customer agencies annually. This provision does not apply to: (a) New assignments; (b) Changes in current assignments; (c) Leased space; (d) New tenant improvement amortization; (e) Building specific security costs; and (f) New amortization of capital expenditures under ROI pricing due to changes in scope of proposed projects or repair and/or replacement of building components
Title 41: Public Contracts and Property Management
PART 102–85—PRICING POLICY FOR OCCUPANCY IN GSA SPACE
Subpart D—Rent Charges
§ 102-85.115 How is the Rent determined?
§ 102-85.120 What is shell Rent?
§ 102-85.125 What alternate methods may be used to establish Rent in Federally-owned space?
§ 102-85.130 How are exemptions from Rent granted?
§ 102-85.135 What if space and services are provided by other executive agencies?
§ 102-85.140 How are changes in Rent reflected in OAs?
§ 102-85.145 When are customer agencies responsible for Rent charges?
§ 102-85.150 How will Rent charges be reflected on the customer agency's Rent bill?
§ 102-85.155 What does a customer agency do if it does not agree with a Rent bill?
§ 102-85.160 How does a customer agency know how much to budget for Rent?
