1. (a)

   1. (1) Pursuant to Arkansas Code § 22-2-114(a)(1), the Real Estate Services Section is the responsible leasing agent for all state departments.
   2. (2) No department, agency, board, or commission may renew or negotiate a lease without the approval of the Real Estate Services Section.

2. (b)

   1. (1) Requests for lease action (lease renewals or requests for new or additional space) shall be submitted to the Real Estate Services Section at least ninety (90) days prior to the date the space request or change is needed.

   2. (2) The request shall:

      1. (A) Be submitted to the Real Estate Services Section; and
      2. (B) Include the information indicated in 22 CAR § 114-102(e).
   3. (3) This information should be as complete and accurate as possible since it will be used to determine the space necessary to meet the needs of the department.

3. (c)

   1. (1) All leases for real property, including but not limited to offices, parking, storage, warehouses, land, antenna, and towers must be approved by the Real Estate Services Section and assigned a Building Authority Division lease number.
   2. (2) The approved lease number must be used by all departments.
   3. (3) The only exception shall be for short-term use of facilities where memoranda of understanding or other agreements may be utilized.

   4. (4) Examples of these short-term use facilities that are exempt from Real Estate Services Section approval include:

      1. (A) Classrooms (from one to nine (1 – 9) months);
      2. (B) Per-seat fees;
      3. (C) Per semester;
      4. (D) School years (nine (9) months);
      5. (E) Short-term specialty classes;
      6. (F) Golf, bowling, gyms, spas for classes;
      7. (G) Conference/meeting rooms (from one to ten (1 – 10) days);
      8. (H) Workshops/seminars;
      9. (I) Fair booths;
      10. (J) Testings;
      11. (K) Graduations;
      12. (L) Ball fields (including seasonal rentals);
      13. (M) Short-term storage (less than one (1) year) including mini-storage where the lease is considered month-to-month providing there is a thirty-day termination clause; and
      14. (N)

4. (i) Modular units (less than one (1) year).

   1. (ii) Leases of modular units (portable buildings) for a period of one (1) year or more shall be submitted to the Real Estate Services Section in the same manner as a traditional office space and shall require division approval (memorandum of understanding exemption).

      1. (iii) The division recommends the lease of modular units should:
5. (a) (a) Be planned on a temporary basis; and

6. (b) (b) Not be utilized as a long-term or permanent use of space.

   1. (iv) Examples of temporary use include:
7. (a) (a) Utilization for disaster relief while a facility is undergoing a capital improvement;

8. (b) (b) Temporary classroom space due to over-enrollment; or

   1. (c) (c) Temporary use for a site-specific special program.

      1. (d) Lease space will be provided to or negotiated for departments based on the department’s submittal of the completed request for lease space with an authorized signature and the department’s justification for the need.

9. (e)

   1. (1) Space in public buildings shall be negotiated pursuant to Arkansas Code § 22-2-114.
   2. (2) The number of moves will be kept to a minimum and efforts will be made so that functional areas remain as contiguous space.
10. (f) All leases may be terminated on thirty (30) days’ written notice to the lessor if state or federal appropriations of funds are insufficient for the department to continue the operations for which the leased premises are being used.

11. (g)

    1. (1) When negotiating rental rates, the state should not exceed the rental rate prevailing in the community for comparable facilities.
    2. (2) Annual square foot price limits will be based on current market conditions in a locality and rental rates will vary from city to city in the state.
    3. (3) State policy for rental rates will reflect the state's position as a prime tenant.
    4. (4) All new lease actions shall be supported by documentation which will reflect the lease rates available for comparable facilities in the market at the time the new lease was negotiated.

12. (h)

    1. (1) It is preferable for the private sector lessor to furnish all utilities except telephone and data services and to furnish janitorial service.
    2. (2) Private sector lessors shall be required to provide maintenance of the building and building systems in all circumstances.

    3. (3) When a lease is negotiated in favor of the state involving special consideration for a public advantage such as a significant reduction in rent or an exchange-for-services arrangement, the private sector lessor may be exempt from providing maintenance for the building and building systems if it determined to be in the best interest of the state.

       1. (i)
    4. (1) All state departments must receive invoices submitted by the lessor to process rental vouchers.

    5. (2) While rent may be paid monthly or quarterly, prior division approval:

       1. (A) Is required for annual payment or payments; and
       2. (B) Shall be reflected in the lease.
13. (j) Rentable area shall be computed by the standard method of floor measurement as adopted by the Building Owners and Managers Association International (BOMA), ANSI/BOMA Z65.1-2010, as amended.

14. (k) Rental overlap, the time between the beginning date of a new lease for different premises and the last date of occupancy for existing premises, shall be held to a minimum and shall only occur when moving arrangements require an overlap.

    1. (l)
    2. (1) The Real Estate Services Section will serve as contact between the department and lessor or as the contact between the department and the tenant when the department is the lessor in all matters pertaining to the lease prior to lease execution.

    3. (2) Departments shall be permitted to contact the lessor for day-to-day issues, including but not limited to:

       1. (A) Invoices/payments;
       2. (B) Routine maintenance and repairs; and
       3. (C) Annual inspections.
    4. (3) Departments shall report all nonroutine maintenance and repair issues to the Real Estate Services Section.

    5. (4) The Real Estate Services Section shall act as the liaison between the two (2) parties should lease interpretation and terms enforcement become necessary.

       1. (m)
    6. (1) Whenever possible, the Real Estate Services Section shall lease space requiring only renovations necessary to accommodate the requesting department.
    7. (2) Renovations shall always be held to the absolute minimum necessary to allow the department to function in the leased space.
    8. (3) When renovation is necessary, the cost of the renovation shall be borne by the lessor except when the renovation is to accommodate specific department functions which would be of no use or value to future tenants.
    9. (4) It is the policy of the state to encourage the lessor to provide any alterations and improvements required to make the space suitable for the requesting department and to recapture this expenditure over the term of the lease as part of the rent.
    10. (5) Lump-sum payment by the state for improvements shall require prior approval of the division.
    11. (6) After the initial lease is in place and during the lease term, if the department requests tenant improvements, the department must submit to the Real Estate Services Section a Request for Lease Action form containing the information in 22 CAR § 114-102(e).
    12. (7) Once approved by the Real Estate Services Section, a change amendment for the improvements and additional rents will be negotiated with the lessor.

    13. (8) When a department contracts for improvements directly with a contractor and payment is not made through rent:

        1. (A)

           1. (i) If the work is estimated over thirty-five thousand dollars ($35,000), but less than fifty thousand dollars ($50,000), a Request for Lease Action must be submitted and approved by the Real Estate Services Section.
           2. (ii) The Request for Lease Action should include a bid tabulation of three (3) competitive bids (all taxes and permit fees are inclusive in the bids), bid specifications and drawings, any disclosure forms required under Governor’s Executive Order 98-04 or Acts 1999, No. 34, to the extent applicable, any required bonds, and the purchase order.
           3. (iii) Any required notice of legal advertisement must be made in accordance with Arkansas laws and rules; or

        2. (B)

           1. (i) If the work is estimated to be over fifty thousand dollars ($50,000), the project must be formally bid in accordance with Arkansas laws and rules.
           2. (ii) The information contained in subdivision (m)(10)(A) of this section, above, must be submitted to the Construction Section for review and approval.
           3. (iii) No work may be done until the lease has been amended to allow tenant improvements.
           4. (iv) If the lessor cannot or will not provide for design professional services, the selection of such professionals shall be the responsibility of the department (see 22 CAR § 111-1703).
           5. (v) Plans and specifications shall be made pursuant to Arkansas Code § 22-9-201, which requires observation by registered design professionals for certain levels of expenditures.

15. (n)

    1. (1) Modular office space leased and occupied by state departments for one (1) year or more are considered leased space.
    2. (2) Requests for this type of temporary space should be processed in the same manner as requests for new or additional space.
    3. (3) See subdivision (c)(4)(N) of this section.

16. (o)

    1. (1) Pass-through escalation clauses in which the state agrees to pay all increases in property taxes, services, or utilities shall not be negotiated or approved.
    2. (2) Escalations shall be predetermined and negotiated with the original lease agreement.
17. (p) Information concerning leases shall be released pursuant to the Freedom of Information Act of 1967, Arkansas Code, § 25-19-101 et seq.

18. (q)

    1. (1) When space has been located which meets the requested criteria, the Real Estate Services Section shall negotiate and prepare for signature the standard state lease agreement.
    2. (2) The agreement shall be signed by the lessor and lessee and approved by the division.
    3. (3) No lease document is valid unless signed by the proper division authorities.
    4. (4) The Real Estate Services Section shall ensure distribution of lease copies to the lessor and lessee.

19. (r)

    1. (1) Departments may enter into leases for residential dwellings or apartment-type facilities for use as living quarters.
    2. (2) Departments shall not enter into a lease for premises located in residential or apartment-type dwellings for any other purpose.
    3. (3) Example. A room in a residence cannot be leased as office space.

20. (s)

    1. (1) All leased premises for departments not located within a state-owned building must be identified with a separate address for each defined premises.
    2. (2) Leased premises shall not be shared with any private entity or use other than for official state or public purposes.
    3. (3) The leased premises shall have a separate entrance from any other place of business unless the premises is supported by funding such as grant programs, stipulated by an agreement with other entities which includes but is not limited to agencies and political subdivisions.
    4. (4) All nonstate lessors or sublessors shall state within the lease agreement their ownership or subletting rights of the leased premises.

21. (t)

    1. (1) While lease agreements may reflect that office furnishings or equipment are being utilized or shared, the lease for such commodities may only be made with approval from the Department of Shared Administrative Services.
    2. (2) Such reflections in the lease agreement for the premises must be identified through an itemized inventory and attached as a lease exhibit.
    3. (3) Lease agreements which combine the use of the premises and commodities are discouraged and should only be done if it is in the best interest of the state.
    4. (4) The use of separate lease agreements for such commodities is encouraged.

22. (u)

    1. (1) Departments entering into memoranda of understanding for the purpose of planning temporary space in the event of disasters shall submit the executed agreement to the Real Estate Services Section even though the division is not a party to the agreement.
    2. (2) Departments shall provide immediate notification to the division upon activation of the agreement due for disaster relief.

Codification Notes: "ANSI" means American National Standards Institute.