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.  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.

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 Section D(4) and D(5) in extraordinary circumstances.

e)         Economy in the procurement of improvements shall be practiced.  One of the following methods of controlling costs shall be used:

1)         Lessor shall obtain no less than three bids for each trade necessary to furnish work on the project or from no less than three general contractors.  Lessor shall utilize the services of the lowest priced unless there is justification for refusing such bid.

2)         If Lessor requires use of in-house crew those services may be utilized if prices do not exceed the higher of price allowances, Capital Development Board, Department of Central Management Services estimates or GSA guidelines, if applicable.

3)         If Lessor insists on selecting a construction crew without seeking proposals, DCMS will attempt to locate other space.  If other space is not available negotiations may continue but prices charged for construction may not exceed the higher of CDB or DCMS estimates or GSA guidelines, if applicable.

4)         For temporary improvements only, the lessee shall, with lessor's and DCMS' permission, contract for these improvements in accordance with Illinois laws and rules.  All temporary improvements paid for by lessee become the property of lessee and may be removed by lessee at the end of the lease.

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.