(Approved by the Board of Regents on February 9, 2001)

A.   General

     1.   These Procedures are intended to implement portions of USM
          Policy VIII-4.00 Policy on Acquisition, Disposition, and Leasing
          of Real Property ("the Policy") and shall be interpreted
          consistent with the provisions of that Policy including the
          definitions therein.  In case of any inconsistency, the Policy
          shall govern.

     2.   These Procedures shall govern the negotiation and
          execution of Leases.

     3.   Leases not requiring Board approval may be approved and
          signed by the president of the Institution involved or
          a president's designee.
     4.   Every Lease requiring approval by the Board shall be
          approved for form and legal sufficiency by the Office
          of the Attorney General (OAG) prior to execution.  All
          other Leases shall be reviewed and approved for form
          and legal sufficiency prior to execution in accordance
          with such procedures as the OAG shall establish.

B.   Proposal

          When an Institution or the Office seeks to enter into a
     Lease that requires approval by the Board, its president or
     the VCAF shall submit to the Chancellor for review a
     proposal that includes the following:
     1.   Description (including improvements) and location of
          the property;

     2.   Location map;

     3.   Anticipated cost (where Institution is lessee) based on
          comparable leased properties or other available
          information, including utility, build-out, furnishing,
          and other additional rent charges or costs;

     4.   Anticipated revenue (where Institution is lessor) based
          on comparable leased properties and other available

     5.   Amount, nature, and source of consideration for the
          leased premises;

     6.   If external financing or other form of borrowing is to be
          used, the expected terms and source for paying the debt service;

     7.   Purpose of the Lease.

     Review shall include as appropriate VCAF, OAG, and officials
     of the Institution that submitted the proposal.
C.   Approvals

          If the Chancellor approves a submitted proposal under
     Section B above, it shall be submitted it to the Finance
     Committee of the Board ("Committee") for its consideration.
     If the Committee's action is favorable, it shall recommend
     approval by the Board.  Leases shall be considered by the
     Committee and the Board in executive session unless
     otherwise decided by the Board.  If the Board approves a
     Lease, it may delegate to the Chancellor authority to
     negotiate and execute all required documents.  However, if
     during negotiation, the terms of the Lease change materially
     to the detriment of the System or Institution from those
     approved by the Board, the Chancellor shall return the
     matter to the Committee and the Board for further

D.   Due Diligence

          Appropriate due diligence shall be undertaken with
     respect to the leasing of real property and shall be
     conducted by the institution involved, or, if Board approval
     of the Lease is required, collaboratively by staff of the
     System, the OAG, and the proposing institution.  Where Board
     approval is required, all elements of due diligence need not
     be completed before submission of the proposal to the
     Chancellor, the Committee, or the Board.  At the discretion
     of the VCAF, and with the agreement of the Board, completion
     of due diligence may follow Board approval, but shall occur
     before closing of the transaction.  The due diligence
     practices to be applied shall be consistent with those
     established by the Chancellor pursuant to paragraph 17 of
     the Policy on Acquisition, Disposition and Leasing of Real
E.   These Procedures are effective upon their approval by the