1. DIVISION OF REAL ESTATE PLANNING
Introductions First
This presentation represents a collaborative effort involving OGS and OSC. (Trich)
OGS and OSC have a role in the leasing process. Starts with OGS and ends with OSC. (thumbnail sketch of the lease procurement process.) (Trich)
As presenters, the objectives of this session are to provide each of you with the knowledge necessary to effectively prepare the documents needed to process lease transactions.(Tim)
BUREAU OF CONTRACTS

2. Section 3 of the Public Buildings Law states:
The commissioner of general services
is authorized to: Lease from time to time
buildings, rooms or premises in the county
of Albany, and elsewhere as required, for providing space for the departments, commissions, boards and officers of the
state government, upon such terms and
conditions as he or she deems most advantageous to the state.
In accordance with this law, OGS is the leasing agent for the majority of NYS agencies.
Tim’s slide.
*This is an excerpt from the legislation which authorizes OGS to be able to lease space for State Agencies.
*All leases are between the landlord and OGS, not the landlord and the agency!
*The law was designed to prevent agencies from competing against each other for the same space and to ensure the best price..
*Unlike other commodities, leases are negotiated versus bid because no two properties are identical.
*Provide an overview of how OGS looks for suitable lease site locations

3. The only agencies authorized to do their own leases are:
EXCEPTIONS
The only agencies authorized to do their own leases are:
The State University of New York
The City University of New York
The New York State Police
Dormitory Authority for OMH and OMRDD non-office requirements
(Trich)

4. Section 112 of the New York State Finance Law states:
Before any contract made for or by any state
agency, department, board, officer, commission,
or institution, shall be executed or become
effective whenever such contract exceeds fifteen thousand dollars, it shall first be approved by
the comptroller and filed in his or her office . . .
In accordance with the law, the Bureau of Contracts reviews all lease agreements entered into by NYS entities.
Trich’s slide.

5. TYPES OF NEW LEASES
Turn Key Lease All of the renovation costs are included in the rental rate.
Allowance - Credit for some tenant work to be completed at some future date incorporated into the terms of the lease.
Dollar Allowance
Quantity Allowance
Tenant Work Letter – Will detail the renovations the landlord is required to do under the terms of the lease.
Tim’s slide.
In a turnkey lease Tenant gets the key and walks into a brand new office – nothing else to pay for
In an allowance lease, you may have to pay extra for some of the renovations, depending whether or not you go over the “Allowance”.
A Dollar allowance gives you X dollars to spend towards renovations. If you exceed that, you pay the difference.
A Quantity allowance gives you X linear ft of partitions or X number of electrical outlets, etc. If your final plan exceeds the allowance, you pay the difference.
A Tenant Work letter will be included in the lease document. It will spell out in detail exactly what the landlord is expected to do to get the space ready for occupancy.

6. AC-340 PREPARATION (By Agency)
Trich’s slide.
OSC requires certain information to appear on the AC340 in order to process the transaction.
Reminder: remember to discuss encumbrance requirements.
May insert numbers for example.

7. (Information provided by OGS to Agency)
NEW LEASE
AC-340 CALCULATION
(Information provided by OGS to Agency)
Base payment for initial term of lease
If payments such as taxes or utilities are paid directly to the landlord, an estimate of the amount to be paid over the term of the lease will be included in the contract amount.
If payments such as janitorial services or utilities are paid directly to the provider of these services and not the landlord, the costs will be included in the OGS analysis, but do not need to be included in the AC340 amount.
Trich’s slide.
This information is important as it provides the agency with the ability to budget for their contracts. It also promotes contract processing efficiency for the Bureau of Contracts.
Provides decision-makers with accurate numbers to forecast the budget and to pay bills and meet obligations.

8. OGS TO AGENCY LETTER Tim’s slide.
This is an excerpt from the transmittal letter OGS will send to the agency when they ask them to sign the lease.
This analysis provides two functions: Total cost of the lease to you, the agency, and how much will be paid to this landlord.
OGS and OSC looks at the total cost for staying at the location and how much money actually goes to the landlord under the agreement.
The is the same analysis that will be eventually provided to OSC along with the lease package.
Important that this is the same dollar amounts that are included in the AC-340

9. OGS TO AGENCY LETTER
We are enclosing for your review and approval three (3) copies of the above document, the Abstract of Economic Clauses which provides an analysis of payments to be made under this Lease agreement, and Fiscal Form RPPU-555.
Please execute the Certificate of Approval on Page ___ on all three 3 copies and return all to this office for further processing. We are also requesting the AC-340 and Batch Transmittal for this transaction. Please ensure that the Landlord's Payee ID No. _________________ appears on the AC-340 as well as the above listed Lease number when submitting same. Also please use the following dollar amounts when generating said AC340: The AC340 contract amount should be $2,598, (Total estimated costs which are to be paid directly to the Landlord). If you disagree with this calculation please contact us to discuss.
(Trich)

10. LEASE CONTINUATIONS New Replacement Lease Fixed Rate Renewal Option
Renewal Option With Negotiated Rate
Temporary Extensions
Holdover Letter
Lease Modification
Tim’s Slide.
There are various ways for OGS to arrange for your agency to remain at your location for after you current lease expires.
This is a list of the various ways that can be used. (Read the list)
The lease continuation method chosen for your situation will depend upon the terms of your existing lease, your budget conditions and your agency’s plans.

11. NEW REPLACEMENT LEASE AC340 CALCULATION
Agency submits completed AC340 and signed leases to OGS
OGS will provide this information to the agency:
Base payment for replacement term of lease
If payments such as taxes or utilities are paid directly to the landlord, an estimate of the amount to be paid over the term of the lease will be included in the contract amount.
If payments such as janitorial services or utilities are paid directly to the provider of these services and not the landlord, the costs will be included in the OGS analysis, but do not need to be included in the AC340 amount.
Tim’s slide.
A replacement lease can be for the same location you are currently in or for a new location. If it is for the same location, the rental rate could be different and the dates will be different. In either case it is treated as a brand new contract. The information is entirely new.
(Then Read Slide about how to submit the AC-340)

12. FIXED RATE RENEWAL OPTION (Submitted directly by agency to OSC)
AC340 for total cost of renewal term
A copy of the lease renewal letter (provided by OGS)
A cover letter explaining the transaction
Trich’s slide.
Since the terms of the renewal were already negotiated and approved as part of the original contract, the only document required by OSC is a letter from OGS exercising the renewal option.

13. RENEWAL OPTION WITH NEGOTIATED RATE
OGS will provide this information to the agency:
Base payment for initial term of lease
If payments such as taxes or utilities are paid directly to the landlord, an estimate of the amount to be paid over the term of the lease will be included in the contract amount.
If payments such as janitorial services or utilities are paid directly to the provider of these services and not the landlord, the costs will be included in the OGS analysis, but do not need to be included in the AC340 amount.
Tim’s slide.
This situation occurs when your current lease has a renewal option in it, but the rental rate is not set. OGS has to negotiate a new rental rate with the landlord before the lease continuation can be process. It is a hybrid of the last two options in that the previous lease was already approved by OSC, but the rental rate for the renewal term was not. Therefore, after OGS negotiates the new rental rate it is submitted it to OSC for approval.
If OGS is not able to come to terms on a rental rate, we may consider relocating the agency to another site or utilize another method of lease continuation.
READ the slide to explain how to submit the AC-340

14. TEMPORARY EXTENSIONS Tim’s slide.
OGS will provide this information to the agency:
Base payment for period of lease extension
If payments such as taxes or utilities are paid directly to the landlord, an estimate of the amount to be paid over the term of the lease will be included in the contract amount.
If payments such as janitorial services or utilities are paid directly to the provider of these services and not the landlord, the costs will be included in the OGS analysis, but do not need to be included in the AC340 amount.
Tim’s slide.
Sometimes leases don’t have renewal options or an agency’s plans aren’t fully developed. OGS is then able to negotiate a temporary lease extension for your agency to remain at this location for a short period of time.
READ THE SLIDE to explain how to submit the AC-340
If the lease extension is only for three months, then three months of money must be encumbered.
Again, if this lease extension crosses another fiscal year, you can only encumber for the current fiscal year.

15. HOLDOVER LETTER
Agency submits AC340 directly to OSC with copy of holdover letter signed by OGS, along with a cover letter explaining the transaction
The amount of the AC340 reflects a fully encumbered lease payment amount of at least six months
Tim and Trich’s slide.
Tim: -A holdover occurs when your current lease expires and no other formal lease continuation is in place. Most leases have a provision that allows the agency to remain in the leased space (“hold over”) beyond the lease expiration date even though a new agreement is not in place. A “hold over” places the agency as a month-to-month tenant but does allow OSC to pay the landlord for occupancy.
Trich: - During this period the agency submits an AC340 for the time period covered by the holdover. OSC asks that the agency encumber at least six months rent at a time unless the agency is positive that it will be staying at the space for a shorter period of time.

16. LEASE MODIFICATION
Lease modifications are handled on a case-by-case basis, depending on the nature of the modification.
Regardless of the modification, an agency submits an AC340 to OGS, along with the signed lease modification agreement.
Tim’s slide.
A lease modification agreement is actually a lease amendment to your current lease.
A lease modification may be used to extend the term of the lease, add additional services to a lease, or change the amount of square footage. The type of change determines how the AC340 will be prepared.

17. LEASE PACKAGE REQUIREMENTS (Provided by OGS to OSC)
Cover Letter
Agency Prepared AC340 with Proper Encumbrance
Justification of Need
Justification for Site Selection
Justification for Cost
DOB Approval if Applicable
Trich’s slide.
This is a list of the items which OGS needs to submit with the proposed lease when it is sent to OSC for approval
DOB approval is required for leases $250,000 per year or lease modification agreements increasing the rent more than10%.

18. What To Do If…..
There is a reallocation of space from one agency to another
There is no budget in place or start date is in a different fiscal year
There is a change in the landlord’s name
Trich’s slide.
Describe the three types of exceptions.

19. REALLOCATION OF SPACE ONE AGENCY TO ANOTHER
OGS will notify landlord of space reallocation with copies to OSC and agencies
Affected agencies submit AC340 encumbering funds through FY end directly to OSC with OGS letter and cover letter explaining transaction.
AC340 must indicate revised sq ft, dollars and term.
Tim’s slide.
Under an OGS lease, the Commissioner of General Services has the authority to reallocate space to any state agency. This allows OGS to maximize the use of the space without having to write a new lease agreement. If a certain agency has more space than it needs and another agency needs space, OGS can reallocate space under a certain lease without the landlord’s approval and without any new lease agreement.
THEN READ SLIDE

20. LANDLORD/PAYEE NAME CHANGE
Former landlord must notify OGS of name or ownership change
OGS will notify OSC in writing with a copy to the agency
Agency submits AC340 ($0) directly to OSC with letter signed by OGS, along with a cover letter explaining the transaction.
Tim’s slide.
Very often buildings are sold or landlords change their name during the middle of the lease.
If this happens….READ SLIDE
Since this is an OGS lease, OGS is required to obtain the information. If the information has changed, it must be updated to ensure landlord payment.
The landlord owns the building and the payee is who gets the checks.
NOTE: if an agency is directly notified of a change, please contact OGS.

21. PURCHASE ORDERS
Payments above the base lease contract amount must be submitted on a purchase order. (i.e. renovations)
Purchase Orders must indicate the OSC lease number
Agency must include cost justification. (OGS approval letter or bidding documents.)
Tim and Trich’s slide.
Trich – Only OGS can authorize the approval of renovation costs. Lease number and tax id number must be included on the face of the purchase order. Attach cost estimate from landlord and OGS approval letter.
Tim – will discuss the renovation approval process.

22. ADDITIONAL OGS SERVICES
Review and audit landlord escalation claims
Review and audit landlord’s electric billings
Pre-approval of proposed renovation costs and post audit of major construction projects
Assist agencies in resolving landlord non-compliance issues
Lease interpretation and legal opinions
Contact OGS at: (518)
Tim’s slide.

23. ADDITIONAL OSC SERVICES
Call OSC for AC340 preparation assistance
Call OSC for guidance on addressing a “no budget in place” situation
Contact OSC at (518)
Trich’s slide.

24. QUESTIONS/DISCUSSION