An arbitration judge has ruled that landlord Shuwa Investments Corp. cannot force its largest tenant at Arco Plaza to help pay for costly fire-safety upgrades to the downtown Los Angeles office-and-retail complex.
Shuwa and Bank of America began arbitration proceedings last year after the bank refused to pay the additional fees--which would amount to $6 million by the time its lease ends in 2004, the bank's attorneys say.
The fees were to be used to offset the $29-million loan Shuwa received from a city bond issue to pay for fire sprinklers and asbestos abatement in the two 51-story towers--items required by a 1988 city ordinance and installed between 1989 and 1993.
The fees were passed along to B of A through a special lease clause stipulating that it pay any escalations in property tax. When the special assessment levied by the city to repay the bond was included on a tax bill, attorneys say Shuwa decided to pass on a large share of that to Bank of America.