Real Property Leases Policy

 

Subject:  PHYSICAL PLANT

Policy:  REAL PROPERTY LEASES

Revised:  August 20, 2009; February 2012

Effective date:  August 31, 2005

Review date:  August  2015

Responsible Party:  Office of Legal Counsel


100.00            INTRODUCTION AND PURPOSE:   This policy governs the leasing or rental of real property, including any interest in land, buildings, office space, laboratory space, storage space, or water or mineral rights, by the university from non-university landowners/lessors and the long- term leasing or rental of real property, water or mineral rights, including any interest in land, buildings, office space, laboratory space, storage space, or water or mineral rights owned or controlled by the university to non-university users.
A lease or rental of real property, including any interest in land, buildings, office space, laboratory space, storage space, or water or mineral rights, may only be entered into under the procedures outlined herein.  Any lease not entered into under the procedures outlined in this policy shall be null and void and will not bind the university.

200.00            LEASE BY THE UNIVERSITY FROM NON-UNIVERSITY LESSORS:  Any request for leasing, or for the extension or renewal of a lease, of real property for university purposes must be submitted and processed as follows:
A written request shall be submitted by the requesting department head, principal investigator, director or other officer through the direct line of administrative authority to the appropriate vice president or the MAES Director,  or their designees.
This request must include or be accompanied by the following information:

1.          A description of the real property proposed to be leased and its location and character e.g. a description of the floor plan, power supplies, air handling, utilities arrangements to the extent known.
2.          An explanation of the need for such space.
                                                                   
3.          A detailed factual justification for entering into the lease.
 
4.          A statement addressing the adequacies of power supplies, air handling equipment and general physical structure and floor plan. Estimated costs of any modifications or remodeling necessary to meet user needs should also be included, indicating proposed sources of funding for any such modifications or remodeling.

300.00            NEGOTIATION.  Upon request for approval of the appropriate parties under Section 200, the university will negotiate the terms of the lease. University Services is the authorized Agent of MSU, who will execute the lease or Inter-Campus Service Agreement for MSU on behalf of the requestor when rent will be paid with instructional funds, and will negotiate the terms of the lease with input from the requestor.  The Vice President for Research or designee shall be responsible for the negotiation and execution of leases when rent will be paid from direct costs in grants or contracts, or from recovered Facilities and Administration fees (formerly IDCs).  Leases may also be negotiated and executed by the vice president/MAES Director or designee which is responsible for the funds that will be used to pay the rent.  In all cases, a final proposed lease shall be prepared and submitted to Legal Counsel for legal review prior to execution.

400.00            LEGAL REVIEW.  Upon approval by the appropriate vice president of any lease or extension or renewal of any lease, the appropriate vice president shall forward to the Office of Legal Counsel for review and evaluation, the following information:
If available, a proposed lease agreement (a standard lease form used by landlord may be acceptable) which includes, among other things, the following:

a.          Term of lease
b.          Payment periods and amounts
c.          Responsibility for utilities, maintenance, snow removal, custodial, grounds care, etc.
d.          Parking arrangements
e.          Responsibility for building and site maintenance and repairs (e.g. structural, mechanical, roof, sidewalks, etc.) It is preferable that maintenance and repairs and any remodeling be bundled into the lease cost when University funds are used for rent/lease payments.
f.          Responsibility for insurance of structure, operation and general liability insurance
g.          Responsibility for property taxes, other taxes and assessments, ownership of any improvements made
h.          Square footage of the space rented (indicate gross or net)
            The initial request and other information required under paragraph above.

A letter approving the lease from the appropriate vice president, including a statement identifying the proposed source of funding for lease costs.

500.00            REGENTS APPROVAL.    If the lease will exceed five years in duration; or if the total lease payments exceed $25,000 per year, the lease shall be submitted by the appropriate vice president or MAES Director to the Montana Board of Regents for approval. BOR Policy 1003.6 III B.

600.00            EXECUTION.  Once the lease is approved as required under this policy, the lease shall be signed by the appropriate vice president or MAES Director for and on behalf of the university, and thereafter shall be binding on the university.  The appropriate vice president or MAES Director shall retain the real property lease and report the following information to Facilities Services and shall provide a copy of the real property lease to Facilities Services:

1.          Lessee (for university property leased by a university entity)
2.          Property Description and Location
3.          The user/occupant of the property
4.          Lease Payments – periods and amounts
5.          Term of the Lease
6.          Square footage of the space rented (indicate gross or net)
From the information provided above Facilities Services shall maintain a list of all leases entered into by the university.

700.00            LEASE OF UNIVERSITY or MAES PROPERTY.  Any proposal for leasing, or for the extension or renewal of a lease, of real property owned by the university or MAES to a non-university entity must be submitted and processed as follows:

A written request shall be submitted by the requesting department head, principal investigator, director or other officer through the direct line of administrative authority to the appropriate vice president or MAES Director. This request must include or be accompanied by the following information:

1.         A description of the real property proposed to be leased including its general location and character.
2.         An explanation of why the space is not needed for university business.
3.         A detailed factual justification for entering into the lease (Why the space should be made available to a non-university entity.)
4.         The proposed terms of the lease, including
a.          Term of lease
b.          Lease payments (which must be equivalent to fair market value) – periods and amounts
c.          Responsibility for utilities, maintenance, snow removal, custodial, grounds care, etc.
d.          Parking arrangements
e.          Responsibility for building and site maintenance and repairs
f.          Responsibility for insurance of structure, operation and general liability insurance
g.          Responsibility for property taxes, other taxes and assessments, ownership of any improvements made
h.          Square footage of the space rented (indicate gross or net)
5.          Execution:
            a.          If the proposed lease of university facilities by non-university entities includes facilities located on the Bozeman campus, the appropriate vice president or MAES Director shall forward the information provided in Section 700.00 to Facilities Services. Facilities Services shall negotiate the final terms of the lease and execute it on behalf of the university.
            b.          Copy of the off campus lease goes to Facilities Services.

800.00            APPLICABILITY.  This policy does not apply to agreements for rental of residence space to students by Residence Life; rental of individual unoccupied storage units by departments or to short-term rentals of university facilities by Conference Services.  Short-term rentals of university facilities for less than three months, including options to renew, shall be governed by the provisions of the Facility Use Manual.