KRS § 56.823 — KY Code / Title VII / Chapter 56 / Section 56.823
56.823 Reports on leases, exercise of options to purchase, completion of lease-purchase agreements, and lease modifications to Capital Projects and Bond Oversight Committee
Status: in_force

56.823 Reports on leases, exercise of options to purchase, completion of lease-

purchase agreements, and lease modifications to Capital Projects and Bond

Oversight Committee.

(1) The Finance and Administration Cabinet shall report information on leases and

lease modifications awarded pursuant to KRS 43.050, 48.111, and 56.800 to 56.823

to the Capital Projects and Bond Oversight Committee as required by this section.

(2) Any lease awarded pursuant to KRS 56.803, including all lease renewals except

automatic renewals permitted under KRS 56.806(1), for which the annual rental

cost will exceed one hundred thousand dollars ($100,000) shall be reported to the

Capital Projects and Bond Oversight Committee after a proposed lease is arrived at

but before execution. The report shall include:

(a) The name of the agency that will occupy the premises;

(b) The name of the lessor;

(c) The terms of the lease;

(d) The reason for the lease;

(e) A copy of the writing required by KRS 56.803(17);

(f) A statement as to whether the Finance and Administration Cabinet complied

with the requirements established in KRS 43.050, 48.111, and 56.800 to

56.823. If the cabinet has not complied with any requirement, the cabinet shall

explain why;

(g) An explanation of why the Finance and Administration Cabinet chose this

lessor over his competition; and

(h) A cost comparison between the cost per square foot of the leased space and

the average cost per square foot of comparable space the state leases in the

same county. If there are factors which make the comparison misleading, the

cabinet shall inform the committee of these factors.

(3) Any lease that incorporates a lease-purchase pursuant to KRS 56.806(5) shall be

reported to the Capital Projects and Bond Oversight Committee after a proposed

lease is arrived at but before execution.

(a) If a lease is awarded pursuant to KRS 56.803, the report shall include the:

1. Fair market value of the property as of the time the lessor and the

Commonwealth entered into the lease;

2. Name and qualifications of each of the two (2) real estate appraisers who

determined the fair market value;

3. Appraisal technique each appraiser employed; and

4. Information required by subsection (2) of this section.

(b) 1. Except as provided in subparagraph 2. of this paragraph, if a lease is

awarded pursuant to KRS 56.805(2), the report shall include the:

a. Fair market value of the property at the time the lessor and the

Commonwealth entered into the lease;

b. Name and qualifications of each of the two (2) real estate

appraisers who determined the fair market value;

c. Appraisal technique each appraiser employed;

d. Information required by paragraphs (a), (b), (c), (d), (f), (g), and

(h) of subsection (2) of this section; and

e. Procedure the department followed to obtain the lease.

2. If the federal government is the lessor, the report shall include the

substance of the lease-purchase.

(4) Any lease awarded pursuant to KRS 56.805(2), including all lease renewals except

automatic renewals permitted under KRS 56.806(1), for which the annual rental

cost will exceed one hundred thousand dollars ($100,000) shall be reported to the

Capital Projects and Bond Oversight Committee after a proposed lease is arrived at

but before execution. The report shall state the information required by paragraphs

(a), (b), (c), (d), (f), (g), and (h) of subsection (2) of this section and the procedure

the department followed to obtain the lease. The report shall also include a copy of

the writing required by KRS 56.805(2).

(5) Any lease awarded as the result of an emergency described at KRS 56.805(3) shall

be reported to the Capital Projects and Bond Oversight Committee within thirty (30)

days after execution. The report shall include a copy of the certificate or the

certificate and the Governor's authorization, as appropriate, kept on file pursuant to

KRS 56.805(4) and shall further state:

(a) The information required by paragraphs (a), (b), (f), (g), and (h) of subsection

(2) of this section;

(b) The terms of lease before and after the emergency; and

(c) The procedure the department followed after the emergency to obtain a lease.

(6) Any built-to-suit lease awarded pursuant to KRS 56.8169 shall be reported to the

Capital Projects and Bond Oversight Committee after a proposed lease is arrived at

but before execution. The report shall state the information required by paragraphs

(a), (b), (c), (d), (f), (g), and (h) of subsection (2) of this section. The report shall

also include:

(a) The written finding and Governor's approval required by KRS 56.8161;

(b) The selection committee's ranking of firms required by KRS 56.8169(15)(a);

(c) The written reason for requesting best-and-final offers, if best-and-final offers

are requested, made pursuant to KRS 56.8169(16)(b);

(d) The selection committee's selection of the best best-and-final offer, if best-

and-final offers are requested, made pursuant to KRS 56.8169(16)(d);

(e) The certificates signed pursuant to KRS 56.8171(2); and

(f) The report prepared by the employee of the Auditor of Public Accounts

pursuant to KRS 56.8171(3).

(7) If the Finance and Administration Cabinet decides to exercise an option to purchase

pursuant to KRS 56.806(4), the cabinet shall report to the Capital Projects and Bond

Oversight Committee after the decision is reached but before the purchase occurs.

The report shall include the:

(a) Fair market value of the property;

(b) Option price;

(c) Name and qualifications of each of the two (2) real estate appraisers who set

the fair market value;

(d) Appraisal technique each appraiser employed; and

(e) Rent paid by the Commonwealth prior to the exercise of the option.

(8) (a) When, pursuant to KRS 56.806(5)(a), the Finance and Administration Cabinet

attempts to complete a lease-purchase through lease payments totally

amortizing the fair market value of the leased property as of the time the

lessor and the Commonwealth entered into the lease, the cabinet shall report

to the Capital Projects and Bond Oversight Committee no more than ninety

(90) days before the final lease payment. The report shall include the:

1. Fair market value of the property at the time the lessor and the

Commonwealth entered into the lease;

2. Name and qualifications of each of the two (2) real estate appraisers who

set the fair market value;

3. Appraisal technique each appraiser employed; and

4. Rent paid by the Commonwealth toward the purchase.

(b) When, pursuant to KRS 56.806(5)(b), the Finance and Administration Cabinet

attempts to complete a lease-purchase, the cabinet shall report to the Capital

Projects and Bond Oversight Committee no more than ninety (90) days before

the final lease payment. The report shall include the terms of the lease

purchase.

(9) When, pursuant to KRS 56.806(5), the Finance and Administration Cabinet decides

to attempt to complete a lease-purchase prior to the total amortization, through lease

payments, of the fair market value of the leased property as of the time the lessor

and the Commonwealth entered into the lease, the cabinet shall report to the Capital

Projects and Bond Oversight Committee after the decision is reached but before the

purchase occurs. The report shall state the information required by paragraph (a) or

(b) of subsection (8) of this section as appropriate. The report shall also include the

sum of money that must be paid in addition to rent paid, in order to complete the

purchase.

(10) If the Finance and Administration Cabinet, pursuant to KRS 56.806(5), includes in

a lease the lease-purchase of the leased property and thereafter becomes aware that a

purchase will not be achieved, within thirty (30) days after the cabinet becomes

aware, it shall notify the Capital Projects and Bond Oversight Committee of the

circumstances preventing the purchase.

(11) (a) Except in the case of an emergency as provided in paragraph (b) of this

subsection, any modification to an existing lease, made pursuant to KRS

56.813, that is less than fifty thousand dollars ($50,000) shall be reported to

the Capital Projects and Bond Oversight Committee within thirty (30) days

after execution, and any modification to an existing lease, made pursuant to

KRS 56.813, that is fifty thousand dollars ($50,000) or more shall be reported

to the Capital Projects and Bond Oversight Committee before execution. In

either case, the report shall consist of:

1. The terms of the lease before and after modification;

2. The reason for the modification;

3. The name of the lessor;

4. Any comments received from the public pursuant to KRS 56.813(4); and

5. A statement as to whether the Finance and Administration Cabinet

complied with the requirements in KRS 56.813. If the cabinet has not

complied with any requirement, the cabinet shall explain why.

(b) Any modification to an existing lease which is required because of an

emergency as described at KRS 56.805(3) shall be reported to the Capital

Projects and Bond Oversight Committee within thirty (30) days after

execution. The report shall include a copy of the certificate or the certificate

and the Governor's authorization, as appropriate, kept on file pursuant to KRS

56.805(4) and shall further state:

1. The terms of the lease before and after modification;

2. The name of the lessor;

3. Any comments received from the public pursuant to KRS 56.813(4); and

4. A statement that the Finance and Administration Cabinet complied with

the requirements in KRS 56.805(3) and (4) and in KRS 56.813. If the

cabinet has not complied with any requirement, the cabinet shall explain

why.

(12) Before beginning work on any improvements, renovations, or refitting of a leased

building under the provisions of KRS 56.813(2)(d), the cabinet shall report to the

Capital Projects and Bond Oversight Committee:

(a) A description of the project;

(b) Identification of the agency or agencies for which the improvements,

renovations, or refitting are being performed;

(c) An estimate of the total cost of the project;

(d) The source of funds for the project; and

(e) All the information required by KRS 45.793.