CBCA 4734

THIS OPINION WAS INITIALLY ISSUED UNDER PROTECTIVE ORDER AND IS BEING RELEASED TO THE PUBLIC IN ITS ENTIRETY ON SEPTEMBER 29, 2017 GRANTED: September 25, 2017 CBCA 4734 BELLE ISLE INVESTMENT COMPANY LIMITED PARTNERSHIP, Appellant, v. GENERAL SERVICES ADMINISTRATION, Respondent. Diana Parks Curran of Curran Legal Services Group, Inc., Johns Creek, GA, counsel for Appellant. Elyssa Tanenbaum, Office of General Counsel, General Services Administration, Washington, DC, counsel for Respondent. Before Board Judges DANIELS (Chairman), SOMERS, and VERGILIO. SOMERS, Board Judge. Belle Isle Investment Company Limited Partnership (Belle Isle, lessor) appeals from a contracting officer’s decision denying its claim for additional payments under a lease entered into with the General Services Administration (GSA) for a property located in Columbus, Ohio. The parties submitted cross-motions for summary relief, which we denied. Belle Isle Investment Co. v. General Services Administration, CBCA 4734, 16-1 BCA ¶ 36,416. On December 6 and 7, 2016, we held a hearing on the merits in Chicago, Illinois. The record includes the pleadings, appeal file, supplemental appeal files, hearing transcripts, and post-hearing briefs. CBCA 4734 2 Based upon the plain language of the terms of the lease and the lease extension agreement between the parties, we grant the appeal. Statement of Facts I. The Initial Lease Agreement On September 18, 1998, GSA and Belle Isle entered into lease no. GS-05B-16252 for office, storage, and parking spaces. The original lease required GSA to pay the lessor “annual rent of $379,810.40 at the rate of $31,650.87 per month at a rate of $17.20 per net rentable square foot (rsf), in arrears.” The lease set an operating cost base for services of $87,003.08 or $3.94 per net rentable square foot (operating cost base). The operating cost base of $87,003.08 was included within the annual rent of $379,810.40 in the first year. Every year after the first year, the operating cost base was to be adjusted by a formula provided in the lease in paragraph 3.6, entitled “Operating Costs, GSAR 552.270-23 (JUN 1985)”: (a) Beginning with the second year of the lease and each year after, GSA shall pay adjusted rent for changes in costs for cleaning services, supplies, materials, maintenance, trash removal, landscaping, water, sewer charges, heating, electricity, and certain administrative expenses attributable to occupancy. Applicable costs listed on GSA Form 1217, Lessor’s Annual Cost Statement, when negotiated and agreed upon, will be used to determine the base rate for operating costs adjustment. (b) The amount of adjustment will be determined by multiplying the base rate by the percent of change in the Cost of Living Index. The percent change will be computed by comparing the index figure published for the month prior to the lease commencement date with the index figure published for the month which begins each successive 12-month period . . . . Payment will be made with the monthly installment of fixed rent. Rental adjustments will be effective on the anniversary date of the lease. Payment of the adjusted rental rate will become due on the first workday of the second month following the publication of the Cost of Living Index for the month prior to the lease commencement date. The lease also detailed how to calculate tax escalations, stating, in paragraph 12 of attachment A, that “[t]ax [e]scalation will be paid via a lump-sum to the Lessor for its share of the increases in real estate taxes paid for the calendar year in which this lease CBCA 4734 3 commences.” Supplemental lease agreement one established the lease term from April 1, 1999, to March 31, 2014 (original term). Every year from 2000 until 2014, GSA paid an annual rent of $379,810.40 in monthly rent payments. Testimony at the hearing established that beginning in the second year of the lease, GSA paid an “operating cost adjustment” or “adjusted rent” in addition to the annual rent.