KRS 56.820: Construction on state -owned land under built -to-suit lease agreements --

Leases without conveyance of title -- Buildings located in Fayette County.

(1) This section shall apply when the built-to-suit process involves the construction of a

building on state-owned land.

(2) Upon the execution of a lease awarded under this section, the Commonwealth shall

convey to the individual or firm to whom such lease has been awarded, in fee

simple with covenant of general warranty of title, the real estate upon which the

building is to be constructed under this lease. The lease shall provide for an initial

lease term commencing on the date the building is accepted for occupancy by the

Commonwealth, but not later than thirty (30) days after the owner's architect has

certified that construction of the building has been completed, and ending June 30

of the second year of the then current fiscal biennium of the Commonwealth, with

an option in the Commonwealth, as lessee, to extend the term of the lease for a term

of two (2) years from the expiration of the original term of the lease and for two (2)

years from the expiration of each extended term of the lease, until the original term

of the lease has been extended for a total number of years to be agreed upon by the

parties at a rental which, if paid for the original term and for each of the full number

of years for which the term of the lease may be extended, will amortize the total

cost of the erection of the building and appurtenances. The rent shall be paid at such

times as the parties to the lease agreed upon. The lease shall provide that the lessee

may, at the expiration of the original or any extended term, purchase the leased

premises at a stated price, which shall be the balance of the total cost of erection of

the bu ilding and appurtenances not amortized by the payments of rent previously

made by the lessee. The lease shall provide that in the event of the exercise of the

option to purchase the leased premises or in the event the lease has been extended

for the full n umber of years which it is agreed the same may be extended, and all

rents and payments provided for in the lease have been made, the lessor shall

convey the premises to the lessee in fee simple with covenant of general warranty of

title. The lease may prov ide that the lessee shall, as additional rent for the leased

premises, pay all taxes assessed against the leased premises, and the cost of insuring

the building erected thereon against loss or damage by fire and windstorm in such

sum as may be agreed by the parties thereto.

(3) For buildings located in Fayette County, the commissioner of the Department for

Facilities Management on behalf of the Department for Military Affairs may award

a built-to-suit lease for built-to-suit projects without the conveyance of title required

in subsection (2) of this section. Any lease agreement under this subsection shall be

awarded in accordance with the provisions of KRS Chapter 45A. The provisions of

KRS 56.8163, 56.8165, 56.8167, 56.8169, 56.8171, and 56.8173 shall not a pply to

built-to-suit leases awarded under this subsection. Any lease agreement established

under this subsection shall provide that title to all improvements shall vest in the

Commonwealth upon completion of the term of the lease.

(4) For buildings located in Fayette County procured pursuant to this section and leased

from the Commonwealth by an agency of the federal government, the following

provisions shall apply:

(a) Notwithstanding KRS 56.813(2) to the contrary, the secretary of the Finance

and Administration Cabinet, on behalf of the Department of Military Affairs,

may approve modifications to existing buildings if the source of the payments

by the Department of Military Affairs for the improvements are made through

an agreement with an agency of the U nited States government, or through an

increase in the term of the lease, provided that the improvements are procured

by the Department of Military Affairs pursuant to the provisions of KRS

Chapter 45A; and

(b) Any lease modification approved by the secret ary of the Finance and

Administration Cabinet pursuant to this subsection shall be reported by the

cabinet to the Legislative Research Commission for referral to an appropriate

legislative committee within thirty (30) days of the execution of the lease

modification.