The University of ArizonaThe University of Arizona
Financial Policies & ProceduresFinancial Policies & Procedures
 

7.20 Equipment Rental Non-University Purpose

PURPOSE:

To provide direction to university departments regarding the rental of university and sponsored equipment for non-university purposes.

AUTHORITY:  

Powers and duties of the University President, ABOR Policy 3-801 and 3-802

Authority below applies ONLY to Federal Property (acquisition dollars or title):

  • 2 Code of Federal Regulations (CFR) Part 200 (“Uniform Guidance”)

POLICY:

In furtherance of the University's public service mission, departments are permitted to rent university and sponsor owned equipment under the following criteria to non-university individuals and entities, and to university employees when acting outside of their university employment.

  1. This policy is limited to the use of equipment, equipment maintenance and unique supplies for the safe and proper operation of the equipment. Any use of University personnel or other supplies must be handled through a standard research agreement, copies of which are available from the Office of Research and Contract Analysis or the Office of Technology Transfer.
  2. The use of the equipment by the user cannot amount to a subsidy by the University. In addition, the use must be a one-time, short-term use and not a substitute for purchasing the equipment or the components, which have been combined to form the unique configuration. In addition, the duration of the use cannot exceed the period within which it would be possible for the user to purchase the equipment and assemble the configuration.
  3. The equipment to be used is either unique equipment or a unique configuration of equipment, which is not readily available in the private sector.
  4. The use of the equipment does not compete with immediate University educational or research needs as determined by the appropriate department head or dean.
  5. The equipment must be fully paid for, for example, it cannot be on a lease purchase, lease or rental agreement.
  6. The use of the equipment must be allowed by the terms of any sponsor's grant, contact, or cooperative agreement which funded the purchase of the equipment.
  7. A "Use Agreement" must be processed for signature by the University's Procurement and Contracting Office.

USE CHARGE

The use charge must meet or exceed the fair market value of the equipment or the use of the equipment and the University must recover all overhead, taxes and direct costs associated with the use, such as depreciation, maintenance, electrical and janitorial costs. The University may not charge any rate which violates OMB Circular A-21. For assistance in determining that a rate is not in violation of OMB Circular A-21, contact the Financial Services Office - Financial Management.

The minimum use charge levied for the use of the equipment shall be the fair market rental rate or the use charge as calculated in accordance with Exhibit A whichever is higher. In addition, Exhibit B describes how the revenues shall be distributed internally to University and sponsor accounts. Higher rates may be charged in light of factors or circumstances unique to the equipment .

The funds received for the use of the equipment must be deposited in a University account.

INSURANCE

The user must provide insurance as required by the University's Office of Risk Management and Safety. The department must contact the Office of Risk Management and Safety to find out what types of insurance will be required.

UNRELATED BUSINESS INCOME TAX

The department must contact the Financial Services Office - Tax Compliance to find out if there are any "Unrelated Business Income Tax (UBIT)" related issues involved in the arrangement. The user will be responsible for paying any and all taxes and/or penalties as a result of its use of the equipment.

HAZARDOUS CHEMICALS

If the use of university equipment requires the use of hazardous chemicals, such materials must be supplied by the user. The user must provide evidence of all applicable permits, and compliance with all applicable regulations, and is responsible for all chemical and/or hazardous waste storage, handling and disposal. Chemicals must be completely removed from all equipment prior to return to the University. Non-university chemical and/or hazardous waste may not be stored in University buildings.

QUALIFED OPERATORS

If the use of university equipment requires special knowledge, training, certification or licensing, the user must supply copies of training records, certifications or licenses to the university. The user may be required to provide proof of workman's compensation insurance coverage to the Office of Risk Management and Safety.

SOFTWARE

Software purchased and/or licensed by the University may not be used by non-university entities pursuant to this policy.

Use of software subject to the copyright of the Arizona Board of Regents on behalf of the University of Arizona must be negotiated separately with the Office of Technology Transfer.

PROCEDURE:

RESPONSIBILITY

ACTION

CUSTODIAL DEPARTMENT

  1. Determine if the equipment was acquired on university or sponsored (3000000 – 4999990 account) funds. If acquired on a sponsored account, obtain the approval of the SPS Property Administrator for the rental use.

SPS PROPERTY  ADMINISTRATOR

  1. Consult with the Fund Accountant and review the applicable grant, contract and cooperative agreement for any terms or requirements affecting the rental use of program acquired equipment on non-program activities and for non-university purposes. Advise the department regarding sponsor requirements, if any. 

CUSTODIAL DEPARTMENT

  1. With SPS Property Administrator approval or if not applicable, contact the Procurement Office and complete the rental agreement documents as directed. Obtain the required approvals of Financial Services Office and Risk Management.
  2. Send copies of the signed agreement to Property Management-FSO. If a Sponsored account is not involved, follow the account deposit provisions in the Exhibit B.

    If a Sponsored account is involved, send a copy to the SPS Property Administrator. Sponsored Project Services will set up a Program Income Account when the equipment was acquired on a Sponsored account.
  3. Responsible for invoicing the renter for the agreed upon charges and to initiate follow-up on collections, as necessary. Renter is to send payments to the University Bursar’s Office.
  4. Responsible to insure the item (s) is returned in good condition less normal wear.
  5. Negotiating with the renter for the recovery of costs arising from the renter’s damage to the equipment discovered upon its return.

EXHIBITS:

Exhibit A

Rate Calculation

Equipment Use Charge (EUC)
Equipment < 5 years old Annual EUC = 18% x equipment acquisition cost per University's Capital Asset Module (CAM)
Monthly EUC = 1.5% x equipment acquisition cost per University's Capital Asset Module (CAM)
Equipment is 5 - 10 years old Annual EUC = 12% x equipment acquisition cost University's Capital Asset Module (CAM)
Monthly EUC = 1% x equipment acquisition cost University's Capital Asset Module (CAM)
Equipment > 10 years old Annual EUC = 6% x equipment acquisition cost University's Capital Asset Module (CAM)
Monthly EUC = .5% x equipment acquisition cost per University's Capital Asset Module (CAM)
NOTE: For Donated equipment, acquisition cost equals the fair market value of the equipment at the time of the donation.
Direct Costs (DC)
    Annual DC = Sum of direct University supplies, maintenance, etc. used in a year to support non UA uses of the equipment.
    Monthly DC = Sum of direct University supplies, maintenance, etc. used in a Month to support non UA uses of the equipment.
Administrative Service Charge (ASC)
    Equipment is used in a UA owned/operated facility
Annual ASC = 23% x (Annual EUC + Annual DC)
Monthly ASC = 23% x (Monthly EUC + Monthly DC)
    Equipment is used in a facility that is not UA owned/operated
Annual ASC = 8% x (Annual EUC + Annual DC)
Monthly ASC = 8% x (Monthly EUC + Monthly DC)
Total Fee/Rate to be Assessed to Nonuniversity Entities or Individuals
Annual Fees = Annual EUC + Annual DC + Annual ASC
Monthly DC = Monthly EUC + Monthly DC + Monthly ASC

Exhibit B

Revenue Distribution

Distributed to Departmental Account EUC and DC will be deposited to an appropriate departmental account (as determined by the Financial Services Office).
Distributed to Central Administration Account ASC may be deposited initially to a departmental account, then transferred to a central administration account (as determined by the Financial Services Office).


Exhibit C

Examples

Example 1: A start up enterprise needs access to a scientific piece of equipment owned by a department in the College of Agriculture. Access is needed for a period of 6 months. The department indicates a willingness to 'rent' (but not sell) the piece of equipment for the needed time. Logistics required that the equipment be used at its normal University location. The University purchased the equipment (new) three years ago for $100K. The department estimates that it must pass along $500 per month of supplies and maintenance expenses.
Calculation Result
    Monthly EUC =
$100,000 x 1.5% = $1,500
    Monthly DC =
$500
    Monthly ASC =
23% x ($1,500 + $500) = $460
    Total Monthly Fee =
$1,500 + $500 + $460 = $2,460
    Planned Six Month Fee =
$2,460 x 6 = $14,760
Example 2: Same as example #1 except that the piece of equipment will be moved to the start up enterprise's company site in north Tucson. Also, the company will bear all supplies and maintenance expenses directly. The department will not be involved or utilized.
Calculation Result
    Monthly EUC =
$100,000 x 1.5% = $1,500
    Monthly DC =
$0
    Monthly ASC =
8% x ($1,500 + $0) = $120
    Total Monthly Fee =
$1,500 + $0 + $120 = $1,620
    Planned Six Month Fee =
$1,620 x 6 = $9,720

EXHIBIT D

A copy of the Facilities Use Agreement (use of University equipment for non-University purposes) can be obtained from the eForms web page