The grantee has the right to purchase the property for a price which at the beginning of the lease appears to be substantially less than the probable fair market value at the time it is permitted to purchase the property, commonly called a lease with a purchase option;
Title to the property passes to the grantee at some time during or after the lease period;
The initial term of the lease plus periods covered by any renewal options is equal to 75% or more of the economic life of the leased property. In this subparagraph, "economic life" means the period the property is expected to be economically usable by one or more users.
Similar costs for buildings owned by an agency are allowable where "rental rate" systems, or equivalent systems that adequately reflect actual costs, are employed. Such charges must be determined on the basis of actual cost, including depreciation based on the useful life of the building, interest paid or accrued, operation and maintenance, and other allowable costs. Where these costs are included in rental charges, they may not be charged elsewhere. No costs will be included for purchases or construction that were originally financed by the federal government.
(38) Severance pay.
Severance pay, also commonly referred to as dismissal wages, is a payment in addition to regular salaries and wages, by organizations to workers whose employment is being terminated. Costs of severance pay are allowable only to the extent that they are required by law, employer-employe agreement, established policy that constitutes, in effect, an implied agreement on the organization's part, or circumstances of the particular employment.
(39) Staff training and education.
The cost of training, customarily provided for employee development, which directly or indirectly benefits grant programs, is allowable.
(40) Supportive services.
Costs for services which a participant cannot otherwise afford, and which are necessary to enable a participant to take part in a Job Training Partnership Act program activity or retain employment, are allowable for a period not to exceed 6 months following termination from JTPA.
In general, taxes or payments in lieu of taxes which the organization is required to pay are allowable, except for:
Special assessments on land which represent capital improvements,
(42) Termination costs.
Termination of grants generally give rise to the incurrence of costs, or the need for special treatment of costs, which would not have arisen had the grant not been terminated. Cost principles covering these items are set forth below. They are to be used in conjunction with the other provisions of this chapter in termination situations, depending on availability of funds.
(a) Common items.
The cost of items reasonably usable in the grantee's other work are unallowable unless the grantee submits evidence that it would not retain such items at cost without sustaining a loss. In deciding whether such items are reasonably usable on other work of the grantee, the grantor should consider the grantee's plans and orders for current and scheduled activity. Contemporaneous purchases of common items by the grantee shall be regarded as evidence that such items are reasonably usable on the grantee's other work. Any acceptance of common items as allocable to the terminated portion of the grant shall be limited to the extent that the quantities of such items on hand, in transit, and on order are in excess of the reasonable quantitative requirements of other work.
(b) Costs continuing after termination.
If in a particular case, despite all reasonable efforts by the grantee, certain costs cannot be discontinued immediately after the effective date of termination, such costs are generally allowable, but only up to the amount of the grant. However, any such costs continuing after termination due to the negligent or willful failure of the grantee to discontinue such costs shall be unallowable.
(c) Loss of useful value.
Loss of useful value of special tooling, machinery and equipment which was not charged to the grant as a capital expenditure is generally allowable if:
Such special tooling, machinery, or equipment is not reasonably capable of use in the other work of the grantee.
The interest of the division is protected by transfer of title or by other means deemed appropriate by the grantor.
(d) Rental costs.
Rental costs under unexpired leases are generally allowable where clearly shown to have been reasonably necessary for the performance of the terminated grant less the residual value of such leases, if
The amount of such rental claimed does not exceed the reasonable use value of the property leased for the period of the grant and such further period as may be reasonable, and
The grantee makes all reasonable efforts to terminate, assign, settle, or otherwise reduce the cost of such lease. There also may be included the cost of alterations of such leased property, provided such alterations were necessary for the performance of the grant, and of reasonable restoration required by the provisions of the lease.
(e) Settlement expenses.
Settlement expenses including the following are generally allowable:
Accounting, legal, clerical, and similar costs reasonably necessary for:
The preparation and presentation to the grantor of settlement claims and supporting data with respect to the terminated portion of the grant, unless the termination is for default.
Reasonable costs for the storage, transportation, protection, and disposition of property provided by the division or acquired or produced for the grant; except when grantees are reimbursed for disposals at a predetermined amount.
(43) Transportation costs.
Transportation costs including freight, express, cartage, and postage charges relating either to goods purchased in process, or delivered are allowable.
Travel costs are the expenses for transportation, lodging, subsistence, and related items incurred by employees who are in travel status on official business of the grantee. Travel costs are allowable subject to pars. (b)
when they are directly attributable to specific work under a grant.
Such costs may be charged on an actual basis, on a per diem or mileage basis in lieu of actual costs incurred, or on a combination of the 2, provided the method used results in charges consistent with those normally allowed by the grantee in its regular operations.
The difference in cost between first-class air accommodations and less than first-class air accommodations is unallowable except when less than first-class air accommodations are not reasonably available.
Notwithstanding the provision of sub. (21)
, travel costs of officials covered by those paragraphs when specifically related to grant programs, are allowable.
DWD 805.05 History
Cr. Register, July, 1986, No. 367
, eff. 8-1-86.