Guideline B-026

Subject: Lease Procedures and Guidelines

These guidelines set forth the leasing procedures for all institutions and Tennessee Technology Centers governed by the Tennessee Board of Regents.

I.   APPROVALS REQUIRED

A. Institution/Technology Center as Lessee

All agreements involving or related to the lease of real property for a term of more than five (5) years or a consideration of more than $15,000 per year shall be approved by the Chancellor, including any amendment or cancellation (TBR Policy No. 1:03:02:10).

B. Institution/Technology Center as Lessor 

All agreements involving or related to the leasing of Tennessee Board of Regents or institutional property for a term of more than five (5) years or a consideration more than $15,000 per year shall be approved by the Chancellor, including any amendment or cancellation (TBR Policy No. 1:03:02:10).

C. Leases for more than $15,000 per year or for more than 5 years

All proposed leasing actions for real property with consideration more than $15,000 per year or for a term of more than five (5) years shall be submitted to the Department of Finance and Administration and the Tennessee Higher Education Commission by the Office of Facilities Development, Tennessee Board of Regents for review and analysis prior to taking action by the institution or technology center.

D. Leases for more than $50,000 per year or for more than 5 years

All lease proposals involving a consideration of more than $50,000 per year or a term longer than five (5) years, upon approval of the Department of Finance and Administration and the Tennessee Higher Education Commission shall be presented, with appropriate comment or recommendation, to the State Building Commission Executive Sub-Committee for approval prior to any leasing action. Leases approved during the annual budget review process will not require prior approval of the State Building Commission Executive Sub-Committee (SBC Policy).

E. Leases for more than $15,000 per year and not more than $50,000

All lease proposals with a consideration of more than $15,000 per year and not more than $50,000 shall be submitted to the Department of Finance and Administration and the Tennessee Higher Education Commission prior to any leasing action but shall not require prior approval of the State Building Commission Executive Sub-Committee prior to advertising. After review and analysis, the Department of Finance and Administration and the Tennessee Higher Education Commission shall provide comments to the Tennessee Board of Regents (SBC Policy).

F. Leases for more than $40,000 per year or for more than 5 years

Documents for all leases and lease amendments with consideration of more than $40,000 per year or a term longer than five (5) years shall be approved by the State Building Commission in accordance with TCA 12-2-115 and the Tennessee Higher Education Commission. Signatures required include:

1. The Lessor (signature shall be acknowledged by a notary public).

2. President of the Institution or Vice Chancellor for Technology Centers (signature shall be acknowledged by a notary public)

3. Chancellor or his/her designee

4. State Building Commission with signatures by:

Commissioner of Finance and Administration

State Attorney General

Governor (this signature is required for lease-outs)

G. Leases for $15,000 or less per year and for five (5) years or less where the institution/technology center is the Lessee or Lessor, using one of the following approved forms: the Tennessee Board of Regents Standard Lease Agreement, Mutual Use Agreement, Transient Use Agreement, or Tenant Use Agreement, shall be approved by:

President of the institution

Vice Chancellor for Technology Centers

H. Leases for which operating funds will be requested or for more than five years

Any lease which is for a term longer than five (5) years or in which the total of the consideration, maintenance costs, utility costs and/or custodial costs are estimated to exceed $15,000 per year, and funding for same is requested through state appropriations, shall be approved by the Tennessee Higher Education Commission (THEC Policy).

II. NON-DISCRIMINATION

A. Institutions/technology centers engaging in a real estate transaction, including sale, rental or lease, shall not discriminate on the basis of race, color, creed, religion, sex or national origin. See TCA 4-21-601.

B. No state employee or agent shall enter into a commercial agreement on behalf of the state with a club which denies to a person entry, use of facilities or membership or unreasonably prevents the full enjoyment of such club on the basis of sex, race, creed, color, religion, ancestry, national origin or disability. See TCA 4-21-803.

III. RECORDING OF LEASES

Leases in which the institution/technology center is the Lessee which require State Building Commission approval shall be recorded by the Commissioner of Finance and Administration in the county or counties where the property is located (per TCA 12-2-105).

IV. ADVERTISING FOR LEASED SPACE

Where the institution/technology center is the lessee, advertising shall be required in all transactions involving new, succeeding, superseding leases or lease renewals except:

(1) Where the annual rent does not exceed $8,500 or where the term of the lease is one year or less.

(2) Where property is owned by a governmental agency and leased to another governmental agency.

(3) Where a supplemental agreement is made to an existing lease for additional space at a negotiated price without modifying the original lease term (Reference TCA 12-2-114).

V. FORMS & DOCUMENTATION REQUIRED

Submit to the Chancellor four (4) copies each of the following forms at the appropriate times described above. Copies of all forms are available from the Office of Facilities Development upon request.

A. Space Action Request Form (green)

Four green copies required with initial submittal of request for leased space.

B. State University and Community College System of Tennessee (Tennessee Board of Regents) Standard Lease Form

Minimum of five (5) copies required after approval has been given to enter into a lease agreement. Use the Tennessee Board of Regents standard form of agreement unless prior approval has been obtained to use any other form. There should be no changes or additions to the standard form without prior approval.

C. Statement of Financial Interest for Leased Property

For all leases subject to the State Building Commission approval, when the institution/technology center is the Lessee, the Lessor shall identify persons with a financial interest in the leased property on the Statement of Financial Interest for Leased Property when submitting the lease agreement.

D. Space Action Request, Office Space Requirements Analysis, Finance and Administration Form RSM-1A

Document space needs on this form, adapting as necessary to include classroom and class laboratory space needs and submit with initial submittal of request for leased space.

E. Supplemental Data Questionnaire, Finance and Administration Form RSM-1B

Document space needs on this form and submit with initial submittal of request for leased space.

F. Certification of Funds Available

For all leases subject to State Building Commission approval, a letter signed by the President of the institution or Vice Chancellor for Technology Centers certifying that funds are available must accompany the lease proposal. Institution/technology center Certification of Funds shall be acknowledged and certified by Vice Chancellor for Business and Finance.

G. Summary of Analysis of Lease Proposals Received

If advertising and receipt of lease proposals is performed by the institution/technology center, a summary of analysis of lease proposals must accompany the lease proposals including cost analysis.

H. Enrollment Projections and Program Documentation

Provide historical enrollments and enrollment projections and documentation of programs to be offered at the site of the proposed leased facility shall accompany the lease proposal as justification for the need to lease space.

VI. STATE STATUTES ON STATE LEASES & DISPOSALS OF REAL PROPERTY

The following State Statutes on State leases and disposals of real property are referenced for your information. Copies are available from the Office of Facilities upon request.

A. TCA 4-15-102 - State Building Commission - Powers and Duties

B. TCA 4-21-601 - Discriminatory Housing Practices Generally

C. TCA 4-21-803 - Commercial Agreements with the State - Prohibition - Required Statement

D. TCA 12-2-112 - Disposal of Surplus Interests in Real Property and Energy Resources

E. TCA 12-2-114 - State Leases - Procedure

F. TCA 12-2-115 - Approval of Lease Instrument where State is Lessee or Lessor 

G. TCA 49-8-111 - Powers Regarding Property

VIII. LEASE POLICIES OF THE STATE BUILDING COMMISSION

Item 7, Leases of Real Property as published in By-Laws, Policy and Procedure of the State Building Commission of Tennessee, compiled January 1991 is referenced for your information. Copies are available from the Office of Facilities upon request.

Source: Presidents Meeting, May 14, 1991; Presidents Meeting November 5, 1997; Presidents Meeting February 13, 2007.