5240 Related Parties Lease Agreements

Other than operating and capital leases, transit agencies may also have related parties lease agreements. Related parties leases are leases with terms and payment amounts that are substantially less than they would be in usual circumstances because the transit agency is related to the lessor.

Common examples include: (a) a state government’s department of transportation purchases buses and leases them to transit agencies in the state at half the market rate; and (b) a county government leases land to a local transit agency for use as a parking lot for a dollar a year.