CBCA 5997

GRANTED IN PART: March 6, 2023 CBCA 5997, 6464 SBC ARCHWAY HELENA, LLC, Appellant, v. GENERAL SERVICES ADMINISTRATION, Respondent. Diana Parks and Hadeel N. Masseoud of Curran Legal Services Group, Inc., Johns Creek, GA, counsel for Appellant. Justin S. Hawkins, Office of General Counsel, General Services Administration, Washington, DC, counsel for Respondent. Before Board Judges VERGILIO, KULLBERG, and CHADWICK. Opinion for the Board by Board Judge VERGILIO. Board Judge CHADWICK concurs. VERGILIO, Board Judge. SBC Archway Helena, LLC (lessor) seeks $395,474.58 under a design/build lease with the General Services Administration (agency). The lessor blames the Government for 277 days of delay in issuing a notice to proceed (NTP), which delayed occupancy and the start of rent payments. The period of alleged delay includes 234 days predating the issuance of the NTP and forty-three days after the NTP and before acceptance for occupancy. The agency contends that the lessor simply seeks rent for the period before occupancy, which is CBCA 5997, 6464 2 not available under the lease or case law, and that the record fails to demonstrate that the lessor was not responsible for the delay. Following a hearing, we find the agency responsible for 138 of the claimed 234 days of delay prior to issuance of the NTP. Lack of input by anyone with contracting officer authority for several months contributed to the delayed issuance of the NTP, as did the fact that construction costs were higher than the parties expected at lease signing. The record fails to demonstrate any other compensable delay. Contrary to the agency’s continued assertions, the lessor is not claiming rent payments. The agency’s actions lengthened the period from award to the start date of the lease. Rent was not calculated for and did not cover such a delay. The agency is liable for substantiated, allowable costs of $59,215.29. Findings of Fact The lease 1. On January 6, 2016, the partes signed a contract obligating the lessor to provide named premises for a firm term of ten years with an agency option to renew for five more years. The lease term would begin upon the acceptance of the premises. Appeal File, Exhibit 1 at 1.1 The lessor was to be involved in the design and obligated to build out the space. Exhibit 1 at 25 (§ 4). The lease includes a Changes (MAR 2013) and a Disputes (JUL 2002) clause. Exhibit 1 at 245 (¶ 30), 247 (¶ 33). 2. The lease provides for annual rent as the sum of six components: shell rent, real estate taxes, tenant improvements (TI), operating costs, parking (priced at $0), and building specific amortized capital (BSAC). Shell rent, real estate taxes, and operating costs are calculated based upon rentable square footage. The TI and BSAC amounts each are set as a dollar figure amortized at 5% per year over ten years and thus are priced at $0 for the option period. Exhibit 1 at 5 (¶ 1.03.A). Rent is subject to adjustment based upon the final TI cost to be amortized in the rental rate. Exhibit 1 at 5 (¶ 1.03.C). The lease also states that a rent reconciliation may be needed based upon square footage and that the lease term commences upon acceptance of the space. Exhibit 1 at 28 (¶ 4.12). 1 All exhibits are in the appeal file. Although the findings of fact often contain citations to specific pages in the record, and the discussion may reference specific findings, those details are not meant to exclude reliance on the record as a whole but to offer some general guidance on what supports a finding. CBCA 5997, 6464 3 3. The Real Estate Tax Adjustment clause provides for adjustments in rent for increases or decreases in real estate taxes after the real estate tax base has been established. The clause defines the real estate tax base as the unadjusted real estate taxes for the first full tax year following the commencement of the lease term, when based upon a full assessment of the property. Of relevance here, in broad terms, the clause also directs how to calculate adjustments for changes in real estate taxes.