The city has filed suit against developer Forest City Ratner over the terms of a ground lease for an entertainment complex the developer operates on West 42nd Street.That's a pretty tiny base rent, so it's understandable why there may be a debate about interpreting the clauses. The case is The City of New York vs. FC 42nd Street Associates, L.P.
Forest City and the city are at loggerheads over whether or not, in determining the terms of the lease, the rents being paid by sublease tenants in the space should be taken into account. Forest City says they should, while the city claims the value should be determined by current market conditions rather than old leases.
Forest City has held the ground lease on the 312,000-square-foot complex at 234 West 42nd Street, which is home to AMC Theaters and Madame Tussauds, since 1996, but it’s due to enter its second term in 2018 and is therefore due for renegotiation. Forest City paid a base rent of $1.17 million a year for the first 20 years of the lease, according to public filings.
It is interesting, though, that the city and Forest City actually went to court, given the generally cordial relationship. But there's big money at stake.