Section 5000.380 Improvements

Section 5000

Section 5000.380  Improvements

a)         It is the policy of DCMS to rent private space that requires

minimal improvements to meet State needs. Temporary and permanent improvements

may, however, be necessary to make the property appropriate for State use. When

necessary, these improvements are an integral part of the lease.

b)         It is also recognized that improvements to leasehold property

could result in enrichment of the building owner. Unjust enrichment shall be

avoided and will be controlled using the following guidelines.

c)         Temporary Improvements

1)         These are defined as goods and services provided to meet the

specific physical needs of the agency occupying leased space. Temporary

improvements are those which primarily benefit the tenant although there may be

coincidental benefits to the lessor after the term of the lease. Value of

temporary improvements will generally be fully depreciated by the end of the

lease. Examples of temporary improvements include, painting, carpeting,

interior non-load bearing office partitions and provision of wiring, lighting,

heating and cooling beyond minimal building standards to satisfy agency needs

for electronic or scientific equipment or other such reasons.

2)         Temporary improvements may be contracted for as a provision in

a lease, as a lease amendment or as a separate contract. In any event the

temporary improvement is integrally related to DCMS leasing authority and must

be approved by DCMS.

3)         DCMS will approve temporary improvements only upon a showing

that the requested services and incidental goods are necessary for the

operation of the agency and are of a quality designed to last for the lease or

some lessor period. DCMS may suggest or require alternatives to the temporary

improvements requested by the agency.

4)         Payment for temporary improvements may be made as an addition

to base rent made in monthly installments over the term of the lease

quested services and incidental goods are necessary for the

operation of the agency and are of a quality designed to last for the lease or

some lessor period. DCMS may suggest or require alternatives to the temporary

improvements requested by the agency.

4)         Payment for temporary improvements may be made as an addition

to base rent made in monthly installments over the term of the lease. If more

beneficial, a single additional payment may be made to cover costs of temporary

improvements.

d)         Permanent Improvements

1)         These are defined as goods or services provided to meet basic

occupancy requirements of habitability, building and health code compliance,

and fitness for the general purpose intended, i.e. for office as opposed to

warehouse space, etc. Permanent improvements are those which would clearly

benefit the lessor beyond the term of the lease. Value of permanent

improvements will generally not be fully depreciated under normal depreciation

tables. Examples of permanent improvements include structural work; provision

of basic heating and air conditioning units; utility service; restrooms and

elevators; paving and insulation.

2)         Permanent improvements may only be contracted for in the

initial lease or as an amendment to the lease.

3)         DCMS will review all requests for permanent improvements and

determine whether they are necessary, whether a temporary improvement could

suffice or whether another location would prove more cost effective.

4)         All permanent improvement items will be assigned a normal life

for depreciation purposes and the cost of such improvements will be noted. The

State will not pay more than its proportionate share of the permanent

improvement cost as shown by the lease term divided by the normal life times

the actual cost

ment could

suffice or whether another location would prove more cost effective.

4)         All permanent improvement items will be assigned a normal life

for depreciation purposes and the cost of such improvements will be noted. The

State will not pay more than its proportionate share of the permanent

improvement cost as shown by the lease term divided by the normal life times

the actual cost.

5)         If circumstances require full payment during the term, the

lease will provide for:

A)        renewals at the State's option in initial lease term increments

until improvement is fully amortized, and

B)        option to remove any permanent improvement which it paid for,

leaving the building in the condition it was in at the start of the lease, or

C)        a rebate of the unamortized value of the permanent

improvements.

6)         A purchase option at fair market value less value of permanent

improvements may substitute for subsections(d)(4) and (5) in extraordinary

circumstances.

e)         Economy in the procurement of improvements shall be practiced.

If the cost of improvements to be paid by the State exceeds $50,000, the

Department of Central Management Services shall provide a fair and reasonable cost

analysis.

f)         Any improvements should be consistent with DCMS published

standards. Modifications or deviations must be approved by DCMS and made a part

of the lease file.