Related organizations

1. Costs applicable to services, facilities, and supplies furnished to a center by a related organization may not exceed the lower of the costs to the related organization or the price of comparable services, facilities, or supplies purchased elsewhere primarily in the local market. Centers must identify such related organizations and costs, and allocations must be submitted with the cost report. 2. A center may lease buildings or equipment from a related organization within the meaning of ratesetting principles. In such case, rent or lease expense paid to the lessor is allowable in an amount not to exceed the actual costs associated with the asset if the rental of the buildings or equipment is necessary to provide programs and services to clients. the actual costs associated with the asset are limited to depreciation, interest, real estate taxes, property insurance, and plant operation expenses incurred by the lessor.