Success Story 1 - $5M in Savings
Issue
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Real Estate tax base year was lower than expected – occupy 67% of space
Opportunity
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Review the real estate tax records and property cards from the city to determine if the taxes were based on a fully assessed basis
Audit Findings
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Real Estate taxes not representative of a fully grossed up building and were not based on a fully assessed /fully occupied building
Results
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$544K increase to the base year and savings of $5M over the life of the lease
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Success Story 2 - $1M in Savings
Issue
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Operating expenses in first year after the base year increased 6% and $345K – occupy 65% of space
Opportunity
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Independently performed a detailed operating expense audit.
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Analyzed contract changes, warranties, electric for vacant floors, gross up accounting, vacancy credits, new services provided, janitorial contract, staff levels and confirmed if the calculations were prepared in accordance with the lease
Audit Findings
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Maintenance contracts that were not in the base year
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Increased staff levels for the janitorial contract
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Additional security guards and changes to the number of hours worked
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Base year expenses not accrued and incurred in the following year
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Charges were included that should be excluded per the lease
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Expenses not properly grossed up per the lease
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Results
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$117K increase to the base year and savings of $1M over the life of the lease
Success Story 3 - $1M in Savings
Issue
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Operating expenses 5 years after the base year increased by $121K and 5% from the prior year and the landlord indicated some categories reduced in cost during this time – occupy 65% of space
Opportunity
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Performed a preliminary desk audit of the expenses based on increases in a couple categories that the landlord did not explain to our satisfaction
Audit Findings
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An additional security guard was added that was not in the base year
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A day porter was added that was not in the base year
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The elevator contract changed from weekday to weekend service at an increased cost and changed the scope of the original contract in the base year
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Results
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$145K increase to the base year and savings of $1M over the life of the lease
Success Story 4 - $0.6M in Savings
Issue
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Operating expenses in first year after the base year increased 8% and $0.6M - occupy 11% of space
Opportunity
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Independently performed a detailed operating expense audit. Analyzed contract changes, warranties, electric for vacant floors, gross up accounting, vacancy credits, new services provided, janitorial contract, staff levels and confirmed if the calculations were prepared in accordance with the lease
Audit Findings
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Maintenance contracts that were not in the base year
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Cleaning contract was re-bid and the scope of services were changed
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Common charges for café operation added in the year after the base year
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Building shutdown charges added in year 1
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Base year expenses not accrued and incurred in the following year
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Charges were included for fixing a heating problem with the garage but this was not permitted as the lease language indicated the floor above the garage was to be heated at a certain level
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Charges were included that should be excluded per the lease
Results
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$491K increase to the base year and savings of $600K over the life of the lease
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Reduction of $400K of expenses from the year after the base for an additional $50K reduction
