PHA Ground Lease

My Tickets Open a ticket Notifications Logout
ID Status Date Public/Private Industry AHACPA Contact
#14809 Closed public PHA Les Sparks
Customer Reply

Hello Les,
We are working on a development with a PHA that used a ground lease for a rehab project, and we were hoping to get your thoughts on the proper GAAP to apply for the lessee, and also on calculating the potential value of the lease.
The facts:
99 year lease
Interest accruing from commencement compounding at 4%
Payments due beginning Year 4 from available net cash flow
The total capitalized amount was allocated 75% to existing structures, and 25% to the land
Your input is always appreciated!
Les Sparks

Brock, sorry this is delayed.

 

I assume here that you are prepared to follow GASB 87. Your situation is a little different as there are actually payment under the lease. Most of these ground leases do not have any payments, so most of the RAD-type leases really have no impact under 87.

 

Here is the only summary I have for this as it is quite new and there are not many PHAs with lease payments.

 

  • PHA should recognize a lease receivable and a deferred inflow of resources at start of lease
  • PHA should NOT derecognize the leased asset
  • Receivable measured at net present value of expected lease payments
  • Deferred inflow measured at value of lease receivable, plus  any payments received at or before the start of lease term that relate to prior periods.
  • Revenue is recognized on the lease receivable from the deferred inflows in a systematic and rational manner over lease term
  • Notes should include a description of leasing arrangements and the total amount of inflows recognized from leases.

 

 

 

Les Sparks

AHACPA

(801) 547-0809

 

From: AHACPA Support <support@ahacpa.org>
Sent: Tuesday, February 9, 2021 5:04 PM
To: les@ahacpa.org
Subject: PHA Ground Lease
Kathy Christensen

I recently had to restore our website from a backup and I lost some support questions and answers.  If you have additional questions related to your question please email Les Sparks directly (les@ahacpa.org).  I am sorry for the inconvenience! ~ Kathy Christensen

Write a reply

The ticket has been closed. If you feel that your issue has not been solved yet or something new came up in relation to this ticket, you can re-open it by clicking this link.
Item Status Opt-in Date Opt-out Date Action
Subject
Additional Information
Subject