Policy 2.11.3: Lease of Space Where CBC/Radio-Canada is the Tenant

Effective: November 9, 2004
Responsibility: Executive Vice-President, Media Technology and Infrastructure Services

STATEMENT OF POLICY:

It is the responsibility of Real Estate Services to ensure that all activities pertaining to the lease of space, where CBC/Radio-Canada is the tenant, are managed in an efficient and cost effective manner and that program, production operations and all other Corporate services are housed in a way that enables them to meet their objectives in the most efficient manner consistent with their mandate and Corporate guidelines. In particular, Real Estate Services is responsible for the following:

  • To minimize cash flow expenditures and maximize effectiveness from leasing activities by meeting established real estate standards described in Appendix E. There are financial, physical, legal, environmental, competitive use and compatibility standards from a tenant perspective.
  • To standardize leasing activities and to streamline the leasing process, ensuring that transactions are in line with market value or better for short, medium and long-term commitments and that incremental space is leased only when appropriate space is not available within the existing portfolio.
  • To ensure that all leases are executed in accordance with corporate policies and guidelines, especially those indicated in the Reference section of this policy.
  • To establish standards and procedures pertaining to the leasing of space from a landlord.
  • To ensure that all components and user groups comprehend and follow this Leasing Policy.

In order to ensure operational efficiency, user groups and their managers must, as a minimum, use the services of Real Estate Services in all situations outlined in Appendix A, to review, validate, authorize and sign off on leasing transactions.

HISTORY:

This is a new policy.

REFERENCES:

  • Canadian Institute of Chartered Accountants’ Handbook Sections 3065 - Leases & Section 3830 - Non-Monetary Transactions
  • The Financial Administration Act
  • The Broadcasting Act

PERSON RESPONSIBLE FOR INTERPRETATION AND APPLICATION:

All questions pertaining to the interpretation or application of this policy should be referred to the Vice-President Real Estate, Legal Services, and General Counsel.

DEPARTMENT RESPONSIBLE TO UPDATE THIS WEB PAGE:

The Corporate Secretariat


PROCEDURES & GUIDELINES
APPENDIX A

LEASING OF SPACE EXCLUDING SPECIFIC PRODUCTION PURPOSES, SPECIAL EVENTS AND TRANSMISSION

At least four situations arise where the services of Real Estate Services are mandatory to ensure that space is put to its best use and that transactions compare to market standards from a tenant perspective. The four situations as follows:

  1. A user group outgrows its current space requirements and seeks additional space within its current building or seeks new space.
  2. A user group has new requirements and seeks space that can meet those requirements.
  3. A user group downsizes and excess space is created. Consideration may be given to moving the user group out of its current space and finding a sub-tenant or another CBC/Radio-Canada user group that would fully use the space.
  4. The term of the lease of a user group is up for renewal and/or approaching its expiry date.

All user groups seeking new space should forward, as a minimum, the following details of their space requirements to the Director, Strategic Development and Leasing, Real Estate Services and also to SNC-Lavalin O&M who would be involved in the research for spaces, with a copy to their respective Vice President or his / her delegate:

  • The number of people to be relocated
  • Their job functions
  • Specific technical requirements the space must offer

If existing leased spaces must be vacated (as in situations 3 and 4), the exact address location and suite number of the spaces that will be vacated must also be provided.

Real Estate Services will evaluate the possibility of meeting the space needs of the user group within the current real estate portfolio (and within the same region when required). If no appropriate spaces are found within the existing portfolio, Real Estate Services shall turn to the market for the required space. These spaces will be evaluated in regards to the established real estate standards (i.e. financial, physical, legal, environmental, competitive use and compatibility) as well as to the overall space planning strategy of the Corporation. As an information measure, Real Estate Services shall provide its documented findings to the user group’s designated individual. Real Estate Services transactions require designated individuals to coordinate space planning, communications, moving etc. and issue approvals on behalf of the various user groups from the very start of a leasing initiative. Real Estate Services shall manage the issuance of RFPs, the hiring of an expert broker, broker/landlord negotiations as well as Letter of Intent, Offer to Lease or Renewal documents and the actual signing of a valid Lease that meets the standards as described in Appendix E. The documents shall be prepared or reviewed by the Corporation’s law department. The Letter of Intent, Offer to Lease, Renewal documents and Lease documents must be approved by the Corporation in accordance with Corporate policy 2.9.3 – Delegation of Signing Authority, which requires full adherence to the two signature principle. The following approvals are required:

  • Aggregate value of less than $1M, approval by the Executive Director, Real Estate Services.
  • Aggregate value of less than $4M, approval by the Vice-President Real Estate, Legal Services, and General Counsel
  • Aggregate value equal to or exceeding $4M but less than $15M, the written approval of the Board of Directors.
  • Aggregate value equal to or exceeding $15M, the written approval of both the Board of Directors and the Governor in Council.
  • All leases, except automatic renewals based on same terms and conditions or predetermined terms and conditions or fixed rent adjusted to CPI, must be reviewed in accordance with Corporate Policy 2.9.3 - Delegation of Signing Authority and Treasury Board regulations.

When renting space outside Canada, Real Estate Services will determine the preferred search method. Once the space found, Real Estate Services will review the RFP, Letter of Intent, Renewal and Lease with the help of expert legal counsel familiar with local laws, Corporate Policy and Treasury Board regulations/requirements.

All leasing transactions must be recorded in one Real Estate Services database for the effective management of the leases and to ensure that lease obligations are fully met. From a strategic perspective, and in order to provide a global vision to ensure the effective administration of the lease portfolio, it is imperative that all real estate transactions and information be centralized within Real Estate Services.

A copy of the original lease is also forwarded to Corporate Finance and Administration by Real Estate Services to enable additional centralization of record keeping.

APPENDIX B - LEASING FOR SPECIFIC PRODUCTION PURPOSES

Any agreement relating to the rental of space for a period of less than one year, from a third party for specific production purposes will be processed and managed directly by Radio and/or TV. However, Real Estate Services will be available to assist user groups as required. Real Estate Services will co-sign transactions of a duration of one year or more to enable business cases to evaluate the possibility of transforming CBC owned premises to meet production needs at a lower cost. Real Estate Services must also ensure that long term transactions will not overlap with future in-house developments to meet production needs.

APPENDIX C - SPECIAL EVENTS

The user groups may research and execute a contract for Special Events with third parties if the event is held outside of the real estate portfolio.

User groups leasing space from third parties for a Special Event, must ensure that the transaction is documented through a proper lease, contract or agreement and the legal documents contain insurance, non-liability, indemnity, termination (cause, default) clauses, extended hour fees, repair of damages fees and the restoration procedure.

APPENDIX D - SPACES FOR TRANSMISSION PURPOSES

Any agreement relating to the rental of space from a third party for Transmission Purposes will be initiated, processed and managed directly by the CTO group.

APPENDIX E - GENERAL GUIDELINES AND PROCEDURES

Approvals

All leasing of space, excluding space for specific production purposes, Special Events and Transmission purposes (as detailed above), must be approved and signed off by the Real Estate Services as per this policy.

All leasing transactions, including space for specific production purposes, Special Events and Transmission purposes, must respect all relevant Corporate Policies including Corporate Policy 2.9.3 – Delegation of Signing Authority. A copy of the original lease or rental agreement must also be sent to Corporate Finance and Administration.

Financing

User groups must finance all new leasing transactions they have requested and transfer budgets to Real Estate Services to cover annual rents and all other expenses related to the occupation of the new spaces (added security, incremental power, auxiliary construction, etc.). Real Estate Services will then be responsible for the management of the leased space. Exceptions may occur in the case of approved consolidation projects and other endeavours resulting from a properly approved business case.

User groups must finance the costs of studies they have requested even if the project is not approved and/or does not go ahead. In the case where outside consultants are required to conduct studies and/or analyses, Real Estate Services shall be responsible for negotiating the contract with the external consultant and shall advise the user group of the cost, in advance and obtain the user group’s approval before actually incurring an expense.

REAL ESTATE STANDARDS FROM A TENANT PERSPECTIVE

Financial:

The true value of Real Estate Services is measured by its effect on cash flow, the Net Present Value, Net Effective Rental Rate and how they match up with Market costs for comparable spaces.

Physical:

The highest and best use estimate must be physically probable. Adequate information must be gathered concerning physical restrictions and conditions to determine the physical appropriateness of a use in any analysis.

Legal:

There may be legal restrictions on a property, inhibiting space improvements required to meet the evolving needs of the Corporation as a tenant. Such restrictions may include exclusivities, zoning and building codes. Transaction assessment must also consider legal issues such as, but not limited to, existing rights of first refusal and options on adjacent spaces that the Corporation may require for its expansion needs.

The Corporation must protect its interest by reviewing relocation clauses, termination provisions (sale of building provisions, compensation provisions, etc.) and the right to sublease amongst others and generally, any unfavourable clauses contained in any landlord leases.

Environmental:

Environmental acceptance is the newest consideration affecting highest and best use decisions. Examples include noise ordinances, strict enforcement of pollution regulations and hazardous material management.

Compatibility:

A project must properly fit into its environment and neighbourhood. Other tenants may have non-competition clauses, which may restrict the activities of the Corporation as a tenant. The Corporation’s business activities, operational mission, vision and public image should be compatible with its new space, its neighbours and the landlord.

Competitive use:

The space must allow the user group to meet its business requirements and productivity goals within the parameters defined for leased spaces and budgets. Long-term feasibility is a preoccupation; hence the transaction must be aligned with the Corporation’s long-term strategy.

Definitions

Spaces for Specific Production Purposes:

Refers to the leasing or contracting of specialized and non-specialized spaces for Radio and TV production activities (i.e. Olympics).

Special Events:

Refers to space, equipment and services required for events such as receptions, gala events, media events or any other short-term activity where a gathering of people, which may include CBC and/or non-CBC staff, takes place for an activity outside the usual scope of business. Such Special Events usually require space for less than one week.

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