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UTgrad09

L & C Tower owner sues state for violation of lease

7 posts in this topic

http://www.tennessean.com/interactive/article/20130622/NEWS/130621022/Read-claim-L-C-Tower-owner-sues?nclick_check=1

 

The document is rather long (40 pages) and full of legalese...but I found it to be very interesting. Aside from the implications it has on the iconic L&C Tower, it also sheds light on some of the goings on with the state and its leasing of office space elsewhere in Nashville, as well as the Cordell Hull building. 

 

401 Church Street, LLC (the owner of L&C) alleges that the state is playing a "shell game" with its leased properties downtown, and lays out some rather interesting evidence of their motives. 

 

The gist of it is the state sent notice to the company that they are breaking their lease early because state owned office space has become available, and the space at the L&C is no longer needed (as part of project T3). However, the state continues to negotiate for leases at other private properties downtown. One of the out clauses in the lease states in certain terms that if the state has available space in its office buildings, then it can terminate the lease...but with the closure of the Hull building (400,000 sq ft), and with the state shifting office workers around downtown, the state is basically breaking old leases they do not like, shifting workers to state owned buildings, and in turn shifting workers from "decommissioned" buildings (like Hull) to other private properties.

 

It alleges that the state can receive a "kickback" from leases negotiated by Jones Lang LaSalle. The concerning aspect of this strategy is that the state might be looking to get out of current leases so it can make money via a kickback on new leases. Rather than simply restructuring office space, it seems like they could be playing musical chairs with private office space in order to receive kickback money rather than live out the terms of their leases. I do not like the idea of this tactic at all, or what it could mean to downtown office building vacancies. And if it is true, it seems to be highly unethical. 

 

If Project T3 was aimed at taking as much state leased office space away in order to place the workers in state owned buildings, that would be one thing. But this looks as if the aim could be to put more state workers in leased office buildings (where it is the landlord's responsibility to prep the building for the state's needs) and make money off of the commissions, rather than the state be responsible for caring for their own buildings. I'm sure it makes sense as a cost-cutting measure...but what it could mean for current state owned office buildings (especially older ones), is concerning, to say the least.

 

I encourage you to read as much of the document as possible. I think it is very, very interesting. Of course, this is 401 Church St's perspective, but they bring up some pretty valid points. I'll try to add some snippets from the document at a later time, when I get the chance.

 

What are your thoughts?

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I have some third-hand knowledge of the situation and would disagree somewhat with the implications of the lawsuit. Not to say that the underlying claim is not valid. The lease of the L&C as well as Parkway Towers allowed for a move of the tenants to state-owned space, which is what is happening with the existing tenants of those buildings. Unrelated (or not, that's the rub) JLL has declared that Cordell Hull is functionally obselete, necessitating that those tenants move to leased space, since there is no state-owned space -available. Bids are solicited for new leased space, and L&C sees a rat. Whether this is a coincidence, or a devious plan will probably be decided in the Claims Comission. whatever the outcome, the " kickback" allegation is hard to swallow. I'm not naive, and this may be part of a master plan, but I believe that it is more of a situation where multiple plans created a situation that was not foreseen, and which looks ridiculous, or worse, in hindsight.

Edited by captainwjm

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I have some third-hand knowledge of the situation and would disagree somewhat with the implications of the lawsuit. Not to say that the underlying claim is not valid. The lease of the L&C as well as Parkway Towers allowed for a move of the tenants to state-owned space, which is what is happening with the existing tenants of those buildings. Unrelated (or not, that's the rub) JLL has declared that Cordell Hull is functionally obselete, necessitating that those tenants move to leased space, since there is no state-owned space -available. Bids are solicited for new leased space, and L&C sees a rat. Whether this is a coincidence, or a devious plan will probably be decided in the Claims Comission. whatever the outcome, the " kickback" allegation is hard to swallow. I'm not naive, and this may be part of a master plan, but I believe that it is more of a situation where multiple plans created a situation that was not foreseen, and which looks ridiculous, or worse, in hindsight.

Noted. I will admit I'm not in the know when it comes to these sorts of things...but from my perspective, it does seem fishy. JLL low bid the initial contract, and it was awarded to them...then the subsequent contracts they received were no-bid. Perhaps it is just a perfect storm of unusual circumstances, but the no-bid contracts make me wonder if the plan all along was for them to low bid to get their foot in the door, then knowing the Haslam admin would give them more 'free' contracts once they got established doing state business.

I could be completely off base...I just don't like the way it looks, and I would like to see the legislature at least force a little research into the situation so the public knows what is going on here.

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Word is that the parties have settled

 

Hopefully L&C can move forward and get the space occupied again.

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http://www.tennessean.com/interactive/article/20130622/NEWS/130621022/Read-claim-L-C-Tower-owner-sues?nclick_check=1

 

The document is rather long (40 pages) and full of legalese...but I found it to be very interesting. Aside from the implications it has on the iconic L&C Tower, it also sheds light on some of the goings on with the state and its leasing of office space elsewhere in Nashville, as well as the Cordell Hull building. 

 

401 Church Street, LLC (the owner of L&C) alleges that the state is playing a "shell game" with its leased properties downtown, and lays out some rather interesting evidence of their motives. 

 

The gist of it is the state sent notice to the company that they are breaking their lease early because state owned office space has become available, and the space at the L&C is no longer needed (as part of project T3). However, the state continues to negotiate for leases at other private properties downtown. One of the out clauses in the lease states in certain terms that if the state has available space in its office buildings, then it can terminate the lease...but with the closure of the Hull building (400,000 sq ft), and with the state shifting office workers around downtown, the state is basically breaking old leases they do not like, shifting workers to state owned buildings, and in turn shifting workers from "decommissioned" buildings (like Hull) to other private properties.

 

It alleges that the state can receive a "kickback" from leases negotiated by Jones Lang LaSalle. The concerning aspect of this strategy is that the state might be looking to get out of current leases so it can make money via a kickback on new leases. Rather than simply restructuring office space, it seems like they could be playing musical chairs with private office space in order to receive kickback money rather than live out the terms of their leases. I do not like the idea of this tactic at all, or what it could mean to downtown office building vacancies. And if it is true, it seems to be highly unethical. 

 

If Project T3 was aimed at taking as much state leased office space away in order to place the workers in state owned buildings, that would be one thing. But this looks as if the aim could be to put more state workers in leased office buildings (where it is the landlord's responsibility to prep the building for the state's needs) and make money off of the commissions, rather than the state be responsible for caring for their own buildings. I'm sure it makes sense as a cost-cutting measure...but what it could mean for current state owned office buildings (especially older ones), is concerning, to say the least.

 

I encourage you to read as much of the document as possible. I think it is very, very interesting. Of course, this is 401 Church St's perspective, but they bring up some pretty valid points. I'll try to add some snippets from the document at a later time, when I get the chance.

 

What are your thoughts?

Interesting. I guess you have to look at from a business point of view. The city of Nashville is ran like a business and I certainly believe that if the city can get kickback's for something than they should take advantage of it. It's better than raising revenues via more taxes. This does raise questions about the cities committment to the older state owned buildings though.

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