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Ground lease with municipality

Ground lease where there are no payments made

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Dear Members,

I wish this message finds you well. 

I need some help if one issue which I cannot resolve.  

A real estate developer comany has entered in an agreement with the municipality for 20 years to build a long pavewalk by the sea and some commercial units in public land.

The commercial units will be operated by the company and the pavewalk serves to the people in general. 

there are no payments to be made to the municipality, but after 20 years, the pavewalk and the commercial units will be given to the municipality.

 

I need  help for how to account this: as a lease or else?

The agreeement does meet the criteria of IFRS 16 Leases but what is the consideration/payment made?   ( We use IFRS for financial statements)

Also, I need to specify that in the end of agreement, after 20 years, the pavewalk and commercial units will have 0 residual value.

I would be so much grateful if you could help me with this! 

Best Regards,

GB

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