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.”