OHIO DEPARTMENT OF TRANSPORTATION OFFICE OF REAL ESTATE. Changes and Updates to the Real Estate Manual

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1 OHIO DEPARTMENT OF TRANSPORTATION OFFICE OF REAL ESTATE DATE: February 15, 2017 TO: FROM: RE: Users of the Real Estate Manual ODOT Property Management Section Changes and Updates to the Real Estate Manual The only current and accurate source of ODOT s Real Estate Manual is on the Office of Real Estate s website. This site is located at: Desired information can be accessed by scrolling down the left column and selecting Manuals and Booklets. Specific information can be selected by clicking on the desired section. The Real Estate Manual is a living document as procedures will evolve and change. Individuals or firms providing various services to the Office of Real Estate (e.g. negotiations, titles, appraisal, appraisal review, relocation, relocation review, closing, property management, railroad coordination and utility relocation) must perform these services in compliance with current published policies and procedures. Individuals utilizing a hard copy version of the manual, without accessing the website for updates, risk providing non-compliant services to the Office of Real Estate. Therefore, all users must be aware of the changes as various sections of the manual are updated. ODOT will provide notice of manual changes on the Design Reference Resource Center (DRRC) web page. Users of the manual can access this page and subscribe to be made aware of manual changes via notification. Then, when changes to the manual occur, ODOT will provide direct notice to the subscriber. This page can be accessed at Scroll down to Real Estate Policies and Procedures Manual and select the desired sections for updates, or enter your address to subscribe for changes. It is the user s responsibility to maintain their most current address on the DRRC notification system. The DRRC web site is updated four times a year. The Office of Real Estate may also provide additional guidance to its procedures by Inter-Office Communications (IOC s). These communications will be made a part of the Real Estate Manual and will be found in the Addenda of each section of the manual.

2 TABLE OF CONTENTS 7100 PAGE REFERENCES LEASE PROCEDURES (Non-OIL & GAS) General Procedure Decision to Lease Negotiation and Closing of Holdover Tenants Application to Rent Rental Agreements Rental Rates Minimum Rent Policy Security Deposit Rental to ODOT Employees Lead Based Paint MANAGING AND MAINTAINING LEASED PROPERTY Receiving Rent Maintenance Policy Maintenance by Lessee Non-Sufficient Funds (NSF) Checks Safety Inspection Insurance Taxes Property Inspection and Surveillance Rental Delinquencies Termination of Lease / Tenant Relocation Return of Security Deposit EVICTION Notice to Leave Premises /15/ i

3 Type of Occupant Commencement of Action OIL AND GAS LEASING Letter of Request Leases on Fee-owned Parcels Only Central Office Role ENCROACHMENTS ii 02/15/2017

4 7100 All approved ODOT Property Management Forms referenced in this Manual are available on the ODOT Office of Real Estate website. To ensure that you are using the most recent version of an approved form, you must access the forms from the website. Do not download forms and save them to your computer. The ODOT Office of Real Estate website may be found at the following location: ( REFERENCES Chapter 55, 53 and 19 R.C. 23 CFR Part CFR Part LEASE PROCEDURES (Non-OIL&GAS) General Procedure The lease and care of leased properties is the responsibility of the District offices and shall be done in accordance with the policies and procedures established by the Central Office, Property Management Section. It is the policy of the Ohio Department of Transportation to lease available properties and structures in order to generate income. All policies and procedures described in this Section shall be administered to comply with the provisions of Titles VI and VIII of the Civil Rights Acts of 1964 and Per 23 CFR part , the department must ensure that all sub-grantees, including Local Public Agencies, follow Federal requirements and approved right of way procedures, as provided in this manual section Decision to Lease The prime factor in determining the feasibility of leasing property on a given project is the length of time between acquisition and the date the right of way must be physically cleared. Accordingly, the District offices must give full consideration to this time factor and all collateral elements in determining the feasibility of leasing property on a proposed project. With respect to those properties acquired sufficiently in advance of the construction sale date, several factors shall be considered in determining the suitability of the property for lease, including, but not limited to, the following; Physical condition of the structure if any The demand for rental of similar type properties in the area The estimated income and expenses (including maintenance and taxes) if the property is rented or left vacant including the cost of abating weeds if agricultural property The effect upon the neighborhood of vacant buildings and/or spot demolition 02/15/

5 Per 23 CFR part (d), disposal actions and right of way use agreements, including leasing actions, are subject to 23 CFR part 771. Thus, all leases must have environmental clearance. Per 23 CFR part (a), any non-highway alternative use of real property interests requires approval and a determination that such occupancy, use, or reservation is in the public interest; is consistent with the continued use, operations, maintenance, and safety of the facility; and such use does not impair the highway or interfere with the free and safe flow of traffic. The public interest in an arm s length lease or rental, at full fair market value, would be that the right of way use agreement is generating income for the Agency. Federal Highway Administration Approval Per the February 20, 2015 ODOT/FHWA Federal-Aid Highway Program Stewardship and Oversight Agreement, and 23 CFR part , FHWA may not assign to ODOT the decision to allow any right of way use agreement or disposal on or within the approved right of way limits of the Interstate, including any change in access control. Thus, any right of way use agreement (lease, rental, license, etc.) involving Interstate R/W must have the full written approval of FHWA. Also per the Stewardship and Oversight Agreement, FHWA has transferred to ODOT the right to act in its place and review and approve any right of way use agreement at full fair market value for all Non-Interstate projects. This assignment applies to projects both on and off the National Highway System (NHS). Thus, if an ODOT District is processing a right of way use agreement at full fair market value, and that property is not on an Interstate, the District may approve the request without seeking FHWA concurrence. Districts can exercise this authority after they have completed all of the usual and customary internal and external reviews in connection with the right of way use agreement. If FHWA review and approval is required, the following applies: 1. If FHWA funded design or construction of a project, but did not participate in buying the parcel, then FHWA engineering review and approval is necessary, but no FMVE concurrence is required. 2. If FHWA funded purchase of the parcel, then both FHWA engineering and valuation/appraisal approval and review are necessary. FHWA requests for right of way use agreements shall include, at a minimum: All District reviews and approvals As applicable, a copy of the valuation or appraisal of the property interest to be rented, leased or licensed If known, a statement of the proposed use of property, along with all plats, maps, legal descriptions, the requesting party s original written lease request and other material that will facilitate an understanding of the proposed right of way use agreement, including descriptions of any existing encroachments Statement that the property will not be needed during the term of the right of way use agreement and further that the lease, rental or license agreement will not adversely affect the subject highway or the traffic thereon Copy of the Categorical Exclusion or other approved environmental documentation 02/15/

6 Negotiation and Closing of Holdover Tenants Negotiation and closings for holdover tenants is the same on property to be leased as on property not being leased except that owner retention of individual items that are essential to occupancy of a structure (e.g., furnace, hot water tank, etc.) shall not be permitted. If a property is occupied by a tenant, and it is agreed the tenant may continue to lease the property after closing, the closing agent shall inform the owner that ODOT will withhold from the final payment the pro rata part of any rent the owner may have collected for tenant s occupancy beyond the date of closing. Any guarantees or deposits received by the owner from a tenant in possession shall likewise be held out of the final acquisition payment. Payment of rent to ODOT will begin on the date of closing. If the property to be leased is owner-occupied, the closing agent shall inform the owner that the owner may continue to occupy beyond the agreed upon date of possession in the Contract of Sale and Purchase if the Agency has agreed to the terms and conditions of their continued occupancy. In any situation, the holdover tenant shall complete the appropriate rental application form identified in Section and execute a lease with the Department Application to Rent Prospective Lessees, seeking to lease State-owned property shall complete an Application to Rent Package. This package must be provided to all prospective Lessees and shall contain; 1. Residential Rental Application, Form RE or Non-Residential Rental Application Form RE Authorization - Release of Information Form RE Lead Paint Disclosure to Tenants Form RE Copy of the pamphlet Protect Your Family from Lead in Your Home 5. Residential Lease Form RE 71-02, Commercial Lease Form RE 71-03, Farm Land Lease Form RE or Vacant Land Lease Form RE 71-22, as applicable The District shall review and verify the rental application. If information is needed from a previous Lessor, an Applicant s Reference Request Form RE should be used. Copies of all applications shall be maintained in conformance with current records retention schedules Rental Agreements Upon the acceptance of an application to rent, ODOT and Lessee will enter into an appropriate lease agreement. The four types of lease agreements are Residential Lease Form RE 71-02, Commercial Lease Form RE 71-03, Farm Land Lease RE or Vacant Land Lease RE The lease agreement establishes the terms and conditions for the use and occupancy of the property by the Lessee and ODOT. The lease agreement, must comply with Section R.C. The security deposits and the first month s rent are also secured at this time. 02/15/

7 To maintain statewide consistency in tracking and managing leases, when a new lease agreement is created, the District will assign a number to the lease. This number will be placed on the first page of the lease in the space provided. The number will be 16 digits long. The first 8 digits will be the month day and year the lease is executed. The next 6 digits will be the District and County in which the property is located. The last 2 digits will sequentially number multiple leases executed on the same day in the same county. For example, for the first lease agreement created on December 1, 2017 for property located in Franklin County the number would be D06FRA01. Per 23 CFR, part (b), A ROW use agreement must contain provisions that address the following items: 1. Ensure the safety and integrity of the federally assisted facility; 2. Define the term of the agreement; 3. Identify the design and location of the non-highway use; 4. Establish terms for revocation of the ROW use agreement and removal of improvements at no cost to the FHWA; 5. Provide for adequate insurance to hold the grantee and the FHWA harmless; 6. Require compliance with nondiscrimination requirements; 7. Require grantee and FHWA approval, if not assigned to SDOT, and SDOT approval if the agreement affects a Federal-aid highway and the SDOT is not the grantee, for any significant revision in the design, construction, or operation of the non-highway use; and 8. Grant access to the non-highway use by the grantee and FHWA, and the SDOT if the agreement affects a Federal-aid highway and the SDOT is not the grantee, for inspection, maintenance, and for activities needed for reconstruction of the highway facility Rental Rates Per 23 CFR part (e), all leases must charge fair market rent if those properties were acquired with title 23, United States Code, funding. The only exceptions to this requirement must be approved by FHWA in writing, and would be considered for the following: There is overall public interest based on social, environmental, or economic benefits or is for a nonproprietary government use o Support documentation must clearly show public benefits and how the State will receive same Use by public utilities in conformance with 23 CFR part 645 Use by railroads in accordance with 23 CFR part 646 Use for bikeways and pedestrian walkways Use for public transportation Use for other transportation projects ODOT s Policies and Procedures Manual at Section 4503 sets forth the processes for establishing fair market rent and performing rent reviews. A comparable rent analysis providing an opinion of market rent should be completed by the appraiser during the acquisition process if the parcel has a likelihood of being rented after closing. 02/15/

8 Rental rates will be reviewed by the District every 3 years, or at a frequency determined by local market conditions. The District may also perform a rent review during vacancies prior to rerenting. If a rental review is not completed every 3 years, District shall maintain a letter of explanation in the parcel file explaining their deviation from the policy. Tenants in possession at the time of acquisition may continue at the existing rental rate for a short term not to exceed one year. If the property is to be rented longer than 1 year, a market rent analysis will be completed prior to the expiration of the lease Minimum Rent Policy To assure that ODOT does not lease property at a loss, a minimum rental of $ per year will be charged when a Market Rent Analysis indicates a lesser rental rate. All leases invoking the minimal rental policy shall have a copy of a Market Rent Analysis in the file indicating a market rent of less than $ per year Security Deposit Security deposits equal to one month s rent and any applicable pet and water deposits shall be collected from the tenant. Deposits are for the purpose of guaranteeing performance by the tenant under the terms and conditions of the lease. Security deposits shall be in the form of a check or money order. Security deposits shall be submitted to the District Finance office for processing and deposit. Security deposits shall be returned to the tenant upon vacating the property, provided the tenant has complied with all terms, provisions and conditions of the rental agreement. The security deposit shall not be used as the last month s rent Rental to ODOT Employees A property may not be leased to an ODOT employee Lead Based Paint Section 1018 of the Residential Lead-Based Paint Hazard Reduction Act of 1992 and Volume 61 Federal Register require disclosure of information on lead-based paint and lead-based paint hazards before leasing homes built before When any residential unit built before 1978 is leased (either a new lease or renewal of an existing lease) a Lead Based Paint Disclosure Form to Lessees (RE 71-06) shall be executed and maintained in the file. If there is any doubt about the construction date of the structure a form shall be provided MANAGING AND MAINTAINING LEASED PROPERTY Management of leased property will be performed by the District in which the property is located. 02/15/

9 Receiving Rent All checks and money orders for rent should be made payable to Treasurer, State of Ohio. As rent is received, the District will prepare a Form RE 24-1 for each payment and submit it immediately to the District Finance office for processing. If repairs have been made by the Lessee and subtracted from the rental payment, the District shall also submit a copy of a properly executed RE 71-08, Letter of Authorization Maintenance Policy All maintenance expenditures shall be done in compliance with Department policy and procedure and shall be coordinated through the District Fiscal Officer. With the exception of excess land parcels, maintenance expenses shall be held to a minimum as the remaining economic life of the property will rarely justify any repairs above those required to maintain the structure in a manner to meet applicable building, health and safety codes in compliance with Section , R.C. The District must consider each property on an individual basis and give careful consideration to the following factors before authorizing any maintenance work: The safety of affected persons or property The probable cost of the proposed work Does future net income justify the cost of anticipated expenses Is ODOT, as the landlord, in compliance with Section , R.C. District must obtain appropriate authority from the District Purchasing Officer for any and all maintenance expenditures. Once you have followed all appropriate Department purchasing guidelines, District will issue a Letter of Authorization Form RE to the individual or company performing the work before any maintenance or repair work begins. Each District shall provide adequate contact information to tenants in the event an emergency maintenance item occurs during non-working hours Maintenance by Lessee District may allow Lessees, where prudent, to perform or secure the performance of maintenance. Such maintenance by Lessees shall not be in an amount greater than $ Before work begins a Letter of Authorization Form RE needs to be completed in detail and presented to the Lessee completing the repairs. The Lessee must submit a receipt for no more than the approved amount on the RE and that amount will be deducted from the next month s rent. The completed work must be inspected by the District before the bill is approved Non-Sufficient Funds (NSF) Checks If a check is refused by the bank upon which it is drawn, the State Treasurer will notify ODOT Central Office Accounting who will in turn notify the District. A $35.00 NSF fee will be charged to the tenant for any check returned due to non-sufficient funds, stop payment order or similar act or event. The District will contact the tenant and make arrangements to collect an alternative rent 02/15/

10 payment which must be in the form of a cashiers or certified check or money order. Pursuant to the terms of the rental agreement, once a tenant submits a NSF check to the department, all future payments will be made by cashier s check or money order, unless the tenant supplies a letter from the bank stating that it was the bank s error for the NSF check. When a substitute payment cannot be secured within 7 days and/or the tenant has vacated the property, the District will return the refused check to the District Fiscal Officer for processing through proper channels for collection. If the tenant still occupies the property, eviction procedures may be initiated due to the tenant s failure to pay rent Safety Inspection Prior to the beginning of each heating season, the District shall have a safety inspection made of all ODOT properties using non-electric heating units to determine the presence of carbon monoxide gases and other hazardous conditions. It will be performed by a qualified heating and air conditioning vendor. A copy of the RE 71-09, Safety Checklist for All Fuel Burning Equipment, will be completed for each individual heating unit inspection performed. Attention shall be given to any unsafe condition that is discovered and repairs shall be made immediately. All inspections and repairs will be made by November 15th of each year Insurance State of Ohio is self-insured. Tenants shall provide their own insurance to cover their personal property Taxes ODOT is responsible for the payment of real estate taxes on all leased properties. It is the responsibility of the District office to secure tax bills for all properties under its management. Failure to receive a tax bill does not relieve ODOT of its obligation to pay real estate taxes due on a property. The District office must insure that tax bills are paid when due, thus avoiding the unnecessary payment of penalties and interest on delinquent taxes. When a lease has terminated, the District will prepare the necessary forms for filing with the County Auditor to exempt the property from further taxation (see the acquisition Policies and Procedures Manual Section 5600 for more details on the tax exemption processes) Property Inspection and Surveillance The District will maintain field surveillance over all property it manages. Visits to residential tenants shall be scheduled with the tenant at least 24 hours in advance, in accordance with Section R.C. For every parcel of property leased for more than one year, an annual field inspection shall be scheduled and performed. Each of these inspections shall be documented on the Annual Site Inspection Checklist Form RE with photos. The best time to inspect the interior of leased properties is at the time of lease renewal. The objectives for these inspections are as follows; Assess the exterior and interior condition of the property and recommend a course of action to correct deficiencies and needed repairs To correct any safety hazards 02/15/

11 To determine the extent of compliance with the lease To evaluate the economic viability of a continued rental Rental Delinquencies The District will make every reasonable effort to collect all past due and delinquent rental accounts. Accounts should not be permitted to exceed 30 days without action being taken to secure payment. The actions taken to secure payment, including notes on all phone calls, shall be documented in the parcel property management file. When all reasonable efforts to collect the delinquent rent due on a property have been exhausted (i.e. correspondence and phone calls during business hours) the District shall contact Central Office Property Management for advice and guidance on further collection activities. Once a property has been vacated and all collection efforts have failed, the account shall be certified for collection. The account should not be certified until the total amount of all charges is known (i.e., delinquent rent, damages, unpaid bills, etc.). The District shall transmit each account deemed uncollectible together with all pertinent information to the District Fiscal Office for processing. The transmittal shall contain a statement of the efforts made to collect and the following information: A copy of the tenant s payment record A copy of the Application To Rent Copy of the Rental Agreement The tenant s full name, present address, relative s name and address Present or last known employer The transmittal shall also show the highway project number, job number, PID, parcel number and any other information deemed pertinent to the delinquent account. The District Fiscal Officer will forward the request to Central Office Accounting who will then submit it to the Assistant Attorney General s Claims Section for collection. The Office of the Attorney General initiates the appropriate action and any recovery, less cost, is credited to the individual parcel by the Office of Accounting using Form RE In turn, the District is notified of this action through copies of the Form RE 24-1 sent to them by the Office of Accounting Termination of Lease / Tenant Relocation Leases shall be terminated in sufficient time to allow for the orderly relocation of tenants from properties that must be removed to clear the right of way for the construction of a highway project. The Notice to Vacate Form RE shall be provided to Lessee at least 30 calendar days in advance of the required possession date. If Lessee fails to voluntarily vacate within the time required by the notice and there is no prospect that Lessee will voluntarily vacate, the District should initiate eviction proceedings. Termination of a lease with a holdover tenant shall be coordinated with the Relocation Agent so as to not affect the Relocation Assistance minimum 90 day requirement. 02/15/

12 Return of Security Deposit When a tenant has vacated an ODOT property, the District shall complete a Residential or Commercial Move-In/Move-Out Inspection Form RE or RE A Security Deposit Settlement Form RE is then completed to determine the balance due the Lessee after deductions to cover items as provided for in the Rental Agreement. Deductions from the security deposits need to be itemized within the RE Provided below is a non-exclusive list of items which may be deducted from the security deposit: Rent Due Cleaning Missing Keys Unpaid Water Bills Uncollected late charges, interest or return check charges, damages or other charges. The District will submit a request to Central Office Capital Accounting for the return of the security deposit as calculated on the Security Deposit Settlement Form RE Upon receipt of the warrant, the District will disburse the warrant to the Lessee with copies of the Residential or Commercial Move-In/Move-Out Inspection Form RE or RE 71-21and a Security Deposit Settlement Form RE EVICTION The Ohio Department of Transportation would like to avoid eviction proceedings whenever possible. There are times, however, when eviction is a necessary tool to clear the right of way or deal with a Lessee who refuses to honor a lease. Prior to commencing an action to evict a Lessee, the District Real Estate Administrator shall make a full and careful review of the detailed history of the case and confer with Central Office, Property Management and the Transportation Section of the Attorney General s Office Notice to Leave Premises If, after a full and careful review of the detailed history of the case, the District Real Estate Administrator determines that all avenues of reconciliation and persuasion have been exhausted, the District may authorize the issuance of the Notice to Leave Premises Owned by the State of Ohio (RE 72-01) as provided for in R.C ; that statute requires a landlord (i.e., State) to do the following prior to having the right to commence a formal eviction action:... shall notify the adverse party to leave the premises, for the possession of which action is about to be brought, three or more days before beginning the action, by certified mail, return receipt requested, or by handing a written copy of the notice to the defendant in person, or by leaving it at his usual place of abode or at the premises from which the defendant is sought to be evicted. The Form RE is a legal notice that the District must deliver to the defaulting Lessee at the 02/15/

13 subject premises not less than three days prior to commencing an eviction action. Frequently, the Lessee will vacate the premises upon receiving the notice to leave premises or make other suitable arrangements (payment of rent, etc.) to remain on the premises with ODOT s consent. If this occurs, there is no need to file an eviction action Type of Occupant When a Lessee remains on the property beyond the term of the lease, the District Real Estate Administrator will have a detailed history of the case prepared. The nature and amount of information included in a detailed history of the case will vary depending on the type of tenant/occupant involved. Original Site Occupants, a.k.a. Holdover Tenants Because the Relocation Assistance Program affords original site occupants several definite rights, every precaution must be taken to be certain that all of those rights are observed prior to and during any eviction procedure. Thus, the information required in the detailed history of the case for an original site occupant is different than what is required for a subsequent property management tenant. The detailed history of the case for an original site occupant shall include the following information: A description of the property, its use, prior ownership and date purchased by the State Fair Market Value Estimate (FMVE) and approved administrative reviews of the property A copy of the negotiator s notes from when the property was acquired If the property was acquired by appropriation, the date on which the appropriation case was filed, the amount deposited with the appropriation case, the status of any Red Book procedures, the date the court granted to State the legal right to take possession of structures, the date and amount of settlement or verdict, if applicable, and the date when paid A copy of the Relocation Assistance parcel file The reason or cause for eviction (e.g., impending contract sale date, nonpayment of rent, etc.); this shall include the known or projected sale date of the project and all pertinent information concerning any rental delinquency (date, amount paid, total amount owed, efforts made to collect, etc.). Subsequent Property Management Lessees Although a subsequent property management Lessee is not afforded all of the same considerations as an original site occupant, a subsequent property management Lessee shall be given every reasonable consideration and opportunity for reconciliation before ODOT commences an action to evict them. The detailed history of the case for a subsequent property management Lessee shall be prepared under the direction of the District Real Estate Administrator (DREA) and shall include the following information: The name of the Lessee and present use of the property. If residential, the number of occupants (e.g., family members living with the tenant) 02/15/

14 The reason or cause for eviction (e.g., impending contract sale date, nonpayment of rent, etc.); this shall include the known or projected sale date of the project and all pertinent information concerning any rental delinquency (date, amount paid, total amount owed, efforts made to collect, etc.) Commencement of Action When the detailed history of the case has been reviewed and approved by the DREA, it will be forwarded to the Administrator, Office of Real Estate, for review, comment and concurrence to institute eviction proceedings. Upon receipt of the concurrence of the Administrator, Office of Real Estate, the DREA will submit to the Chief of the Transportation Section of the Attorney General s Office his/her recommendation, including the detailed history of the case and the comments of the Administrator, Office of Real Estate. Upon commencement of an eviction action, the Assistant Attorney General assigned to the case will maintain any records relevant to the action (e.g., pleadings, communications, actions taken, etc.). In the event that actual physical eviction becomes necessary, the Assistant Attorney General assigned to the case shall immediately notify the Administrator, Office of Real Estate, and the DREA. It is the responsibility of the DREA to notify the respective District Public Information Officer and the Administrator, Office of Real Estate to notify Central Office Communications of the event OIL AND GAS LEASING Letter of Request Companies desiring to include any ODOT owned parcel in a drilling until shall submit a letter of request to the DREA/ District Engineer for approval. The following information must be submitted with the letter of request: 1. Identification of the ODOT parcels, and the acreage in each parcel. ODOT parcel numbers and acreage are contained in the original ODOT acquisition deeds. The requesting companies should provide copies of each deed in their request. 2. The company name, contact name, business title, address, phone number and address of the requesting party. 3. A well map indicating the distance from ODOT s right of way to the well, pad and tank locations. If this information is not yet available, the requesting company must include a statement regarding when they expect to provide it to ODOT. 4. A copy of the application to the Ohio Department of Natural Resources for a well permit or the actual permit, if one has been issued. If this information is not yet available, the company must include a statement in their request regarding when they expect to provide it to ODOT. 02/15/

15 5. The amount the company is offering for their bonus payment and royalty payments. 6. The size of the pool or drilling unit and the amount of ODOT s acreage in the pool or drilling unit. If this information is not yet available, the requesting company must include a statement in their request regarding when they expect to provide it to ODOT. 7. The period of time they are requesting for the initial term (the amount of time the company projects they need to get the well drilled and the leased premises in production). 8. A statement regarding whether the well will be a vertical or horizontal well. 9. Identification of the formation and drilling depth requested for the leased premises. The lease will be limited to one of the following geological formations and/or depths. a. The distance from the surface of the land to the top of the Onondaga limestone; b. The distance from the top of the Onondaga limestone to the bottom of the Queenston formation; c. The distance from the bottom of the Queenston formation to the top of the Trenton limestone; d. The distance from the top of the Trenton limestone to the top of the Knox formation; or e. The distance from the top of the Knox formation to the basement rock. 10. The date drilling is planned to commence. If this information is not yet available, the requesting company must include a statement in their request regarding when they expect to provide it to ODOT. 11. A cross section diagram showing well location and depths at entry and exit of right of way, as applicable. All ODOT parcels are to be leased in their entirety. In addition to any requirements imposed by Sections and of the Ohio Revised Code, and any rules and regulations promulgated thereunder, ODOT s lease will prohibit the drilling of any well and the construction of any portion of a pad or a storage facility nearer than 150 feet from our right of way. The District will evaluate the request. The District must consider highway integrity and safety along with present and future needs for the requested parcels. If the District approves the request it will forward all information to the Central Office, Property Management Section Leases on Fee-owned Parcels Only Any parcel to be included in an Oil & Gas Lease must be owned in fee by ODOT. ODOT must own the mineral rights to the parcels. Parcels will not be split to create orphaned parcels that cannot be further utilized for further oil and gas production. 02/15/

16 Central Office Role Upon receipt of the Letter of Request and its attachments from the District, the Central Office Property Management Section will: Check the Department s oil & gas inventory to ensure the parcel is not already under an existing lease. Obtain the right of way plan and parcel file from the original acquisition. Check to make sure ODOT owns fee title to the right of way including the mineral rights (in some cases the Department has acquired fee title with mineral rights reserved to the Previous Owner/Grantor) Execute forms RE (Standard Oil & Gas Lease), RE REL (Exhibit C ) and RE (Memorandum) with the company. Process payments to ODOT and enter the lease into the oil and gas tracking system. Manage the lease for the duration of its term Encroachments Encroachments within the right of way should be removed by following the obstruction removal procedures in O.R.C General ongoing encroachment removal is often handled as a Highway Management process, which may include county maintenance forces. Encroachment removal, as part of the overall right of way project certification process, is detailed in Section 2400 of the Office of Real Estate s Policies and Procedures Manual. 02/15/