Original Issuance Date: December 7, 2016
Last Revision Date: October 6, 2020
1. Policy Purpose
The purpose of this policy is to establish protocols for leasing by UW System institutions as permitted by s. 36.11 (1)(b), Wis. Stats., and in accordance with Regent Policy Document (RPD) 13-2, Real Property Contracts: Signature Authority and Approval. This policy also delegates authority for certain related real estate agreements to UW System institutions and provides the parameters under which this delegation may be used.
The policy also establishes leasing parameters for individuals occupying Board-Owned Residential Housing.
2. Responsible UW System Officer
Associate Vice President for Capital Planning and Budget
This policy sets parameters for all UW System institutions for the leasing of real property or other means used to encumber real estate. This policy applies to both UW System lessor and UW System lessee agreements as outlined below, except that UW System Administrative Procedure 910.A, Leasing Process, applies only when a UW System institution is the lessee.
Section 6.C deals specifically with Board-Owned Residential Housing as defined in this policy.
Under RPD 13-2, the President of the University of Wisconsin System and the Executive Director and Corporate Secretary of the Office of the Board of Regents may sign leases of real property when the following conditions apply:
- the initial terms of a lease are equal to or less than both $1,000,000 in total cost and five years in length; and
- the renewal options included in a lease are equal to or less than both $1,000,000 in total cost and five years in length.
The UW System President is further permitted to approve leases and/or delegate signature authority for leases to chancellors. This policy directs institutions to the relevant processes to be followed when leasing real property. In establishing this policy and associated procedure, the UW System is committed to operating in an efficient and effective manner that best meets its needs and ensures that the stewardship role of its physical assets and financial resources is integral to its decision making processes.
Communication/Tower/Antenna Agreement: An agreement between a communications entity and a campus to install tower(s) or antenna(e) on land or buildings controlled by the Board of Regents.
Board-Owned Residential Housing: Property owned or controlled by the Board of Regents that is rented as housing for individuals other than students.
Facilities Rental Agreement: A short-term (up to one year) agreement for utilizing space from a private entity. For facilities rental agreements, the total annual payment must be less than $25,000 and the agreement cannot include renewal options extending more than three years.
Facilities Use Agreement: Similar to a Facilities Rental Agreement, this agreement is used exclusively for faculty leasing university space for grant applications. The Agreement details the kind and type of space and possible specialized equipment to be used by the faculty.
Inter-Agency Agreement: An agreement to utilize space by and between a UW institution and other public agencies. These can include field stations, offices, garages etc. and can only be used when the building owner is a public entity. This agreement does not provide for a limit on the amount of space to be utilized, or the term of the agreement and shall contain an early termination clause.
Land Rental Agreement: An agreement allowing the university as lessor or lessee to utilize land on a temporary basis. The agreement should include an early termination clause that can be exercised by either party. If the land is owned or controlled by the Board of Regents, the deed should be reviewed for any conflict or covenants which prohibit leasing the specific parcel.
Lease: A contract that defines the terms and conditions upon which a lessee is permitted to occupy space. Specifics such as length of term, the amount of rent, and responsibility for the maintenance of the property are included to protect the university’s interests and access to the property.
Lease Amendment: A modification to an existing lease that alters the terms and conditions and effects a permanent change. It does not stand as a separate document and is signed by both the lessor and lessee. An amendment will state the change that is being made by identifying the specific paragraph within the existing lease.
Space Request: This document outlines the type and amount of space required for the specified activity. The Request includes estimated rent, move costs, furniture purchasing, and/or IT cabling costs.
6. Policy Statement
The President of the University of Wisconsin System may delegate certain contracting authority and other responsibilities to designated university officials and may delegate signature authority for leasing to chancellors as outlined in Regent Policy Document 13-2, Real Property Contracts: Signature Authority and Approval. Per RPD 13-2, institutions are required to obtain review of any proposed lease by either an institution’s legal affairs office or the UW System Office of General Counsel prior to execution.
Under RPD 13-2, Board of Regents Approval is required when:
- the initial terms of a lease exceed either $1,000,000 in total cost or five years in length;
- the renewal options included in a lease exceed either $1,000,000 in total cost or five years in length;
- a lease would permit a facility that would be privately owned or operated to be constructed on state-owned land. Such leases also require approval from the State Building Commission under 13.48(12), Wis. Stats.;
- a lease would affect agricultural lands covered under. 36.33, Wis. Stats.;
- a state-owned residence hall is leased to another state agency or nonstate nonprofit agency for purposes of alternate use. Such a transaction would require State Building Commission approval under 36.11(1)(e), Wis. Stats.; or
- a lease amendment alters a lease such that the rental amount over the initial term or any subsequent renewal terms exceeds the limits defined by RPD 13-2.
In further determining what levels of review and approval are necessary for a lease or similar agreements, institutions should consult the Leasing Review and Approval matrix.
A. Leasing Process
The standard process to be used by UW System institutions when considering leasing of property as a lessee is outlined in section 4 of UW System Administrative Procedure (SYS) 910.A, Leasing Process.
B. Delegation of other real estate agreements
Chancellors and the responsible business officer at each institution are delegated signature authority for the following real estate agreements:
- Facilities Rental Agreements
- Facilities Use Agreements
- Inter-Agency Agreements
- Land Rental Agreements
The UW System Office of Capital Planning and Budget may support institutions in developing or revising these agreements.
The delegation of signature authority for these agreements shall be used under the following circumstances:
- The term in the agreement is for one year or less; and
- The annual gross rent is $25,000 or less.
The UW System President or designee(s) may delegate signature authority to chancellors to sign agreements where agreements specified above have an annual gross rent greater than $25,000. Any agreement delegated under this provision must not exceed the thresholds or criteria that would necessitate Board of Regents approval under RPD 13-2.
For facilities rental agreements, the total renewal options cannot exceed three years in length. If any of the above thresholds are exceeded, the institution must work with the UW System Office of Capital Planning and Budget to develop an agreement or a suitable alternative.
Chancellors and responsible business officers at each institution are also delegated signature authority for real estate agreements involving Communication/Tower/Antenna agreements. However, institutions shall work with the UW System Office of General Counsel or the institution’s legal affairs office prior to authorizing any Communication/Tower/Antenna agreement.
C. Board-Owned Residential Housing
Individuals occupying Board-Owned Residential Housing must execute a residential lease with the university setting forth a rent that is calculated according to applicable IRS regulations and state statutes. Valuation and rental calculations are set by the Wisconsin Department of Administration. Bi-annual increases in monthly rent are established by the Wisconsin Department of Administration and notification issued to each state agency prior to August 15 every even-numbered year.
Any decision to exclude any portion of rent or discount from an employee’s income should be reviewed for tax implications. Exclusions from income must meet the tests outlined in IRS Publication 5137, or the criteria established under IRS Section 119(d). The institution is responsible for maintaining proper documentation to support the tax treatment.
This subsection does not apply to UW System employees who are required to live in Board property as a condition of their employment (e.g. UW System President, chancellors, or residential hall staff) or to student housing owned or controlled by the Board of Regents.
D. Standardized Legal Documents and Reporting
All leases and agreements covered by this policy, regardless of the delegation of signature authority or whether the institution is the lessee or lessor, shall utilize standard templates developed by the UW System Office of Capital Planning and Budget. Any amendments to these templates requires the review and approval of the UW System Office of General Counsel or an institution’s legal affairs office. Institutions should also consult with the UW System Office of Risk Management to ensure compliance with State of Wisconsin policies and procedures.
Each UW System institution is required to provide semi-annual reports to the UW System Office of Capital Planning and Budget for submission to the Board of Regents in June and December of each year on any exercise of delegated authority for leasing, per RPD 13-2.
Additionally, the UW System Office of Capital Planning and Budget will provide a copy of the separate semi-annual report on state-owned housing rentals required by the Wisconsin Department of Administration to the UW System Chief Audit Executive.
7. Related Documents
Regent Policy Document 13-2, Real Property Contracts: Signature Authority and Approval
UW System Administrative Procedure 910.A, Leasing Process
Section 36.11(1)(b), Wis. Stats., Protection of People; Custody and Management of Property
8. Policy History
Revision 2: October 6, 2020
Revision 1: January 26, 2018
First approved: December 7, 2016
9. Scheduled Review