Making Tenant Pay Fair Share of After-Hours Lighting

Q: My shopping center leases let me pass through the cost of lighting the parking lot during center hours. But some of my tenants—such as a movie theater and a restaurant—commonly stay open after center hours. I want to charge them for the extra cost of lighting the parking lot after hours. Can I do this? If so, how?

A: It depends on how your lease defines the tenant’s pro rata share of the costs of lighting the parking lot after hours. Most leases say that the tenant must pay its pro rata share, as defined in the lease, of this extra cost. But that’s not the best way to get the result you want. Why? Those leases typically define the tenant’s pro rata share as a percentage of leasable space in the center. That’s usually a set number in the lease, say 10 percent. But suppose two tenants that each occupy 10 percent of the center are the only tenants that consistently use the parking lot after hours. With this pro rata share language they would each pay only 10 percent of the extra lighting cost. That would leave you footing the bill for the remaining 80 percent.

Instead, use lease language that gets an after-hours tenant to pay its full share. You can do this by defining the tenant’s pro rata share of the cost of lighting the parking lot after hours so that the entire extra cost will be divided among the tenants that use the parking lot after hours. It’s a good idea to exclude any anchors or supermarkets that stay open after hours—these types of tenants typically won’t pay for extras like this. To use this solution, add the following lease language to the clause that covers the tenant’s payments for extra services:

Model Lease Language

If Tenant remains open after [insert time, e.g., 9 p.m.], Tenant will pay to Landlord Tenant’s pro rata share of the cost of lighting the parking lot after [insert time, e.g., 9 p.m.] (“After Hours Parking Lot Lighting Cost”). For purposes of this clause, Tenant’s pro rata share of the After Hours Parking Lot Lighting Cost shall be a fraction with a numerator that shall be the Tenant’s leasable square footage of the Premises and a denominator that shall be the leased square footage of all tenants, including the Tenant, that are open after [insert time, e.g., 9 p.m.], but excluding any [insert any excluded tenant, e.g., supermarket] in the Center.