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Department of the Treasury
LEASING OUT OF STATE REAL PROPERTY

NO: 95-21

ORIGINATING AGENCY: GSA/OMB

EFFECTIVE DATE: 7/96

EXPIRATION DATE: IND*

SUPERSEDES: 91-06-GSA

SUBJECT: LEASING OUT OF STATE REAL PROPERTY

ATTENTION: ALL DEPARTMENTS AND AGENCIES

FOR FURTHER INFORMATION CONTACT: Anthony R. Mazzella
Division of Property Management
984-0976

Policy and Pertinent Changes

The leasing out of all State surplus real property
(other than the Department of Transportation right-of-way
properties, properties titled to State colleges and
universities or properties leased on a seasonal basis), will
be coordinated by the Division of Property Management (the
Division), General Services Administration (GSA), Department
of the Treasury.

Leasing Procedure

A department or agency having jurisdiction over State
surplus real property, which is proposed to be leased, will
complete and forward Form RPR-1 to the Division providing all
pertinent facts about the property. A cover letter must
accompany the RPR-1 form signed by the department or agency
head or deputy. The Division will circulate the notice via
the State Real Property Review system through all department
land review officers to ascertain whether any department or
agency is interested in the property. Departments and
agencies will be afforded thirty (30) days in which to
express any such interest.

If issues, problems or potential conflicts surface
during the thirty (30) day notice served to other departments
and agencies, the Division will conduct meetings of
interested parties to resolve such matters.

The terms and conditions of all real property leases
must be approved in accordance with NJSA 52:31-1.1 et seq.
and the Appropriation Act. The Division staff will assist in
clarifying any questions raised.

The Division may develop fair market rental value to be
charged for the property by arranging for a full narrative
appraisal by a NJ State Licensed Real Estate Appraiser. The
appraisal will be reviewed internally by Division staff. If
appropriate, the Division will prepare an in-house valuation.
The Division will decide on the type of appraisal to
establish value and, with respect to such decision,
shall take into account the size of the property in
question, the existence of prior appraisals and timing
considerations, if any, relating to the leasing of the
property.

The Division may arrange for a licensed land surveyor to
prepare a legal metes and bounds description and site survey
to fully describe the property to be leased. Alternatively,
the Division may generate this information in-house utilizing
its computer assisted design (CAD) equipment. The cost of
any survey work will be borne by the lessee as "closing"
costs.

The Lessee shall secure and maintain a comprehensive
general liability insurance policy in the amount of
$1,000,000, naming the State as co-insured. Evidence of such
insurance shall be provided to the State prior to execution
of the lease and on the anniversary date each year thereafter
during the term of the lease.

The lease agreement will be prepared by the Division in
consultation with the Office of the Attorney General, and
will contain the terms and conditions approved by the
Treasurer and Budget Director or State House Commission. The
agreements will be executed by the Lessee and for the State
by the State Treasurer, GSA Administrator and the department
or agency head having jurisdiction over the property.

The Division will maintain an inventory of State leases
to the private sector. This inventory will contain
information on expiration dates, schedule of rental payments,
amount of insurance, etc.

The Division will notify the Bureau of Risk Management
that the property has been leased out and will provide that
office with details regarding insurance coverage.

The proceeds from the leasing out of State real property
shall be payable to the Treasurer, State of New Jersey.
Proceeds shall be utilized as provided in the Appropriations
Act, i.e., for the maintenance of leased property, subject to
the approval of the Budget Director, provided that a sum not
to exceed $100,000 be available for the administrative
expenses of the program.

This Circular Letter is effective on the date hereof.

_____________________________
George M. Gross, Jr., Administrator

_____________________________
Elizabeth L. Pugh, Director
General Services Administration
Office of Management and Budget

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