DEPARTMENT OF TECHNOLOGY, MANAGEMENT AND BUDGET  
REAL ESTATE DIVISION  
REAL ESTATE SERVICES  
(By authority conferred on the department of technology, management and budget by  
sections 4 and 13 of 1948 PA 51, section 31 of 1969 PA 306, sections 131 and 221 of  
1984 PA 431 and Executive Reorganization Order 2009-39, MCL18.4, 18.13, 24.231,  
18.1131 and 18.1221 18.441)  
R 18.501 Definitions.  
Rule 1. As used in these rules:  
(a) "Agreement" means a contract transferring the right, acquired for a consideration,  
to possession or use of real property on a month-to-month basis for a period not to exceed  
1 year.  
(b) "Appraisal" means an estimate or opinion as of a given date of the fair market  
value of real property.  
(c) "Bidder" means an individual or other legal entity that submits a sealed bid or bid  
proposal.  
(d) "Bidder list" means a general or geographic list maintained by the department's  
real estate office which sets forth the names and addresses of potential owner/lessors who  
have requested that they be provided solicitations for sealed bids or bid proposals. The  
bidder list is subject to ongoing additions and deletions in response to written requests  
from owner/lessors and is also formally updated by solicited responses on an annual  
basis.  
(e) "Bid proposal" means an offer submitted in response to the state's solicitation for  
available space (including major remodeling or new construction, or both, when  
acceptable multiple locations are available) which meets or exceeds minimum  
specifications, requirements, and instructions outlined in a solicitation notice, with all  
exceptions or substitutions noted.  
(f) "Department" means the department of technology, management and budget.  
(g) "Director" means the director of the department or his or her authorized  
representative.  
(h) "Fair market value" means the highest estimated price which real property will  
bring if offered for sale on the open market, allowing a reasonable time to find a  
purchaser who would buy with knowledge of the property's possible uses.  
(i) "Financial analysis" means an analysis of the cost or value of the land, the  
improvements, and construction; amortization; interest; taxes; insurance; and any other  
pertinent factors included in a proposed rental rate which can be verified and compared to  
the open market competition.  
(j) "Lease" means a contract transferring the right, acquired for a consideration, to  
possession or use of real property for a definite period of time.  
(k) "Lessee" means a tenant or one who rents real property.  
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(l) "Lessor" means the owner of real property or one who lets the property.  
(m) "Market rental analysis" means the conclusion reached through the comparison  
of rental rates on similar properties taking into account established market costs for  
differences in services provided.  
(n) "Option" means the right, acquired for a consideration, to buy certain property for  
a fixed price within a specified time.  
(o) "Real estate manager" means the manager of the state's central real estate office  
as designated by the director.  
(p) "Real property" means the interests, benefits, and rights inherent in the ownership  
of the physical real estate, including the land, everything attached to it, and everything  
under or over it.  
(q) "Rental" means a consideration paid by a lessee for the possession or use of real  
property.  
(r) "Sealed bid" means a bid quotation in response to a solicitation where comparable  
facilities are established by complete plans and specifications which may include a  
designated site.  
History: 1983 AACS; 2012 AACS.  
R 18.502 Leasing of facility space; legal lessee; attorney general and board  
approval of lease required; competitive award process required specifications;  
objectives; justification of rent and rate increases required; options.  
Rule 2. (1) Pursuant to sections 4 and 13 of Act No. 51 of the Public Acts of the  
First Extra Session of 1948, as amended, being SS18.4 and  
18.13 of the Michigan Compiled Laws, facility space for the various  
departments shall be leased in a manner which provides an equal opportunity for  
all individuals to participate in the procurement process insofar as there is no  
state  
abrogation of the director's authority to award contracts which he or she deems to be  
in the best interest of the state.  
(2) The state of Michigan is the legal lessee of all property occupied and rented  
by a state department or agency. An individual state department or agency shall not lease  
property in the name of the department or agency unless specifically authorized by  
statute.  
(3) All lease contracts are subject to the approval of the attorney general as to  
legal form.  
(4) All lease contracts are subject to the approval of the state administrative  
board prior to execution by the director.  
(5) Unless otherwise waived by the director, the awarding of lease contracts  
shall be determined through a competitive bid proposal or sealed bid process. If waived,  
lease terms shall be subject to a complete market analysis or financial analysis, or  
both, to substantiate the rental amount.  
(6) Specifications shall be written to encourage overall economy and efficiency  
through maximum competition in providing facilities, building space, equipment,  
services, and supplies to satisfy the state's needs.Specifications shall not be unduly  
restrictive.  
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(7) Sites or locations for leased space shall be evaluated consistent with the  
following criteria:  
(a) Consolidating a state department, agency, or departments into 1 building if  
practical.  
(b) Providing maximum occupancy of state-owned and leased facilities.  
(c) Centralizing a department, agency, or departments into downtown areas if  
practical.  
(d) Complying with policies and directives from the governor or director which  
are in the best interest of the state.  
(e) Entering into lease contracts with local governments if possible to take  
advantage of their tax-exempt status and to encourage joint location of government  
services.  
(f) Protecting the health, safety, and welfare of the public and employees.  
(8) Lease contracts renewed through negotiation shall justify any increases in  
rental rates through comparative data. If a renewal includes renovations or additional  
construction, costs shall be substantiated and rental rates justified through market  
analysis or financial analysis, or both.  
(9) The director may option a specific site or sites which meet a department's  
or agency's program needs, subject to the following criteria:  
(a) The fair market value of the site or sites shall be determined by appraisal.  
(b) Any deposit money required by an option shall be paid by the user  
department or agency.  
(c) Purchase options for the acquisition of property for state use which specify a  
deposit in an amount greater than 1 dollar shall contain a clause that the owner  
shall return the deposit money to the user department or agency if the option is not  
exercised. The requirement for this clause in a purchase option may be waived by the  
director for good cause when deemed in the best interest of the state.  
(d) The state has the right to assign an option to the successful bidder.  
History: 1983 AACS.  
R 18.503 Special provisions.  
Rule 3. Unless otherwise authorized by the director, for good cause when deemed in  
the best interest of the state, except as required by law, every lease contract entered into  
by the state shall have all of the following special provisions:  
(a) The lessor, pursuant to the requirements of Act No. 453 of the Public Acts  
of 1976, as amended, being S37.2101 et seq. of the Michigan Compiled Laws, shall  
agree not to discriminate against any employee or applicant for employment, to be  
employed in the performance of the  
contract, with respect to his or her hire, tenure, terms, conditions, or privileges of  
employment, or any matter directly or indirectly related to employment, because of his  
or her race, color, religion, national origin, ancestry, sex, height, weight, marital status,  
or age, except where a requirement as to age is based on a bona fide occupational  
qualification.Further, the lessor shall agree that every subcontract entered into for the  
performance of the contract shall contain a provision requiring nondiscrimination  
in employment, as herein specified, binding as a material breach of contract.  
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(b) The lessor shall, at the lessor's expense, during the term of the lease or any  
extension thereof, insure the premises with public liability insurance, the terms of such  
requirement to be set forth in the lease.  
(c) The lessor shall warrant that the premises will comply with the barrier-free  
design requirements made applicable by Act No. 1 of the Public Acts of l966, as  
amended, being S125.1351 et seq. of the Michigan Compiled Laws, unless an  
exception or exemption is granted by the Michigan barrier free design board.  
(d) The lessor shall provide to the state, before possession, a  
written fire  
inspection report approving the premises for occupancy. Fire inspection reports  
shall be updated as determined by the director.  
History: 1983 AACS.  
R 18.504 Contracts.  
Rule 4. (1) Any type of contract which is in the best interest of the  
state may be used.  
(2) A short-term lease contract agreement (1 to 4 years) may be used when a  
building requires little or no remodeling in order to allow the department or agency  
maximum flexibility and mobility in accordance with siting policy objectives.  
(3) A long-term lease contract (5 to 10 years) may be used in the following  
situations:  
(a) A building is to be extensively remodeled or rehabilitated by the lessor to  
meet state requirements.  
(b) A building is to be constructed for a specific use by a state department or  
agency.  
(c) The building and location best serves the interest of the state.  
(4) A month-to-month agreement may be authorized by the real estate manager  
when space is needed for temporary, emergency, or interim quarters, for a period  
not to exceed 12 months, for any of the following purposes:  
(a) Seasonal programs.  
(b) Additional space to relieve congestion caused by temporary increases in  
workload.  
(c) Immediate occupancy when unusual delays occur in the lease process.  
(d) When there is a threat to public health, safety, or welfare under emergency  
conditions.  
(e) For good cause when deemed in the best interest of the state.  
History: 1983 AACS.  
R 18.505 Leasing information; public access.  
Rule 5. Leasing information shall be a matter of public record to the extent  
provided in Act No. 442 of the Public Acts of 1976, as amended, being S15.231 et  
seq. of the Michigan Compiled Laws, and shall be available to the public pursuant to  
this act.  
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History: 1983 AACS.  
R 18.506 Rescinded.  
History: 1983 AACS; 2012 AACS.  
R 18.507 Bid solicitation.  
Rule 7. Unless otherwise authorized by the director, for good cause when deemed in  
the best interest of the state, the following provisions apply:  
(a) Sealed bids or bid proposals shall be solicited from all parties who express an  
interest in bidding in response to the public notice or in response to notification sent  
to those on the bidder list.  
(b) All sealed bids and bid proposals are subject to the specifications,  
requirements, and instructions outlined in each specific bid solicitation.  
History: 1983 AACS.  
R 18.508 Bids; right of refusal.  
Rule 8. The state reserves the right to reject any or all bids or to waive defects in  
bids for good cause when deemed in the best interest of the state.  
History: 1983 AACS.  
R 18.509 Solicitation or award of contract; public right of protest.  
Rule 9. (1) A person who is aggrieved in connection with the solicitation or  
award of contract action taken by the real estate manager may protest to the director.  
(2) A person who is aggrieved in connection with a solicitation or award of contract  
authorized by the director may protest to the building committee of the state  
administrative board.  
(3) A person who is aggrieved in connection with a solicitation or award of contract  
recommended by the building committee of the state administrative board may  
protest to the state administrative board.  
History: 1983 AACS.  
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