VIII - 4.02 PROCEDURES FOR LEASING OF REAL PROPERTY
(Approved by the Board of Regents on February 9, 2001)
A. General
1. These Procedures are intended to implement portions of USM
Policy VIII-4.00 Policy on Acquisition, Disposition, and Leasing
of Real Property ("the Policy") and shall be interpreted
consistent with the provisions of that Policy including the
definitions therein. In case of any inconsistency, the Policy
shall govern.
2. These Procedures shall govern the negotiation and
execution of Leases.
3. Leases not requiring Board approval may be approved and
signed by the president of the Institution involved or
a president's designee.
4. Every Lease requiring approval by the Board shall be
approved for form and legal sufficiency by the Office
of the Attorney General (OAG) prior to execution. All
other Leases shall be reviewed and approved for form
and legal sufficiency prior to execution in accordance
with such procedures as the OAG shall establish.
B. Proposal
When an Institution or the Office seeks to enter into a
Lease that requires approval by the Board, its president or
the VCAF shall submit to the Chancellor for review a
proposal that includes the following:
1. Description (including improvements) and location of
the property;
2. Location map;
3. Anticipated cost (where Institution is lessee) based on
comparable leased properties or other available
information, including utility, build-out, furnishing,
and other additional rent charges or costs;
4. Anticipated revenue (where Institution is lessor) based
on comparable leased properties and other available
information;
5. Amount, nature, and source of consideration for the
leased premises;
6. If external financing or other form of borrowing is to be
used, the expected terms and source for paying the debt service;
7. Purpose of the Lease.
Review shall include as appropriate VCAF, OAG, and officials
of the Institution that submitted the proposal.
C. Approvals
If the Chancellor approves a submitted proposal under
Section B above, it shall be submitted it to the Finance
Committee of the Board ("Committee") for its consideration.
If the Committee's action is favorable, it shall recommend
approval by the Board. Leases shall be considered by the
Committee and the Board in executive session unless
otherwise decided by the Board. If the Board approves a
Lease, it may delegate to the Chancellor authority to
negotiate and execute all required documents. However, if
during negotiation, the terms of the Lease change materially
to the detriment of the System or Institution from those
approved by the Board, the Chancellor shall return the
matter to the Committee and the Board for further
consideration.
D. Due Diligence
Appropriate due diligence shall be undertaken with
respect to the leasing of real property and shall be
conducted by the institution involved, or, if Board approval
of the Lease is required, collaboratively by staff of the
System, the OAG, and the proposing institution. Where Board
approval is required, all elements of due diligence need not
be completed before submission of the proposal to the
Chancellor, the Committee, or the Board. At the discretion
of the VCAF, and with the agreement of the Board, completion
of due diligence may follow Board approval, but shall occur
before closing of the transaction. The due diligence
practices to be applied shall be consistent with those
established by the Chancellor pursuant to paragraph 17 of
the Policy on Acquisition, Disposition and Leasing of Real
Property.
E. These Procedures are effective upon their approval by the
Board.