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I .6 3 1 FEDERAL RESERVE BOARD WASHINGTON ADDRESS OFFICIAL CORRESPONDENCE TO THE FEDERAL RESERVE BOARD June 29, 1935. B-10S9. Dear Governor: There are enclosed, copies of a formula for use in confuting square foot space costs and cubic foot vault costs, referred to in our telegram of today (Trans 228*0. The "Manual of Instructions Governing the Preparation of Functional Expense Reports" effective January.'.!, 1935» provides, on page 6, that the units of the "Fiscal Agency, Custodianship, and Depositary" function should be charged with a proportionate part of the "Provision of Space" costs, based on the proportion of square feet of office and vault space used b y such units. It is suggested that, instead of reporting square feet of vault space used b y such units, For m E figures for the semi-annual report for the period ending June 30, 1935 b © prepared on the basis of cubic feet of vault space, and that "both the square foot space figures and cubic foot vault figures be b a sed o n the average space actually assigned to such units during the six m o n t h period. If it is-not practical to arrive at average figures, the space used on the last day of the period m a y b e substituted. It is understood that several Reserve Banks pl a n to use the enclosed formula for determining the amount of "Provision of Space" expense to be charged to the units of the "Fiscal Agency, Custodian 632 #2. ship* and Depositary" function, and it is suggested that, in order to maintain uniformity in the method of such distribution, the formula be used b y all banks. In preparing For m E, the following item which appears on pages IS, 19, 20 and 21 "Proportion of ‘Provision of Space* function, (on basis of square fe e t)” should be changed to read '‘S p a c e , (on basis of square feet of floor space and ________ cubic feet of vault space)". The figures reported under the now itom should b o based on the number of square feet of floor space assigned to, and the nynribor of cubic feet of vault area used b y each "Fiscal Agency, Custodianship, and Depositary" unit, multiplied b y the square foot space cost and the cubic foot vault cost, as determinod in accordance with the formula. It will b e noted that the entire cost of the "Vault Maintenance" unit is included in the calculation for determining the cubic foot cost of the vault. However, no actual distribution should be made from the "Vault Maintenance" unit. The entire amount reported under the itom "Space" in the units of the "Fiscal Agency, Custodianship, and Depositary" function, should b e shown as a deduction in the "Provision of Space" function, under the appropriate captions provided on page TO ALL GOVERNORS 3 of F o r m E, Yours very truly. Division of B a n k Operations. 633 FORMULA FOR DISTRIBUTION OF B U I L D U P LiAlNTENANCS COSTS TO THE UNITS OF THE FISCAL AGENCY. CUSTODIANSHIP. AND DEPOSITARY FUNCTION (Figures have been inserted to show method of calculation only) A, METHOD OF DETERMINING THE TOTAL NUMBER OF SQUARE FEET OF RENTABLE OR USABLE SPACE IN BUILDING1, Measure the interior floor area of tho building botween plaster surfacos of outside walls, EXCLUDING (a) service or utility areas, such as access aislos or passago ways to rentable or usable spaco, access corridors, stairways, elevator corridors and shafts, entrance lobby, wash rooms, lavatories, toilets, locker rooms, tube rooms, etc.; (b) building equipment space, such as elevator pent-houses, heating plant, power plant, air-conditioning or ventilating equipment space, and fuel space; (c) building and maintenance space, such as building supply rooms, store rooms, work rooms, service rooms, etc.; and (d) cash and security vault space (item A?-2) but including other vault space such as book vaults. NOTE: Inside walls or partitions dividing usable or rentable spaco should be included in the total number of square feet of floor space. Inside walls separating usable or rentable space from service or utility areas, build ing and maintenance space, or building equipment spaco should be excluded in calculating usable or rentable spaco 110 . sq.ft, 2, Measure tho total building floor space area occupied by cash and security vaults, INCLUDING (a) total building floor space occupied by tho vaults and vault walls, without deduction for elovators, stairways, aisles, etc., within the vaults; (b) vault access areas and floor spaco required for opening vault and doors; and (c) floor space of areas providod for pro tective purposes, surrounding the vault walls 3, Add items A-l and A-2 to arrive at the total number of square feet of rentable or usable spaco in building — 1 — H.7^8 sq.ft. 115.208 sq.ft. 634 FOBMPLA FOR DISTRIBUTION OF BUILDING MAINTENANCE COSTS TO THE UNITS OF THE FISCAL AGEHCY. CUSTODIANSHIP. M D DEPOSITARY FUNCTION (Cont’d^ B. METHOD OF DETERMINING- PER SQUARE FOOT COST OF B3NTA3LE OR USABLE BUILDING- SPACE 1, To tho gross expenses of the "Provision of Space" function for tho current poriod as shown on Form E, i.o., boforo deductions for "Income from banking house", etc., to obtain the net total pro vision of spaco expenso $136.922 Add a. Depreciation at 2 percent nor annum on cost of construction of bank building after deducting charge-offs approved by Federal Reserve Board in order to arrive at replacement cost of building, but not deducting other charge-offs $**4.563 b. Depreciation on fixed machinery and equipment at 5 percent -per annum of original cost. (Do not include the cost of replacements charged to "reserves") $39.205 2. The sum of items B-l, B-l-a, and 3-1-b represents the total maintenance expense of rentable or usable building space IHO 4620 3. Divide item 3-2 by item A-3 to obtain the cost per square foot of maintaining rentable or usable space ($220 ,690 -r 1 1 5 ,2 0 8 $1 .9 2 ) = 2 - $1 ,9 2 sq.it. 635 FORMULA FOR DISTRIBUTION OF 3UILDING MAINTENANCE COSTS TO THE UNITS OF THE FISCAL ASB1NCY. CUSTODIANSHIP AND DEPOSITARY FUNCTION (cont'd) C, METHOD OF DETERMINING PER SQUARE FOOT COST OF RENTABLE OB usable bank space 1 , From the total maintenance expense of rentable or usablo building spoco (item 3-2) $220,690.00 Deduct a. The total cost of maintaining space actually rented to tonants on an office building basis. This cost is obtained by multiplying the number of square foot of floor space actually rented to such tenants (item C-3-a) by the cost por square foot of maintaining rentablo or usable building spaco (Item 3-3} t e o ( 2 8 , % ) x $1 . 9 2 » $54,700.80) 2, The remainder (item C-l minus C-l-a) represents the total maintenance charges for rentablo or usable spaco for banking purposes, including "Fiscal Agency, Custodianship, and Depositary" activities $ig5t989 *30 3, From the total number of square feet of rentable or usable spaco in building (Item A-3) 115.208 sq.ft. Deduct a. The total number of square feet of spaco actually rented to tenants on an office building basis *+. The remainder (item C-3 minus C-3-a) represents the total number of square feet of space available for banking and "Fiscal Agency, Custodianship, and Depositary" activities 28.M-90 sq.ft. 86,718 sq.ft. Deduct number of sqtiare feet inside building used fora. Security court, garage, loading platforms 1.265 sq.ft. (within the building) b. Purchasing agent's office, telephone switch board, automatic telephone exchange, and telegraph office 2.18Z sq.ft. c. Other space properly deductable sq.ft. d. Total deductions 3,^52 sq.ft. 5. The remainder (item C-4 minus C-^-d) represents the net number of square feet of space available for banking and "Fiscal Agency, Custodianship, and Depositary" activities 83,266 sq.ft. - 3 - 636 * FORMULA FOR DISTRIBUTION OF 3UILDINS MAINTENANCE COSTS TO THE UNITS OF THE FISCAL AGENCY. CUSTODIANSHIP ALU) DEPOSITARY FUNCTION (cont'd) D. METHOD OF DETERMINING PER SQUARE FOOT COST OF RENTABLE OR USABLE BANK SPACE (cont«d) 6. Divide item C-2 "by item C-5 to obtain the cost per square foot of maintaining rentable or usable bank space $lt99sq.ft. ($165,929.20 * NOTE: S3,266 s The cost per square foot of maintaining rentable or usable bank space (item 6) represents the cost basis for charging the unit3 of the "Fiscal Agency, Custodianship, and Depositaiy" function for office space. \ i $1.99) - k - 637 f * FORMULA FOR DISTRIBUTION OF BUILDING MAINTENANCE COSTS TO THE UNITS OF THE FISCAL AGENCY. CUSTODIANSHIP. AND DEPOSITARY FUNCTION (cont»d) D. METHOD OF DETERMINING PER CUBIC FOOT COST OF ITSARTE 1. Multiply Item A-2 "by item C-6 to obtain the bank building maintenance costs applicable to vaults < (l*,7^S x $1.99 * $9,^8.52) M i a. Depreciation at 2 percent per annum on vault con struction and doors after deducting charge-offs approved by Federal Reserve Board to arrive at replacement cost, but not deducting other charge-offs $3.700.00 b. The total expense of the "Vault Maintenance" unit of the "General Service" function as shown on Form E $^ . 1 ^ - 9 0 2, The total of items D-l, D-l-a and D-l-b repre sents the total maintenance costs of the vault $17*293.**2 3. Measure the available cubic feet of actual storage space inside the vaults which may be used for storage of cash, securities, etc, (Do not include aisles, stairways, eleva tors, and necessary working space) **.819 cu.ft. 1*. Divide item D-2 by item D-3 to obtain the cost per cubic foot of maintaining vault space $3.58 cu.ft. ($17,293.^2 NOTE? -5- U,®L9 = $3.58) The cost per cubic foot of maintaining usable vault space (Item D-*f) represents the cost basis for charging the units of the "Fiscal Agency, Custodianship, and Depositary" function for vault space. 5
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