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Generally, renting a warehouse to store voting equipment is considered to be an allowable cost. This expense is not directly related to meeting any of the Title III requirements. Thus, only Section 101 or Section 251(b) funds may be used. Factors such as allocability and cost reasonableness must still be considered in order to determine the appropriateness of this type of expense. If the warehouse will not be used exclusively for the purpose of improving the administration of Federal elections (e.g., rental space would be used to house equipment other than voting systems that would be used in Federal elections), only that percentage of costs associated with the administration of Federal elections can be charged to the HAVA grant. Rental costs of buildings and equipment are covered by OMB Circular A-87.

Rental costs under leases which are required to be treated as capital leases under Generally Accepted 13 Accounting Principles (GAAP) are allowable only up to the amount that would be allowed had the State or local government purchased the property on the date the lease agreement was executed. The provisions of Financial Accounting Standards Board Statement 13, Accounting for Leases, determine whether a lease is a capital lease. The determination is based on factors such as if the lease transfers ownership of the property to the lessee by the end of the lease term; contains a bargain purchase option; the lease term is equal to 75 percent or more of the estimated economic life of the leased property unless the lease term falls within the last 25 percent of the total estimated economic life of the leased property; or the present value at the beginning of the lease term of the minimum lease payments excluding executory costs such as insurance, maintenance, and taxes to be paid by the lessor, including any profit, equals or exceeds 90 percent of the excess of the fair value of the leased property to the lessor at the inception of the lease.

No. Section 102 of HAVA grants payments to States for the purpose of replacing punch card and lever voting systems not for the storage or warehousing of such equipment. 

While purchasing buildings and/or equipment is an allowable cost, leasing has certain limitations. Leasing equipment is considered an allowable expense under 2 CFR 200.465, according to the limitations and conditions of paragraphs (b) through (d). Limitations include:

  • “Sale and lease back” arrangements cannot cost the state or local government more than when it owned the property. The costs include expenses such as depreciation or use allowance, maintenance, taxes, and insurance.
  • A “less-than-arms-length” agreement (i.e., a state government established a corporation to own the property then leases it back to the state) cannot cost the state or local government more than if title had vested in the state or local government.
  • Rental costs under leases which are required to be treated as capital leases under Generally Accepted Accounting Principles (GAAP) are allowable only up to the amount that would be allowed had the state or local government purchased the property on the date the lease agreement was executed. Unallowable costs include amounts paid for profit, management fees, and taxes that would not have been incurred had the property been purchased.

Generally, purchasing a building for federal election activity is an allowable cost (e.g. purchasing a warehouse to store voting equipment). (This expense is not directly related to meeting any of the Title III requirements. Thus, only Section 101 or Section 251(b) funds may be used.) Factors such as allocability and cost reasonableness must still be considered in determining the appropriateness of the expense. If the warehouse will not be used exclusively for the purpose of improving the administration of federal elections, only that percentage of costs associated with the administration of federal elections can be charged to the HAVA grant. Similarly, it may be more reasonable to rent a warehouse rather than purchase one.

Generally, making modifications to a warehouse to store voting equipment is an allowable cost. (This expense is not directly related to meeting any of the Title III requirements. Only Section 101 funds or Section 251(b) funds may be used for this expense.) However, allocability and cost reasonableness must still be considered. For example, if the warehouse modification will not be used exclusively for the purpose of improving the administration of federal elections, only that percentage of costs associated with the administration of federal elections can be charged to the HAVA grant. Similarly, it may be more reasonable to select a different warehouse rather than retrofit the current structure.

No. The voting equipment provisions of HAVA apply only to elections for federal office. However, there may be state laws, rules or regulations that require the use of accessible voting systems in state and/or local elections.

Generally, a state or county can rent or lease out its voting systems. Common Rule, 41 C.F.R. § 105-71.32 Equipment, prohibits a grantee from using a piece of equipment purchased using grant funds to compete unfairly with the private sector. If a state rents or leases its voting machines out it must do so in a way that does not thwart competition with the private sector. The price paid by the lessee must be a competitive price. Equipment is defined by the common rule as "tangible, non-expendable, personal property having a useful life of more than one year and an acquisition cost of $5,000 or more per unit. A grantee may use its own definition of equipment provided that such definition would at least include all equipment defined above.” If the voting systems meet the definition of “equipment” either under the Common Rule or state laws, rules or regulations, the restriction must apply. Income from leasing voting equipment to other jurisdictions would be considered program income, see OMB Circular A-102, Common Rule, 41 C.F.R. § 105-71.125 Program Income. The only appropriate treatment of income classified as program income during the grant period is for the county to dedicate the income to uses permitted under HAVA Section 251. Section 251 allows the use of HAVA funds to implement the requirements of Title III; once those requirements are met, to improve the administration of elections for federal office. After the expiration of the grant period, the income generated by the lease of voting systems may be used by the county as it chooses.

Either Section 101 or Section 251(b) funds can be used for expenses related to maintenance of voting systems. Under Section 251(b), a State is limited to the amount that it would have been entitled to as a minimum payment until the State meets the requirements of Title III.

Section 251(c) of HAVA contemplates using Title II funds for the purpose of reimbursing States for expenses associated with voting equipment that meets the requirements of HAVA purchased prior to the availability of funds under HAVA. This concept of reimbursement applies to the county or other local government unit that purchases voting equipment in lieu of such purchases on a State level. HAVA funds may reimburse and replace county funds that were obligated after October 29, 2002, (or obligated prior to January 1, 2001 under a multi-year contract) in advance of the receipt of Federal funds. Thus, if the county has already earned those reimbursement payments, it can reappropriate the funds to uses it deems proper, subject to any conditions established by the State in granting funds to counties.

Cellular phones would generally be considered an allowable cost. Cost principles such as allocability and cost reasonableness must still be considered.

Yes. The funds can only be used to reimburse the purchase of voting systems that meet the requirements of Section 301(a) of HAVA; purchase must have occurred after the November 2000 election; and if the money is used to reimburse a purchase of voting equipment on a multi-year contract, then the State must increase its maintenance of effort expenditure by the amount of the payment and additional matching funds are required under Section 253(b)(5).

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