Ill. Admin. Code tit. 44 § 2000.4075

Current through Register Vol. 48, No. 49, December 6, 2024

Section 2000.4075 - Improvements to Real Property

a) The Secretary of State will 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 SOS use. When necessary, these improvements are an integral part of the lease.

b) Improvements to leasehold property may result in the enrichment of the building owner. Unjust enrichment shall be avoided and controlled using the following:

1) Temporary Improvements

A) Temporary improvements are defined as goods and services provided to meet the specific physical needs of the department occupying leased space. Temporary improvements are those that primarily benefit the tenant although there may be coincidental benefits to the lessor after the term of the lease. The 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 needs for electronic or scientific equipment or other such reasons.

B) Temporary improvements may be contracted for as a provision in a lease, as a lease amendment, or as a separate contract. The temporary improvement is integrally related to SOS leasing authority and must be approved by the CPO.

C) The CPO 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 duration of the lease or some lesser period. The CPO may suggest or require alternatives to the temporary improvements requested by the department.

D) 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 the costs of temporary improvements.

2) Permanent Improvements

A) Permanent improvements are those that would clearly benefit the lessor beyond the term of the lease. 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.). Value of permanent improvements will generally not be fully depreciated under normal depreciation tables. Examples include structural work, providing basic heating and air conditioning units, utility service, restrooms, elevators, paving, and insulation.

B) Permanent improvements may only be contracted for in the initial lease or as an amendment to the lease.

C) The CPO will review all requests for permanent improvements and determine whether they are necessary, whether temporary improvement could suffice, or whether another location would prove to be more cost-effective.

D) 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.

E) If circumstances require full payment during the term, the lease will provide for:

i) renewals at the State's option in initial lease term increments until improvement is fully amortized; and

ii) an option to remove any permanent improvement that it paid for, leaving the building in the condition it was in at the start of the lease; or

iii) a rebate of the unamortized value of the permanent improvements.

F) A purchase option at fair market value less value of permanent improvements may substitute for subsections (d)(4) and (d)(5) in extraordinary circumstances.

Ill. Admin. Code tit. 44, § 2000.4075

Added at 47 Ill. Reg. 10622, effective 7/3/2023