1.2 Leasing Generally
With the exception of farming operations and certain "UIUC Extension" leases, all leases for real property are drafted by the University Office of Capital Programs and Real Estate Services (UOCP&RES). UOCP&RES prepares all leases where the University is a Tenant (Lessee) assuring the various statutory provisions regarding the lease document and procurement are met as outlined in the law and these procedures. UOCP&RES also prepares documents where the University is Landlord (Lessor). These "concession" agreements may be in the form of leases or licenses depending on the circumstances.
In all instances the leases must be executed by the appropriate officials on behalf of The University of Illinois Board of Trustees (BOT). Real property leases of $200,000 or more in annual rent require a BOT vote to approve. Leases for space in excess of 10,000 square feet or $100,000 in annual rent must be submitted to the Policy and Procurement Board and follow a Request for Information process. Leases in excess of $250,000 per year must also be signed by the President of the University.
1.3 University as Lessee (Tenant)
1.3 A. Requests for Leasing Services
Requests for leasing services may originate from the UIUC, UIS, UIC campuses, the University Administration ( UA) , the University Foundation, the Alumni Association, the University of Illinois Extension Offices, the Scientific Survey units ( became University of Illinois units in 2009) or other University related agencies where the University of Illinois is the Lessee. Any campus unit requesting leased space shall first contact and receive approval of the Campus Director for Space Management or similar Unit space approval position prior to contacting UOCP&RES. Requests for leasing services to UOCPRES shall be in writing (e-mail is acceptable) and addressed or copied to the Director of Real Estate Services (Director) and include a CFOAPAL charge line item. The Director will review the request with staff, Capital Programs staff, Provost and/or other appropriate officials in order to confirm the appropriateness of the request, funding availability, opportunities for backfill, and the consistency with policy and other space directives. Units shall be notified that requests for establishing facilities otside the State of Illinois shall comport to the provisions of the Section 1.8 of the OBFS Policy Manual. The Director will assign the request for services based on campus location, priorities and staffing availability or engage a third party to assist with the project where appropriate. From time to time, other affiliated agencies may request a UOCP&RES review of leasing terms or other assistance which may be provided as time permits, upon approval of the Director.
1.3 B. Lease Approval Process
The process and timing to locate and approve appropriate leased space is largely determined by the size and cost of the space to be leased. Leases not subject to the request for information (RFI) process and less than $100,000 annual rent may be procured by UOCP&RES, approved by delegated BOT authority in accordance with the OBFS purchasing manual and policies and applicable Procurement Code provisions for such leases. All leases are with the University of Illinois Board of Trustees and approved by the BOT either by a delegation of authority or specifically approved by vote of the BOT. Consistent with University Audit directives regarding the segregation of duties, the Director will review the proposed procurement process and proposed business terms for all transactions prepared by staff and evidence that approval on the routing form. Leases are procured by either RFI or a NON-RFI process.
1.3 C. Illinois Public Higher Education Procurement Bulletin
The Illinois Public Higher Education Procurement Bulletin (Bulletin) is a free online resource for vendors wishing to do business with the public universities in Illinois. Where required, the University of Illinois posts notices for upcoming bids, requests for proposal, requests for information, solicitation documents, and awards in the bulletin. Vendors can search for notices that may be of interest to them, download bid documents, and return to check the status of a bid.
The Office of the Higher Education Chief Procurement Officer publishes Bulletin notices based on information provided by each of the State Universities. Each State University independently determines which notices are submitted to the Bulletin for publication based on the requirements.
In the simplest of terms, every RFI must be posted in the bulletin and the award of an RFI posted in the Bulletin 30 days prior to execution unless the 30 day period is waived. Lease renewals that were subject to an original RFI process must be posted 60 days in advance of execution unless waived. Change orders to leases may be subject to posting.
1.3 D. RFI Process
An RFI leasing process as outlined in the Procurement Code is required for all space requests of over 10,000 sq. ft. in area or where the rental fee exceeds $100,000 in any year of the proposed lease where the University is the Lessee. This law was modified in 2010 to read as follows:
(30 ILCS 500/40 15)
Sec. 40 15. Method of source selection.
(a) Request for information. Except as provided in subsections (b) and (c), all State contracts for leases of real property or capital improvements shall be awarded by a request for information process in accordance with Section 40 20.
(b) Other methods. A request for information process need not be used in procuring any of the following leases:
(1) Property of less than 10,000 square feet with rent of less than $100,000 per year.
(3) Duration of less than one year that cannot be renewed.
(4) Specialized space available at only one location.
(5) Renewal or extension of a lease; provided that:
(i) the chief procurement officer determines in writing that the renewal or extension is in the best interest of the State; (ii) the chief procurement officer submits his or her written determination and the renewal or extension to the Board; (iii) the Board does not object in writing to the renewal or extension within 30 days after its submission; and (iv) the chief procurement officer publishes the renewal or extension in the appropriate volume of the Procurement Bulletin.
(c) Leases with governmental units. Leases with other governmental units may be negotiated without using the request for information process when deemed by the chief procurement officer to be in the best interest of the State.
(Source: P.A. 95 647, eff. 10 11 07; 96 920, eff. 7 1 10.)
Lease with governmental units (including Jr. Colleges) may be negotiated without an RFI per paragraph (c) above utilizing a letter consistent with Exhibit A..
The content of the RFI and published notice provisions are specifically as determined by the Procurement Code. Additionally, it may be necessary to consider proposed modifications to the content of the RFI by the CPO under the 2010 procurements code changes. The RFI posting and Award and proposed and final lease will be subject to review ad submittal to the PPB. The award may also be subject to approval of the BOT if over $200,000 annually in rent. RFI publication and process is as follows:
(30 ILCS 500/40 20)
Sec. 40 20. Request for information.
(a) Conditions for use. Leases shall be procured by request for information except as otherwise provided in Section 40 15.
(b) Form. A request for information shall be issued and shall include:
(1) the type of property to be leased;
(2) the proposed uses of the property;
(3) the duration of the lease;
(4) the preferred location of the property; and
(5) a general description of the configuration desired.
(c) Public notice. Public notice of the request for information for the availability of real property to lease shall be published in the appropriate volume of the Illinois Procurement Bulletin at least 14 days before the date set forth in the request for receipt of responses and shall also be published in similar manner in a newspaper of general circulation in the community or communities where the using agency is seeking space.
(d) Response. The request for information response shall consist of written information sufficient to show that the respondent can meet minimum criteria set forth in the request. State purchasing officers may enter into discussions with respondents for the purpose of clarifying State needs and the information supplied by the respondents. On the basis of the information supplied and discussions, if any, a State purchasing officer shall make a written determination identifying the responses that meet the minimum criteria set forth in the request for information. Negotiations shall be entered into with all qualified respondents for the purpose of securing a lease that is in the best interest of the State. A written report of the negotiations shall be retained in the lease files and shall include the reasons for the final selection. All leases shall be reduced to writing; one copy shall be filed with the Comptroller in accordance with the provisions of Section 20 80, and one copy shall be filed with the Board.
When the lowest response by price is not selected, the State purchasing officer shall forward to the chief procurement officer, along with the lease, notice of the identity of the lowest respondent by price and written reasons for the selection of a different response. The chief procurement officer shall publish the written reasons in the next volume of the Illinois Procurement Bulletin.
(e) Board review. Upon receipt of (1) any proposed lease of real property of 10,000 or more square feet or (2) any proposed lease of real property with annual rent payments of $100,000 or more, the Procurement Policy Board shall have 30 days to review the proposed lease. If the Board does not object in writing within 30 days, then the proposed lease shall become effective according to its terms as submitted. The leasing agency shall make any and all materials available to the Board to assist in the review process. (Source: P.A. 96 1521, eff. 2 14 11.)
1.3 E. RFI Procedural Compliance
The RFI procurement process shall be considered and planned six months in advance of the start or lease termination date. The PPB award posting process required to execute the lease will require 30 to 60 days at the end of the RFI process which will determine the schedule of work. Prior to publication, the RFI and space needs description should be reviewed by the requesting unit, Director and proofed by the UOCP&RES staff. The RFI must be posted and published in the Illinois Public Higher Education Procurement Bulletin by UOCP&RES and in accordance with all procurement procedures and posting protocols. Selection and award must be made in accordance to the RFI process description and comply with the following legislation and procedure:
(30 ILCS 500/20 155)
Sec. 20 155. Solicitation and contract documents.
(a) After award of a contract and subject to provisions of the Freedom of Information Act, the procuring agency shall make available for public inspection and copying all pre award, post award, administration, and close out documents relating to that particular contract.
(b) A procurement file shall be maintained for all contracts, regardless of the method of procurement. The procurement file shall contain the basis on which the award is made, all submitted bids and proposals, all evaluation materials, score sheets and all other documentation related to or prepared in conjunction with evaluation, negotiation, and the award process. The procurement file shall contain a written determination, signed by the chief procurement officer or State purchasing officer, setting forth the reasoning for the contract award decision. The procurement file shall be open to public inspection within 7 business days following award of the contract.
(Source: P.A. 96 795, eff. 7 1 10 (see Section 5 of P.A. 96 793 for the effective date of changes made by P.A. 96 795).)
- The RFI award must be posted in the Procurement Bulletin 30 days (60 days may be required) in advance of the award.
- The RFI opening dates for the paper publication and Procurement Bulletin shall be identical. An attachment will be utilized to more fully explain space needs and submitter instructions. The newspaper publication should not contain all certifications and additional instructions as a URL may be referenced. Only one publication is required.
- A hard copy and PDF of the publication shall be retained as a record
- If the lowest bidder is not selected a letter as to why shall be provided the CPO from the SPO.
- Letters of rejection and award are provide by UOCPRES and copies retained
- All proposals submitted shall include the appropriate financial disclosures. (new)
- The "proposed" lease shall be submitted to the PPB with the award
- An executed lease copy shall be sent by PDF to the PPB
- The RFI file shall be prepared and maintained in accordance with the above law and retained with the property file.
- The PPB shall be provided information in accordance with the 500/ 40-20 (e) and additionally may request a "white paper" be completed in order to submit an award.
1.3 F. Non-RFI processes
For space requests less than 10,000 sq. ft. in area and less than $100,000 annually UOCP&RES will conduct a space search and alternative space comparisons including economic terms and conditions and verification of local market rental rates. In some cases, UOCP&RES will engage a third party to conduct the space search, particularly in unfamiliar markets. In some cases, units have conducted a space search and the services requested of UOCP&RES are to complete the lease. In such cases it should be determined if the unit approach is within University guidelines. Where the space search is conducted by UOCP&RES efforts will be taken to assure that potential bidders are made aware of the proposed space needs. Tenant (Unit) responsibilities include participating in property tours, developing space programming and advising as to acceptable alternatives. UOCP&RES responsibilities include business decision analysis, direct liaison with property owners or managers, documentation of decisions, management of approval process and record keeping.
1.3 G. Lease Content Generally
UOCP&RES maintains standard lease formats and templates approved by Legal. In addition to general lease terms, required provisions are as follows:
- Leases must be subject to appropriation by the Illinois General Assembly (30 ILCS 500/40-25 (c)). This does not apply to leases of less than 1 year.
- Leases of entire free standing buildings must have a purchase option where determined appropriate by SPO or the lease file must contain a letter signed by the SPO that the purchase is not in the best interest of the State. (30 ILCS 500/40-30)
- There must be a recognition that a State agency cannot incur rental obligations before occupying the space (30 ILCS /40-35)
- Multiple-year real property leases that may convey ownership require additional reporting and annual disclosures ( SAMS 15.20.41)
- Comptroller required content check list as of January 1, 2009 Procedure 15.20.40 SAMS manual:
- Lessor's name and address
- Leasing agency's name.
- Description and locations of property.
- Beginning and ending dates of lease.
- Monthly and annual rental amount, where applicable.
- The maximum or estimated amount to be paid, where applicable.
- Signature of Lessor and authorized agency representative.
- Execution date.
- Termination clause.
- Lease number.
- Appropriation Contingency clause when the lease is for more than one fiscal year.
- Bid-Rigging/Bid Rotating Certification if contract was let for bid.
- Bribery clause certification.
- Contract Debt Certification.
- Drug Free Workplace Certification if contract is with individual or sole proprietor.
- Educational Loan Certification if issued to an individual for goods or services.
- Environmental Protection Act.
- Felony Conviction under the Sarbanes-Oxley Act or Illinois Securities Law.
- Illinois Use Tax Certification.
- Disclosure of identity and trust beneficiaries (real estate Disclosure Certification)
- Right to audit record clause
- State Board of Elections certification
- Lessor's Federal Taxpayer Identification Number and Legal Status Disclosure Certification
- Such other provisions as may be specifically required by law
- Any other provision deemed necessary or advisable by the agency, the Attorney General or, where applicable the Department of Central Management Services
- Note: certain of the above certifications in the SAMS manual will be replaced by new 2011 certifications and are reflected by the certification attachment on all new leases.
- All new Lessors must fully execute a W-9 and a new vendor form prior to the first rental fee payment and provide FEIN or Social security numbers.
- Month to month leases are limited to 6 months.
- Lease term is governed by the following provision:
(30 ILCS 500/40 25)
Sec. 40 25. Length of leases.
(a) Maximum term. Leases shall be for a term not to exceed 10 years inclusive, beginning January, 1, 2010, of proposed contract renewals and shall include a termination option in favor of the State after 5 years.
(b) Renewal. Leases may include a renewal option. An option to renew may be exercised only when a State purchasing officer determines in writing that renewal is in the best interest of the State and notice of the exercise of the option is published in the appropriate volume of the Procurement Bulletin at least 60 days prior to the exercise of the option.
(c) Subject to appropriation. All leases shall recite that they are subject to termination and cancellation in any year for which the General Assembly fails to make an appropriation to make payments under the terms of the lease.
(d) Holdover. Beginning January 1, 2010, no lease may continue on a month to month or other holdover basis for a total of more than 6 months. Beginning July 1, 2010, the Comptroller shall withhold payment of leases beyond this holdover period.
(Source: P.A. 96 15, eff. 6 22 09; 96 795, eff. 7 1 10 (see Section 5 of P.A. 96 793 for the effective date of changes made by P.A. 96 795).)
1.3 H. Lease Renewals and Extensions
UOCP&RES software tracts lease terminations, renewals and options to extend. UOCP&RES should make contact with the tenant/ unit sufficiently in advance of the decision point to execute an action under the lease. New original leases are required upon the termination of all lease options or the completion of the original lease term which does not include an option to extend consistent with the 2010 legislation on lease term.
UOCP&RES responsibilities in the lease option or extension process, as in the original lease process, includes business decision analysis, direct liaison with property owners or managers, documentation of decisions, management of approval process, Procurement Bulletin posting and record keeping.
Where an RFI process and posting was originally mandated for leases that have pre-negotiated fixed renewal options that run unilaterally to the University, the exercise of a renewal option must be posted in the procurement Bulletin 60 days in advance of execution. See (30 ILCS 500/40-25). The renewal must be posted in the bulletin in order to post any future renewal. A gap in postings must be avoided.
1.3 I. University of Illinois Board of Trustee Approval Process
Real property leases of $200,000 or more in annual rent require BOT approval. Until September, 2010 the BOT limit of $100,000 excluded operating costs. The revised BOT policy states "Lease of space contracts requiring payment by the University in one fiscal year of $200,000 or more" (underline added). Therefore, if additional payments to landlord for parking or other costs, excluding utilities paid to a utility company, over base rent exceed $200,000 a BOT item is required. Utilities paid directly to the utility and not to the landlord are excluded. Given that the BOT only meets 6 times a year, sufficient time must be allocated to the process. BOT approval is required prior to occupancy. A draft report to the BOT shall be reviewed by the Director and submitted to the Senior Associate Vice President for Capital Programs and Real Estate Services. An early placeholder may be required in advance of BOT packet deadlines in order to assure action on a potential real estate transaction. The proper BOT memo template and lease abstract shall be prepared in advance.