PCS 215: Land/Building
Purchase and New Building Construction
To outline requirements for purchasing land or buildings and for
constructing new buildings
Arizona Board of Regents Policy Manual -
Department of Facilities Management
Purchasing and Business Services
Land and Building Purchases
Land and building purchases must have prior approval from the
Board of Regents. All construction, repair, and maintenance
projects expected to cost more than $105,000, regardless of the
funding source, must have prior approval. If the original estimate
was expected to be less than $105,000 and the final estimate
exceeds this amount, the Board of Regents must approve the project
Capital Improvement Projects
improvement projects must have prior approval from the Board of
Regents regardless of cost.
Ownership of Real Property
property purchased by ASU is legally owned by the Board of
Regents. This property must be appraised before purchase. Emergency
purchases may be made without prior Board of Regents’
approval provided certain conditions are met. Board action
following purchase may be required.
Real property may consist of the following:
Land (Object Code 7890 01)
- Acquisition by Purchase - Land purchased by the
university is recorded at cost. The cost includes legal, title, and
broker’s fees, landfill, clearing, grading, and other costs
necessary to prepare the land for its intended use.
- Acquisition by Gift or Bequest - Recorded at the fair
market value at the date of the gift (appraisal will usually have
- Acquisition through Eminent Domain - Recorded at the
amount of the court award made to the landholder(s).
Improvements to Land Other than Buildings (Object Code 7890
This category consists of land improvements outside the
periphery of the building. Improvements to land, other than
buildings, which are required to make land ready for its intended
use, are capitalized if the aggregate expenditure is $100,000 or
more per project.
This category includes: roads, walkways, tunnels, utilities,
drainage systems, landscaping, parking lots, tennis courts,
athletic fields, fences, curbs, streetlights, and other similar
items. The capitalization criteria are the same as those used for
Buildings/Building Components (Object Codes 7890 11–
- Buildings (7890 16). The cost of buildings (permanent structures
housing persons and personal property) is the construction cost of
the building shell and its components. Examples of construction
costs include, but are not limited to, building materials,
building permit fees, subcontract fees,
rent for property, to complete construction,
operating and maintenance costs for property, site preparation, compensation for work performed,
and cost of supplies consumed in the construction. Capitalization of associated costs takes place as the costs are incurred.
- Building Components (7890 11). Building components are items
permanently attached to the building shell necessary for the
building to be used as intended. Building components are either
integral to the building or cannot be removed without damaging the
building or component. Examples of building components are plumbing
systems, electrical wiring, and air-conditioning duct work.
- Building Additions (7890 11). New additions to buildings resulting in
additional square footage are capitalized regardless of the dollar
- Renovations (7890 11). Major building component replacements or
renovations of a building that extend the original life of the
building and/or increase its value to the university are
capitalized for projects involving expenditures of $100,000 or more.
- Demolition Costs (7890 16). The cost of building demolition in
preparation of new construction is added to the cost of the new
building as “site preparation costs” (7890 16). If new
construction is not planned, the demolition costs are not
- Planning (7890 21). Professional services and fees incurred with
construction and remodeling (e.g., architects’ fees, construction
and management fees, and engineering studies).
- Building Fixtures (7890 95). Fixtures must be able to be removed without extensive alterations to the building structure and cannot be so affixed as to be legally considered part of the real property. Examples include carpeting, shades, shelving, bulletin boards, and lab benches bolted to the floor. These are capitalized if the total expenditure is $100,000 or more, per project.
Property Control establishes a separate and complete inventory
record for each distinct unit of real property. A separate building record is established immediately after
title is acquired for a new tract of land or building, or
construction of a new building is completed.
The department submits a memo and a proposal to University Real Estate Development Office justifying the use and
funding source of the land or building being purchased.
||The University Real Estate Development Office is
distinct from Property Control.
The University Real Estate Development Office submits
proposals to the Board of Regents for approval, if applicable. When
approval is granted, the University Real Estate Development Office:
- selects or advertises for engineers, architects, and other
professionals needed to acquire the property
- negotiates the purchase price and terms of the
Once the property is acquired, Facilities Management:
- assigns a unique identifying building number to all new
buildings (the numbers of retired buildings should not be
||The building number is used as a reference for future additions
or improvements. Future capital renovations are added to the
building inventory record based on PCS
103, “Remodeling and Other Building Costs.”|
- assigns room numbers and prepares floor plans for each new
- maintains a record for each unit of real property to include
the area, volume, floor plan, type of construction, utility system,
maintenance record, and original architectural drawings and
Property Control records all capital costs, including additions
and improvements, to the appropriate building record, provided they
comply with PCS 101, “Plant Acquisitions,” and PCS
103, “Remodeling and Other Building Costs.”
For authoritative references see the Research Policies and Procedures Manual— RSP 101, “General Research Policy”
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