U.S. Department of State Fiscal Year 2020 Agency Financial Report

11 L eases The Department is committed to over 10,000 leases, which cover office and functional properties, and residential units for diplomatic missions. The majority of these leases are short-term operating leases. In most cases, management expects that the leases will be renewed or replaced by other leases. Personnel from other U.S. Government agencies occupy some of the leased facilities (both residential and non-residential). These agencies reimburse the Department for the use of the properties. Reimbursements are received for approximately $95.8 million of the lease costs. Capital Leases The Department has various leases for real property that meet the criteria as a capital lease in accordance with SFFAS No. 6, Accounting for Property, Plant, and Equipment . Assets that meet the definition of a capital lease and their related lease liability are initially recorded at the present value of the future minimum lease payments or fair market value, whichever is lower. In general, capital leases are depreciated over the estimated useful life or lease terms depending upon which capitalization criteria the capital lease meets at inception. The related liability is amortized over the term of the lease, which can result in a different value in the asset versus the liability. The following is a summary of Net Assets under Capital Leases and Future Minimum Lease Payments as of September 30, 2020 and 2019 (dollars in millions) . Lease liabilities are not covered by budgetary resources. As of September 30, 2020 2019 Net Assets under Capital Leases: Federal Buildings $ 330 $ 330 Accumulated Depreciation (50) (33) Total Federal 280 297 Non-Federal Buildings 144 171 Accumulated Depreciation (52) (67) Total Non-Federal 92 104 Net Assets under Capital Leases $ 372 $ 401 Future Minimum Lease Payments: 2020 Fiscal Year Non-Federal Lease Payments 2021 $ 10 2022 10 2023 7 2024 4 2025 4 2026 and thereafter 59 Total Minimum Lease Payments 94 Less: Amount Representing Interest (45) Liabilities under Capital Leases $ 49 2019 Fiscal Year Non-Federal Lease Payments 2020 $ 12 2021 11 2022 11 2023 8 2024 5 2025 and thereafter 86 Total Minimum Lease Payments 133 Less: Amount Representing Interest (69) Liabilities under Capital Leases $ 64 The Blair House Garden Room welcomes diplomatic guests for dining, meetings, and special events throughout the year . Department of State 2020 A gency F inanci al R eport U ni ted S tates D epartment of S tate | 91 NOTES TO THE PRINCIPAL FINANCIAL STATEMENTS | FINANCIAL SECTION