Client
A national financial services firm that leased 140,000 square feet of office space in Northern California
Audit Discovery
KBA discovered that water and sewer expenses in the Company’s escalation bill showed unusually large increases over the original base year. KBA compared the charges for water and sewer to those of other buildings in the market, and determined that although current costs were normal, the costs in the base year were unusually low due to aberrations in the municipality’s billing system.
Resolution
The landlord pointed out that nothing in the lease required an adjustment, as the lease called for the tenant to pay for actual increases, regardless of their reasonableness. Notwithstanding this fact, KBA convinced the landlord to acknowledge the unfairness of the situation and the landlord agreed to increase the base level expenses to normal levels. This reduced the client’s annual liability by $71,000 per year.
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