Original Issuance Date: December 7, 2016
Last Revision Date: January 26, 2018
1. Purpose of Procedures
This procedure outlines the process UW System institutions must follow when considering the leasing of real property as a lessee under s. 36.11 (1)(b), Wis. Stats.. The procedure outlines requirements for institutions where a chancellor has been delegated approval to sign leases by the UW System President, as permitted by Regent Policy Document 13-2, Real Property Contracts: Signature Authority and Approval.
2. Responsible UW System Officer
Senior Associate Vice President for Capital Planning and Budget
Correspondence Memorandum: A document issued by the UW System Office of Capital Planning and Budget to the institution representative to determine if an existing lease should be renewed and under what terms and conditions.
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.
Request for Proposal: A Request for Proposal (RFP) is a public solicitation for real estate within a specified geographic area and with proscribed characteristics. The real estate is selected using a quantifiable scoring process to eliminate bias.
Request for Information: If the desired space is located in a smaller real estate market, or if the space is specialized, a Request for Information (RFI) can be performed to determine the level of interest and possible availability of real estate. An RFI may provide the basis for a request to sole source real property.
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.
A. Leasing Process
The following process shall be followed by UW System institutions considering the leasing of space as a lessee.
i. Request for Space
Each chancellor or the responsible institutional business officer shall approve the space request form. Copies of each approved space request form shall be filed with the UW System Office of Capital Planning and Budget. Each request shall be reviewed according to the following prerequisites:
- Facility Standards and Compliance – Space needs resulting from building code violations and compliance, and/or health safety and environmental issues.
- Academic Program and Enrollment Growth – Demonstrated space shortage based on enrollment trends, space use analysis, and/or evidence that enrollment exceeds original building design capacity.
- Revenue-based Initiatives – space shortage related to student supported and/or community based initiatives.
- Effective Use of Capital and Operating Resources – Existing facilities are insufficient, dysfunctional, and no longer cost effective to operate and maintain.
ii. Identification of Space
In general, if a proposed lease requires Board of Regent approval per RPD 13-2, a Request for Proposal (RFP) shall be utilized. In situations where the requested space is located in a smaller real estate market, or if the space is specialized but not large enough to require an RFP, a Request for Information (RFI) can be completed. In certain instances a Request to Sole Source may be appropriate due to the uniqueness of a property or its availability in a specific location. Last, a market analysis option may be used if other options are not suitable.
Those institutions with delegated authority shall follow the RFP, RFI, Sole Source, or market analysis alternatives below.
For those institutions without delegated authority for leasing, the UW System Office of Capital Planning and Budget shall assist institutions in identifying space to fulfill a space request through the following processes.
a. Request for Proposal
A Request for Proposal (RFP) is typically required when a lease is anticipated to require approval from the Board of Regents. The UW System Office of Capital Planning and Budget will work with institutional staff to develop the RFP. The process for conducting an RFP is as follows:
- Develop a Request for Proposal detailing preferred locational and building attributes. These could include:
- Minimum or maximum square footage;
- Proximity to research or business partners, or other institution users; or
- Specialized building features like overhead doors and loading docks, or lab space
- Develop evaluation criteria and score sheet prior to posting the RFP.
- Develop a timeline for posting and evaluating the RFP.
- The RFP shall be posted in the most visible publication(s) in the area and suited to the type of real estate being solicited in addition to being posted to the UWSA website. The RFP will be advertised in at least one other publication depending on the size of the UW System institution, the end user, the surrounding population. The institution shall determine the additional publication where the RFP should be advertised.
- Once a proposer has been chosen, the lease process will follow the negotiation and approval processes outlined in Section 4.A.iii and 4.A.iv of this procedure.
b. Request for Information
A Request for Information (RFI) may be necessary when searching for available space in smaller real estate markets, or if the need is for a specialized space. The purpose of an RFI is to secure information about a real estate market. An RFI is not scored, nor does it always result in a transaction. The process for conducting an RFI can be as simple as posting an advertisement for the type of real estate needed to the UW System email list.
c. Request to Sole Source
In some instances, the uniqueness of a property or its availability in a specific location or circumstance may preclude procuring real estate through a competitive RFP process. Sole sourcing allows an institution to specify the real estate which is to be leased. For example, a sole source option may be acceptable if:
- co-location with an institution partner is required;
- the building is located on a communications backbone; or
- a specific use, such as a greenhouse or laboratory is satisfied by the real estate.
All requests for sole source shall be thoroughly documented and justification provided as part of the space request.
d. Market Analysis of Space
For requests for space that do not require an RFP, RFI, or identification by the institution as a sole source option, information from the space request shall be used to conduct a market analysis and negotiate with a landlord.
iii. Lease Negotiations
Institutions with delegated signature authority for leasing may negotiate the terms of a lease, lease amendment, addenda, or renewal. Support may be provided by the UW System Office of Capital Planning and Budget upon request of the institution.
For those institutions without delegated authority, negotiation of the terms of a lease, lease amendment, addenda, or renewal shall be conducted by the UW System Office of Capital Planning and Budget, within the parameters set forth in the space request the institution submitted. Approximately eight months prior to a lease expiration date, the UW System Office of Capital Planning and Budget will issue a correspondence memorandum to determine if the lease should be renewed for those institutions without delegated authority. A renewal letter can be issued if there are renewals included in the lease, or negotiate an extension once concurrence from the UW System institution is received by the UW System Office of Capital Planning and Budget.
In all situations, the standard lease template as developed by the UW System Office of Capital Planning and Budget shall be used. Amendments to the standard template shall be approved by the UW System Office of General Counsel or an institution’s designated legal affairs office. Institutions shall also consult with the UW System Office of Risk Management.
IV. Approval and Execution of Lease
Approval of a lease prior to execution shall be obtained pursuant to Regent Policy Document 13-2. Institutions should work with the Office of Capital Planning and Budget on compiling the necessary materials when Board of Regents approval is required. Institutions should consult the for further detail.
5. Related Documents
Revision 1: January 26, 2018
First approved: December 7, 2016