Use and Lease of Non-University Real Estate

Administrative Procedure Requirements

• The University requires a written agreement for the use of non-University Real Estate by a College or University Unit when a payment or financial obligation to the owner of the Real Estate is required, even if the payment is not called rent, or when the owner of the Real Estate requires evidence of University insurance coverage.
• If the owner of the Real Estate does not require payment or financial obligation from the University, nor evidence of University insurance coverage, nor a written agreement, consult with the Real Estate Office to determine if a written agreement would be recommended. The University may want a written agreement to confirm the term of use granted, the intended use of the premises, planned modifications to the premises for the University's use, etc.
• The Real Estate Office manages all Use Agreements and Leases providing for a University Unit's use of non-University Real Estate, including any payment of rent or financial obligation associated with the agreement. These payments are generally issued through the University’s enterprise asset management system rather than through a purchase order.
• A hotel room reserved by a University employee traveling on University business (or a University Unit reserving a hotel room in conjunction with recruitment activities, etc.) does not require a written agreement. The employee will pay for the use of the hotel room pursuant to the University's travel expense and travel-related policies.
• Visiting faculty should enter into their own housing agreements. In very limited circumstances, the University will enter into an agreement with the owner of the Real Estate, and a housing/occupancy agreement with the visiting faculty member.

Approval Authority for Use Agreements and Leases

All Use Agreement and Lease transactions require the Approval Authority of the Real Estate Office.

All Use Agreement transactions with a value exceeding $50,000 or that exceed a term of 50 days (Approval Authority for Use Agreements not exceeding $50,000 or a term of 50 days has been delegated to the Signature Authority) and all Lease Agreements regardless of the term or value require the Approval Authority of the Real Estate Office. Use Agreement transaction values include the value of a single agreement if all University facilities and services for an event are described in one agreement, or the value of all agreements covering University facilities and services for an event.

For Use Agreements that require the Real Estate Office Approval Authority and for all Leases, the Real Estate Office will coordinate and confirm all additional required approvals such as Legal Authority, Funding Authority, and Board of Regents Approval.

Leases

Leases are generally used for the exclusive on-going use of non-University Real Estate for a specific term where a periodic payment is required.

Process for Leases

1. For College or University Units on the Twin Cities Campus in need of building space, contact PSRE Space and Facilities Planning for the determination/confirmation of the College or University Unit's space needs. For the lease of space by a System Campus unit and leases of non-University Real Estate other than building space, contact the Real Estate Office.

2. PSRE Space and Facilities Planning requires that the Resource Responsibility Center Facility Lead (RRC-FL) contact for the College or University Unit requesting space submit a Space Request Form: Space Requests Overview in order to analyze and determine the amount and type of space the College or University Unit needs and whether the University currently has on-campus space available. If PSRE Space and Facilities Planning has determined that the space the College or University Unit needs is not available on-campus, contact the Real Estate Office with the space requirements that PSRE Space and Facilities Planning has approved. Before entering into any arrangement to use off-campus non-university property, the College or University Unit shall ensure they have a funding source and financial approval for ongoing costs associated with such use.

   At a minimum, a College or University Unit should consider the following before leasing off-campus non-University property:

   • Resources available for ongoing occupancy or upfront costs for renovations;
   • “Temporary” vs. “Long-term” uses and needs;
   • University uses that do not need to be accommodated on campus (such as storage of records accessed infrequently and back office-functions); and/or
   • University uses which are best located for programmatic reasons adjacent to an off-campus facility.
3. The Real Estate Office will assist the College or University Unit in its search for off-campus space, or the College or University Unit can search for the needed rental space on its own. Contact the Real Estate Office if the services of a real estate broker are desired. The University does not typically engage and pay for brokers to search for and/or lease space. Brokerage agreements must be in writing and require the approval of the Real Estate Office.

4. Once the College or University Unit has selected one or more space options, the Real Estate Office engages with the landlord or landlord’s agent and requests a lease proposal based on the University and Unit’s desired terms and conditions. These conditions may include the following:

   • Name and address of Non-University entity
   • Legal name and address of the Non-University entity
   • Type of organization (corporation, partnership, etc.)
   • Name, email and phone number of non-university entity’s point of contact person
   • Location and current and intended use of Real Estate to be used
   • Number of square feet needed (if building space) or land area needed
   • Parking and associated University service needs requested
   • Beginning and ending dates of use
   • Any other pertinent information.

   The Real Estate Office will negotiate the Lease terms and conditions with the landlord or landlord’s agent for the selected location, in consultation with the Office of the General Counsel (OGC) on legal issues, Risk Management and Insurance on insurance issues, the College or University Unit to occupy or use the Real Estate to be leased on business issues, and other University Units as appropriate, such as Environmental Health and Safety.

   In conjunction with negotiating a Lease, the College or University Unit/user of the space must approve the plans and specifications for any modifications or improvements within the leased space (including the location of required electrical outlets and telecommunications outlets) to be completed prior to Lease commencement and typically detailed in an exhibit to the final Lease. The College or University Unit to occupy the space (or parent department, college, etc.) is also responsible for costs related to any required restoration of the leased premises at Lease end.

5. The University prefers to use the University’s Lease form, but if that is not possible, the proposed Lease must be reviewed and approved by the Office of the General Counsel.

6. The Real Estate Office approves the final Lease as to business terms. The final Lease requires the Legal Approval of the Office of the General Counsel.

   The size/length/purpose of the Lease determines any additional administrative approvals that will be required. If the total value of the Lease is over $1,000,000 present value (PV) during the initial term, the Lease will require review and action by the Board of Regents.

7. The final Lease is then signed by the appropriate University signatory pursuant to the Delegations of Authority Library.

   After the Real Estate Office reviews and approves the contract (and obtains any additional approvals required), an Approval Authority memo and the contract will be returned to the College or University Unit contact for signature by the delegated signatory pursuant to the Delegations of Authority library.

   If Board of Regents approval is required, the contract will be signed on behalf of the University by the Senior Vice President for Finance and Operations, or by the Vice President of University Services, or Assistant Vice President for Planning, Space, and Real Estate who have been re-delegated this authority following Board approval. The landlord then signs the Lease.

8. The landlord must complete or contract for all leasehold improvements (modification of the space) prior to or during occupancy. The University's standard Lease provides that improvements become part of the leased premises and are owned and insured by the landlord with no University restoration obligation at Lease end. Any work prior to or during occupancy must have a "cost not to exceed" provided by the landlord, be approved by the College or University Unit occupying the space, and be authorized by the Real Estate Office. Unless otherwise approved, the Real Estate Office shall require all College or University Units to engage the services of a Capital Project Management Project Manager for oversight of all leasehold improvements proposed in the space prior to or during occupancy at the College or University Unit’s cost.
9. The College or University Unit/user is responsible for making all telecommunications (phone, data) arrangements with the Office of Information Technology or other selected telecommunications provider (depending on location of the premises to be leased), and moving arrangements with the moving company selected by the College or University Unit/user.
10. Facilities Management does not perform work in building space leased to the University. All work impacting the leased premises during the Lease that the College or University Unit/user of the space wants or needs completed, such as hanging shelves, must be completed by the landlord or a contractor hired by the landlord.
11. The Real Estate Office manages the Lease, including payment of rent, ensuring the required certificate of insurance is provided to the landlord, tracking options to renew the Lease, lease of additional space, and early termination, etc.

Use Agreements

Use Agreements are used for the short-term use of Real Estate that typically involve a one-time fee or payment. Use agreements can also be used for long-term uses of Real Estate. Use agreements can include hotel agreements, access agreements, and license agreements.

For the purposes of this Procedure related to Use and Lease of Non-University Real Estate, all Use Agreements that involve a periodic payment require review and approval from the Real Estate Office regardless of the term or transaction value.

Process for Use Agreements

Many facilities, including hotels, retreat centers, and public schools, accept a standard University form when renting hotel space or other Real Estate to the University. To determine if an acceptable use agreement exists, check the Standard Contracts Library.

• If the facility or landlord accepts a standard University use agreement, determine the total estimated cost of the contract (including food and beverages, etc.), and then follow the appropriate steps below.
• If the facility or landlord does not accept a standard University use agreement, skip to the appropriate step 2 below.
• If multiple facilities or locations are required, contact the Real Estate Office.

For Short Term Use Agreements Not Exceeding $50,000

1. Complete the appropriate University standard use agreement with the facility or landlord. If no changes are made to the standard agreement, proceed to step 3. If the facility or landlord insists on using only its own contract, or changes are requested to the University's contract, proceed to step 2.
2. Send the agreement to the Office of the General Counsel (OGC) for approval. After OGC approval, proceed to step 3.
3. Have the Use Agreement signed by the authorized University signatory pursuant to the Delegations of Authority Library.
4. Obtain execution of the Use Agreement by the landlord. The College or University Unit using the hotel or other non-University Real Estate for its conference, etc. is responsible for managing the Use Agreement (payments required, ensuring required certificate of insurance provided to the facility or landlord, etc.).
5. After the event or conclusion of use, furnish the Real Estate Office with a copy of the fully-executed Use Agreement along with the appropriate EFS chartfield string and total final amount of facility-related costs (excluding food and beverages) noted at the top of the Use Agreement.

For Short Term Use Agreements Exceeding $50,000

1. Complete the appropriate University standard Use Agreement with the facility or landlord, but do not sign it.
2. Send the agreement to the Real Estate Office for review.

3. After the Real Estate Office reviews and approves the contract (and obtains any additional approvals required, including, if applicable, approval from the Office of the General Counsel), an Approval Authority memo and the contract will be returned to the College or University Unit contact for signature by the delegated signatory pursuant to the Delegations of Authority library.

   If Board of Regents approval is required, the contract will be signed on behalf of the University by the Senior Vice President for Finance and Operations, or by the Vice President of University Services, or Assistant Vice President for Planning, Space, and Real Estate who have been re-delegated this authority following Board approval. The landlord then signs the Use Agreement.

4. After execution by the landlord, furnish the Real Estate Office with a copy of the fully-executed Use Agreement with the appropriate EFS chartfield string and the total final amount of facility-related costs (excluding food and beverages) noted at the top of the Use Agreement.