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Real Estate Lease or Rental Costs


Important Notice: CACFP Program Moved to CDSS

The Early Childhood Development Act of 2020 (Senate Bill (SB) 98, Chapter 24, Statutes of 2020) authorized the transfer of child care and development programs administered by the California Department of Education to the California Department of Social Services (CDSS) effective July 1, 2021. The content on this page may not be current and involves the Child and Adult Care Food Program (CACFP) that has moved to CDSS. Visit the CDSS CACFP web page External link opens in new window or tab. or call 1-833-559-2420 for more information.

Nutrition Services Division Management Bulletin

Purpose: Policy, Beneficial Information

To: All Child and Adult Care Food Program and Summer Food Service Program Agencies

Attention: Program Operator

Number: CACFP-06-2018; SFSP-02-2018

Date: June 2018

Reference: Title 2, Code of Federal Regulations, Section 200.465(c)(6); Food and Nutrition Service Instruction 796-2, Revision 4; Food and Nutrition Service Instruction 796-4, Revision 4

Subject: Real Estate Lease or Rental Costs


This management bulletin clarifies that commercial or residential real estate rented or leased to the program by any program operator in the Child and Adult Care Food Program (CACFP) or the Summer Food Service Program (SFSP) is not an allowable cost.

The U.S. Department of Agriculture Food and Nutrition Service (FNS) Instruction 796-2, Revision 4, and FNS Instruction 796-4, Revision 4, establish guidelines for the financial management of CACFP and SFSP funds, respectively. These guidelines include, but are not limited to, guidance that states program costs must “… conform to any limitations or exclusions set forth in this instruction, federal laws, or the governing limitations as to types or amounts of cost items.”

FNS 796-2, Revision 4, for example, allows a situation where a child care center program director may properly disclose a less-than-arm’s-length transaction to rent commercial real estate to the program director’s child care center. However, according to Title 2, Code of Federal Regulations (2 CFR), Section 200.465(c)(6), “… the rental of any property owned by any individuals or entities affiliated with the non-Federal entity, to include commercial or residential real estate, for purposes such as the home office workspace is unallowable.”

Since the guidance in 2 CFR regarding home office space rent is more restrictive than the FNS guidance, 2 CFR takes precedence over the FNS Instructions and CACFP and SFSP Operators may not charge this expense to either program.

Contact Information

If you have questions regarding this subject, please contact the CACFP or SFSP Specialist assigned to your agency.

CACFP: A contact list of CACFP Specialists is available in the Download Forms section of the Child Nutrition Information and Payment System (CNIPS), Form ID CACFP 01.

SFSP: A contact list of SFSP Specialists is available in the Download Forms section of the CNIPS, Form ID SFSP 01.

Questions:   Nutrition Services Division | 800-952-5609
Last Reviewed: Wednesday, June 16, 2021
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