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jakeburdett OP t1_je35k9f wrote

Reply to comment by JimboSkillet in Former Columbia Association President Lakey Boyd EXPOSED for Questionable, Seemingly Corrupt Decisions in Office by jakeburdett

Great question, and I address that point towards the end of this piece:

“Defenders of former CA President Boyd may argue that the terms of the December 2021 lease contract awarded to the new Howard Hughes Corporation tenant (The Collective 13) was signed during the COVID-19 pandemic and that the lower monthly rent rate and no annual inflation adjustments were justified due to “pandemic hardship”.

It is true that many businesses were struggling financially during the pandemic and that the previous tenant did not renew their lease potentially because they were unable to afford the monthly rent rates they were being charged under their contract established in 2013.

In a case such as this one, would a rent reduction for a future tenant be justified?

Let’s address that question with a few other questions:

How many Howard Hughes Corporation residential tenants were either evicted or did not renew their leases during COVID due to financial hardship?

Did the future tenants who moved in after the prior tenants were forced out due to hardship also receive a 50%+ decrease in monthly rent?

It is highly doubtful that this occurred. Even if the extremely low rental rates in this 2021 CA contract were set using COVID hardship as justification, the contract spans 2021 to 2027 and could even be extended through 2032, well after the effects of COVID are no longer a significant justification for hardship.

Beyond that, even if a rent reduction was justified, how was this drastic of a reduction calculated? Why was inflation adjustment not included? Answers to these questions are exactly the kind that the CA Board of Directors and the public deserve. These types of contracts and leases should be getting appraised for fair market value, rather than picking some arbitrarily low number.

It was incumbent upon Lakey Boyd as CA President to fulfill her fiduciary duty to CA residents and prove that a valid methodology was used to establish these seemingly low monthly rent rates as the true market value for the CA-owned open space that she leased out to a tenant of the private developer Howard Hughes Corporation. Otherwise, the CA would be at risk of violating IRS Rev. Rul. 72-102, potentially putting the CA’s tax-exempt status as a 501(c)(4) non-profit service corporation in serious jeopardy.”

If you are still skeptical and not convinced yet, then be on the lookout for Part 3!

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JimboSkillet t1_je36x1y wrote

Cut to the chase already. Did anyone else want to rent this space for more? Who specifically?

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blorbschploble t1_je37qe9 wrote

Yeah. Boyd could be satan incarnate but this NY Post quality tabloid prose doesn’t fly in HoCo/Columbia.

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jakeburdett OP t1_je37kvk wrote

Not sure, but that doesn’t address the question of how was this huge monthly rent rate decrease arrived at? What was Lakey Boyd’s methodology of reaching these low rates? Was a fair market evaluation appraisal conducted, as it should have? You may be right that perhaps a rent reduction was justified to find a new tenant. But what she have been justified in renting it out at $1/month at that point? There needs to be a reasonable formula/methodology of arriving at these numbers, rather than choosing them arbitrarily, which would be a betrayal of her fiduciary duties to CA residents. I’m not sure the details of how this rate was calculated, and until we know, all we can do is speculate. But without knowing more, this did not seem even close to up to snuff.

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JimboSkillet t1_je383kj wrote

All you’re doing is speculating then?

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jakeburdett OP t1_je38l6e wrote

No, it’s verifiably true that if the terms of the previous lease were kept, it would have resulted in over $1 million in additional revenue for the CA. Whether that is justified or not is speculation, I suppose, but until I’m given a convincing justification (which we have not been given), I’m led to believe this was a sweetheart deal.

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evergreenneedles t1_je3c06s wrote

But there wasn’t an active lease because that business closed. Covid changed many things, including real estate and the restaurant industry.

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jakeburdett OP t1_je3cppn wrote

The previous tenant’s lease was active from 2013-2021, and the lease for the new tenant was signed in December 2021. Both tenants were in the same industry, using the same open space for the same reasons. So it is a good comparison

Your point about the pandemic is a good one, but keep in mind that the terms of Lakey’s 2021 contract can still be in place as late as 2032, well after the effects of COVID have subsided. I addressed the point you’re making in the blog. I’ve copied and pasted that part below, to show that residential tenants were certainly not extended this same courtesy:

“Defenders of former CA President Boyd may argue that the terms of the December 2021 lease contract awarded to the new Howard Hughes Corporation tenant (The Collective 13) was signed during the COVID-19 pandemic and that the lower monthly rent rate and no annual inflation adjustments were justified due to “pandemic hardship”.

It is true that many businesses were struggling financially during the pandemic and that the previous tenant did not renew their lease potentially because they were unable to afford the monthly rent rates they were being charged under their contract established in 2013.

In a case such as this one, would a rent reduction for a future tenant be justified?

Let’s address that question with a few other questions:

How many Howard Hughes Corporation residential tenants were either evicted or did not renew their leases during COVID due to financial hardship?

Did the future tenants who moved in after the prior tenants were forced out due to hardship also receive a 50%+ decrease in monthly rent?

It is highly doubtful that this occurred. Even if the extremely low rental rates in this 2021 CA contract were set using COVID hardship as justification, the contract spans 2021 to 2027 and could even be extended through 2032, well after the effects of COVID are no longer a significant justification for hardship.

Beyond that, even if a rent reduction was justified, how was this drastic of a reduction calculated? Why was inflation adjustment not included? Answers to these questions are exactly the kind that the CA Board of Directors and the public deserve. These types of contracts and leases should be getting appraised for fair market value, rather than picking some arbitrarily low number.

It was incumbent upon Lakey Boyd as CA President to fulfill her fiduciary duty to CA residents and prove that a valid methodology was used to establish these seemingly low monthly rent rates as the true market value for the CA-owned open space that she leased out to a tenant of the private developer Howard Hughes Corporation. Otherwise, the CA would be at risk of violating IRS Rev. Rul. 72-102, potentially putting the CA’s tax-exempt status as a 501(c)(4) non-profit service corporation in serious jeopardy.”

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