Lease Administration

Monthly Lease Payment Report

The Monthly Lease Payment Report, Lease Summary, and Break Out are compiled between the 20th - 24th of each month and submitted to accounting for processing no later than the 25th. Checks are mailed out to Landlords no later than the 28th of each month.  The Break Out file reflects the payment amounts for those locations with multiple commodity lines and other special payments.

Tax Exempt for State Leased Space

As of January 1, 2009 the State will not be responsible for paying property taxes on state leased properties. Property taxes are collected by the county therefore each department will be responsible for informing the local county assessor of buildings leased by the state. Included within the bill is the requirement of submitting all leases and amendments to each individual county assessor. This applies to land leases as well as building leases.

Any real estate lease or amendment must be filed in a timely manner with the appropriate county assessor. Any termination of a lease prior to the term stated in Article 1 (B) of the lease must also be filed with the appropriate county assessor. This will be the responsibility of the individual agency.

New and Amended Lease Agreements

The Real Estate Program (REP) in the Office of the State Architect (OSA) provides oversight for state leases by maintaining approved contract templates and establishing policy and procedures, including development and administration of office space standards for leased space.  This oversight includes statutory approval of all leases, coordination with the state's contracted real estate brokers, maintaining the inventory of state-owned and leased property, maintaining the inventory of state-owned vacant facilities, and reporting acquisitions, dispositions and lease summaries to the Capital Development Committee of the General Assembly.  DOR is required to use the contracted real estate brokers for all leased space within the contracted geographic boundaries.

Included in REP’s oversight responsibilities is maintenance of approved lease agreement templates.  The preferred lease form is a gross lease where the negotiated rate includes all services and operating expenses of running a typical office building. 

On rare occasions REP may allow use of a base year template or a triple net (NNN) template.

A base year lease includes the operating expenses in the initial calendar year (base year) of the lease term in the negotiated lease.  In subsequent years, if the operating expenses increase from the base year expenses, the lease allows for collection of additional rent for those increased expenses. 

 A NNN template provides for additional rent to be paid in excess of the negotiated per square foot rate to reimburse the landlord for its operating expenses.  REP and DOR Facilities work with the contracted brokers in selecting the appropriate template and negotiating terms with the landlord.

The Space Request Form (SRF) is the mechanism by which REP is made aware of DOR’s request for new, or renewal of, leased space. It is also the form that allows the contracted real estate brokers to undertake representation on behalf of DOR.  The information contained on the SRF is used by the contracted real estate brokers to guide the search for appropriate facilities, i.e., geographic boundaries, square footage, budget, FTE, special needs, term, etc.  REP reviews the completed SRF to ensure the space being requested is consistent with the OSA strategic plans and space standards.

The programs are responsible for completing the SRF (and the Space Needs Form, if needed) based upon its strategic plans for leased space.  DOR Facilities will work with program leadership as needed or requested to promote timely decision making specific to leased space.

The majority of DOR’s lease agreements contain provisions for lease renewals.  The notice period is generally 12 to 9 months in advance of the current term expiration.  Facilities requests the programs to submit its SRF to renew or extend a current lease 18 months prior to the current term expiration in order to assess and address the deferred maintenance and/or identify tenant improvement needs.  For new space requests or requests to relocate, an SRF is requested 24 months in advance of the current lease term expiration.  This lead time provides sufficient notice to research market opportunities, locate appropriate space, negotiate lease terms, work with landlords for the construction of tenant improvements, and prepare moving arrangements prior to the expiration of the current lease term.

Funding of Lease Rent Payments

The annual lease appropriation is based on the program’s strategic plans for leases and DOR’s current lease contractual obligations.  The appropriation covers the rent and the additional rent.  Specific requests made of property managers or landlords for such services as locksmith, garage access cards, validated parking charges, fleet vehicle parking, and similar non-rent related requests are the financial responsibility of the program.

Greening Initiatives

If an Agency or Department leases space that is not owned by the State, the leased space is exempt from this Executive Order’s goals unless the lease meets all of the following criteria:

1. The lease is for 75% or more of the building's rentable square feet;

2. The leased space's utilities are sub-metered; and

3. The rentable square feet of the leased area is 10,000 square feet or more.