New York Codes, Rules and Regulations › Title 14 - DEPARTMENT OF MENTAL HYGIENE › Chapter XIV - Office for People With Developmental Disabilities › Part 635 - General Quality Control and Administrative Requirements Applicable to Programs, services or Facilities Funded or Certified by the Office for People With Developmental Disabilities › Subpart 635-6 - Allowability of Capital Costs and Costs of Transactions with Related Parties › Section 635-6.3 - Leases for real property

Current through Register Vol. 46, No. 28, July 10, 2024
(a) This
				  subdivision applies to allowability of costs for leases for real property
				  except for continuing residential lease arrangements as specified in
				  subdivision (b) of this section.
(1) In order
				  for lease costs to be considered for allowability, the provider or individual
				  lessee must submit the lease to OPWDD for approval. In deciding whether to
				  approve a lease, OPWDD shall consider whether the lease is in the best
				  interests of the programs and the persons it serves and whether the lease in
				  any way violates public policy. In deciding whether to approve an amount for
				  rent, OPWDD shall consider whether the provider's rate, fee or price, as a
				  whole, including the amount of rent to be approved, would result in payment
				  which is consistent with efficiency and economy.
(2) If an approved lease (see glossary,
				  Subpart 635-99 of this Part) or approved proprietary lease (see glossary,
				  Subpart 635-99 of this Part) is between the provider or individual lessee and a
				  party which is not a related party, allowable lease costs shall be the lesser
				  of contract rent or fair market rent.
(3) If an approved lease or approved
				  proprietary lease is between the provider or individual lessee and a related
				  party, allowable lease costs shall be the least of:
(i) contract rent (see glossary, Subpart
				  635-99 of this Part);
(ii) fair
				  market rent (see glossary, Subpart 635-99 of this Part); or
(iii) the landlord's net cost (see glossary,
				  Subpart 635-99 of this Part).
(4) The commissioner may waive the
				  limitations on allowable costs as stated in paragraph (3) of this subdivision
				  upon a showing that such limitations would jeopardize the opening or continued
				  operation of the program or services and that the negotiations for the lease or
				  proprietary lease were conducted as though the parties were not
				  related.
(5) The commissioner may,
				  upon application from a provider, allow lease costs in an amount equal to
				  contract rent and greater than fair market rent if all of the conditions in
				  subparagraph (i) or (ii) of this paragraph are met.
(i) The commissioner will allow such lease
				  costs only for as long as it is necessary for the provider to relocate the
				  program or services located on the lease property; and
(a) the lease is a renewal that is not
				  pursuant to an option to renew;
(b)
				  the lease is a renewal of a lease for an existing program or services;
				  and
(c) the provider has shown
				  that:
(1) the provider has made diligent
				  efforts to negotiate a lease renewal for fair market rent or less;
(2) the provider has been unable to negotiate
				  a lease renewal for less than the current rent;
(3) the parties to the lease renewal are not
				  related; and
(4) allowance of lease
				  costs in the amount of contract rent is necessary to ensure the continued
				  operation of the program or services; or
(ii) A substitute provider (see section
				  635-99.1[bp] 
				  of this Part) is designed to operate the program at the same physical location,
				  and OPWDD determines that allowing such lease costs:
(a) is an economic and efficient use of
				  resources; and
(b) is necessary to
				  protect the health, safety, or welfare of the persons who are receiving or will
				  receive services at the facility or program in question.
(6) Contract rent incurred
				  pursuant to an approved lease or approved proprietary lease which is renewed
				  pursuant to an option to renew is allowable.
(7) Costs incurred pursuant to an approved
				  lease or approved proprietary lease which is renewed other than pursuant to an
				  option to renew (see glossary, Subpart 635-99 of this Part) shall be allowable
				  as follows:
(i) If the lease is between
				  parties who are not related, allowable costs are determined in accordance with
				  paragraph (2) of this subdivision.
(ii) If the lease is between parties who are
				  related, allowable costs are determined in accordance with paragraph (3) of
				  this subdivision.
(iii) OPWDD shall
				  decide whether to approve any such renewal at least 30 days before the last day
				  the lease may be renewed, if the provider or individual lessee has notified
				  OPWDD in accordance with subparagraph (iv) of this paragraph.
(iv) Whenever possible, the provider or
				  individual lessee shall submit to OPWDD a request for approval of lease
				  renewals at least 120 days prior to the last date for renewing the
				  lease.