Board of Visitors minutes :: October 4, 2003 :: University of Virginia Library

Chapters 995 and 933 of the 1996 Virginia Acts of Assembly (House Bill No. 884 and Senate Bill No. 389, respectively) provide that, subject to certain conditions established in subsection 2 of § 23-77.4 of the legislation, operating leases entered into by the University of Virginia on behalf of the University of Virginia Medical Center shall be exempt from § 2.2-1149 of the Code of Virginia and from any rules, regulations and guidelines of the Commonwealth's Division of Engineering and Buildings in relation to leases of real property from others. Contracts entered into by the University on behalf of the Medical Center are also exempted from § § 2.2-1155 and 23-4.1 of the Code of Virginia in relation to leases of Medical Center real or personal property to others. Exercise of this autonomy in entering into operating leases is to be in compliance with policies, procedures and guidelines adopted by the Board of Visitors which are to direct that competition be sought to the maximum practical degree, that all costs of occupancy are to be considered, and that the use of the space to be leased is necessary and is efficiently planned. Subsection C of § 4-5.08 of the 1996-98 Appropriation Act delegates to the University as a whole the authority granted the Governor and the Commonwealth's Department of General Services ("DGS") in § 2.2- 1149 of the Code of Virginia regarding operating leases for the University other than the Medical Center. This latter delegation supplants the supervisory role of DGS which is established pursuant to § 2.2-1149, the provisions of which have been implemented by policies, procedures and guidelines promulgated by DGS pursuant to this section of the Code of Virginia. This authority has since been continued through 2002- 04 by subsequent legislative action. This latter delegation of authority is subject to certain conditions, the foremost of which is that the Board of Visitors must develop and submit policies, procedures and guidelines governing operating leases by the University for approval by the Secretaries of Finance and Administration by September 1, 1996. More recently § 4-5.08 of the 2003 Appropriation Act extended the delegated authority approved in § 4-5.08 of the 1996 Appropriation Act to include 1) leases of University real or personal property to others and 2) capital leases to the University as a whole provided that such capital leases have been specifically authorized by the Governor

or the General Assembly pursuant to the Appropriation Act and have been reviewed and approved by the Treasury Board.

The following provisions of this policy statement constitute the adopted Board of Visitors policies, procedures and guidelines required by the enabling legislation regarding operating and capital leases entered into by the University on behalf of the Medical Center or on behalf of any other part of the University.

II. Definitions

The following words and terms, when used in this policy statement, shall have the following meaning unless the context clearly indicates otherwise:

"Board of Visitors" means the Rector and Visitors of The University of Virginia.

"Enabling legislation" means Chapters 995 and 933 of the 1996 Virginia Acts of Assembly (House Bill No. 884 and Senate Bill No. 389, respectively), § 4-5.08 of the 1996-98 Appropriation Act, and § 4-5.08 of the 2003 Appropriation Act.

"Operating Lease" means a leasehold interest in real property, or improvements thereon, which is not a Capital Lease as the term "Capital Lease" is defined within Generally Accepted Accounting Principles pursuant to the pronouncements of the Financial Accounting Standards Board.

"University" means the University of Virginia, including the Medical Center unless otherwise expressly stated.

"University of Virginia Medical Center" or the "Medical Center" means that part of the University of Virginia Health Sciences Center consisting of the University of Virginia Hospital, referenced in the 1996-98 Appropriation Act as Agency 209, and related health care and health maintenance facilities.

III. Scope of Policy

This policy statement applies to operating leases of real property and to capital leases as defined in guidelines established by the Secretary of Finance and as defined in the Generally Accepted Accounting Principles ("GAAP") promulgated by the Financial Accounting Standards Board. This policy statement

applies University-wide; provided, however, for non-Medical Center leases, this policy statement is applicable only during the 2002-04 biennium unless extended or continued by subsequent act of the General Assembly.

IV. Requirements for Leases

A. Factors To Be Considered When Entering Into Leases

The decision to enter into a lease shall be based upon cost, demonstrated need, compliance with the policies, procedures and guidelines established in this policy statement, consideration of all costs of occupancy, and a determination that the use of the space to be leased actually is necessary and is efficiently planned. Leases shall also conform to the space planning procedures, if any, which may be adopted by the President or his designee to ensure that the plan for the space to be leased is consistent with the purpose for which the space is intended.

In addition, capital leases require specific authorization by the Governor or the General Assembly pursuant to the Appropriations Act and approval by the Treasury Board. The authorization and approval must be received prior to procurement of the lease.

B. Competition to Be Sought to Maximum Practicable Degree

Competition shall be sought to the maximum practicable degree when the University seeks to lease real property from another party. The President or his designee is authorized to ensure that leases by the University are procured through competition to the maximum degree practicable and to determine when, under guidelines that may be developed and adopted by the President or his designee, it is impractical to procure leases through competition.

C. Procurement of Leases

Except where competition is deemed impractical pursuant to Sections IV(B) and IV(F) of this policy statement: (i) leases entered into by the University on behalf of the Medical Center shall be procured as provided in the University of Virginia Medical Center Procurement Guidelines, 8 VAC 85-10-10 et. seq., and (ii) leases entered into by the University for non-Medical Center purposes shall be procured in a manner which complies

with the provisions of the Virginia Public Procurement Act, § 11-35 et seq. of the Code of Virginia.

D. Approval of Form of Lease Required

1. The form of leases entered into by the University on behalf of the Medical Center shall be approved by a representative of the Attorney General's office.
2. The form of leases entered into by the University for non-Medical Center leases shall be approved by a representative of the Attorney General's office.

E. Execution of Leases

All operating leases entered into by the University and all leases entered into pursuant to Section IV(F) shall be executed by the person or persons designated by the President or his designee.

F. University as Lessor

When University property is leased by the University to another party, the following guidelines shall apply:

1. Such leases shall be for a purpose consistent with the mission of the University.
2. The President or his designee shall determine, on a case-by-case basis or through the issuance of general guidelines, when such leases shall be procured through competition and when the procurement of such leases through competition is impractical or not warranted; and
3. Both real and personal property of the University may be leased to another party.

G. Compliance with Other Provisions of Law

The enabling legislation requires that all leases entered into by the University on behalf of the Medical Center shall meet all requirements of law except those from which such leases have been exempted. The University is exempt from any rules, regulations and guidelines of the Division of Engineering and Buildings in relation to leases of real property which it enters into on behalf of the Medical Center. The provisions of § 10.1- 1188 of the Code of Virginia governing Environmental Impact Reviews remain applicable to all University leases which otherwise trigger the requirements of that section. In addition, § 11-72 through 11-80 of the Virginia Public Procurement Act (Ethics in Public Contracting), the State and

Local Government Conflict of Interests Act, § 2.2-3100 et seq., and the Virginia Governmental Frauds Act, 18.2-498.1 et. seq. of the Code of Virginia, continue to apply to all leases.

It therefore shall be the policy of the University that leases governed by these guidelines shall be entered into so as to comply with the requirements of the Code of Virginia and the Appropriation Act and other provisions of law applicable to leases, including those enacted in the future, except to the extent the Code of Virginia or the Appropriation Act exempt such leases from such requirements.

H. Certification of Occupancy

All property leased by the University pursuant to these guidelines shall be certified for occupancy by the building official of the appropriate public body.

I. Copies of Leases and Amendments Forwarded to Department of General Services

Upon entering leases, and upon any subsequent amendment of such leases, the University shall provide copies of all lease documents and any attachments thereto to the Department of General Services.

J. Implementation of Board of Visitors Policies, Procedures and Guidelines

The President or his designee is authorized to take such measures as are reasonable and necessary to implement the provisions of these policies, procedures and guidelines and to ensure compliance therewith.