VIII - 4.02 USM 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.
