By Andrew Welsh-Huggins
Associated Press
via Washington Post
Saturday, April 23, 2016
COLUMBUS, Ohio -- A downtown office building is worth its weight in gold,
according to a federal judge who upheld a nearly century-old lease that tied
rent to the current price of the metal.
Last month's ruling means rent paid by the company leasing the Commerce
Building from a group of five property owners could jump from $6,000 annually
to more than $300,000.
At issue is a so-called "gold clause" included in the original
1919 lease. The provision, common at the time, linked rent to the price of
gold to account for inflation, similar to today’s consumer price index.
"This really is a vindication of property rights," said
Washington, D.C.-based attorney Peter Patterson, who represents the five
owners.
In 1919 the value of gold was $20.67 per ounce, compared to more than
$1,200 per ounce today. The property owners have been charging a yearly rent
of $6,000 since that original lease, which was assumed by Commonwealth
Investments in 1990.
That deal, Patterson argued in a 2014 lawsuit, has resulted in a windfall for
the group, since their more than 40 tenants are charged $900,000 annually.
In 1933, in the midst of the Depression, the gold clauses were prohibited
as part of efforts to reform the monetary system, which also included a ban
on private ownership of gold from 1934 until 1973.
A 1977 law once again permitted gold clauses in new leasing agreements.
That set up debates over interpretations of agreements when new parties
entered them and whether an original clause could still be enforced. ...
... For the remainder of the report:
https://www.washingtonpost.com/national/judge...-can-charge-...
