Rental Agreement Change for University Auxiliary Units
As part of its goal to be proactive in looking for ways to restrain tuition cost increases and to address budget challenges, the University of Michigan is requiring that auxiliary units begin to pay a 10% surcharge of gross revenues associated when an external entity rents or leases U-M facilities (i.e., buildings) or land (i.e., parking lots, fields, etc.) that are managed by the auxiliary units. This surcharge only applies to one-time, short-term or occasional-use rental and is applicable to all three campuses – Ann Arbor, Dearborn, and Flint – effective July 1, 2012 for rental agreements entered into July 1, 2012 and thereafter
Auxiliary units are those that are maintained with revenue from their own operations. A few of the more well-known auxiliary units on the Ann Arbor campus are the Hospital and Health Centers, Intercollegiate Athletics, University Housing, and Parking Operations.
The revenues generated by this surcharge will be allocated to the Provost/Chancellor of the campus that operates the facility. The Provost’s/Chancellor’s share of the revenues will be used to support high priority needs of the University. According to Jarrod Van Kirk, Division Controller for Accounting Services, “This rental agreement change will provide more money to schools and colleges as a part of their budgets by making use of the revenue from the surcharge earned by their respective Provost or Chancellor. Adding this surcharge to auxiliary rental activity within a school or college would defeat this purpose.”
For more information including which units within each campus is affected by this as well as procedures for the units to follow, please see Facilities Rental Revenue Sharing Policy and Procedures.