REDEVELOPMENT OF EXISTING SITES AND BUILDINGS MARK ELLIOT & DAVID KIRK
Moratoria
A
final
consideration
when
planning
for
a
redevelopment project is the potential for the local
governing authority to institute a moratorium on new
zoning applications, new building permits for particular
uses, or other essential approvals. While such
moratoria are required to be "temporary" in nature,
courts look to the particular facts and circumstances of
each case to determine if a moratorium lasts so long
as to overly restrict property development and result in
a compensable "taking" of property. As a result, a moratorium may last several months while the local
government takes steps to address the purpose of the moratorium, such as the drafting of regulations
governing mixeduse redevelopment.
Leases
With leases, there are matters and standard
lease terms of which the owner which intends
to densify must be aware. Most of what is
discussed here for leases comes out of
negotiated terms in leases; they are "market"
terms, but they appear in a lease that has
been fairly negotiated; this is a problem where
there is a large tenancy. The key for an owner
to keep in mind is that leases exist in the
building(s) being impacted, and the lease is a
complex
contract;
if
redevelopment
or
densification violates the terms of the contract, then the owner could be liable to the tenant in damages; be
subject to injunction; or risk a termination of the contract (lease), if the violation goes to a material element of
the bargain. None of these possibilities are matters owners desire to face, when trying to create more leasable
space, for more cash flow; losing a tenant because of a material lease violation is going backwards.
What are the areas in leases that an owner in this situation ought to pay attention to? Where do traps lie? The
answer will depend on the type of densification desired.