Seventh Session

(27 June - 1 July 1994)

LETTER DATED 3 JUNE 1994 FROM THE DIRECTOR OF THE OPCW FOUNDATION ADDRESSED TO THE EXECUTIVE SECRETARY OF THE PREPARATORY COMMISSION FOR THE OPCW

Subject: "Basic rent" office-building, guarantee $ 250 per m²

^{In the Netherlands bid a guarantee is given that the lease price for the new purpose-built OPCW-building will never exceed $ 250, - per square meter (indexed on the basis of the 1992 price level, basic rent). I observed that there is some lack of clarity about the concept of "basic rent".}

^{In this letter I shall try to give you an explanation what was the intention of the Netherlands when it offered this guarantee, and what was meant by "basic rent".}

^{The Resolution Establishing the Preparatory Commission for the Organisation for the Prohibition of Chemical Weapons ("Paris Resolution"), in Annex 3, paragraph 6 stipulates the following:}

^{"for a period of 3 years during the full implementation phase, The Hague and the Netherlands will pay for the rent of the office space, ( . . . . ), maintenance costs of the building and the installations, energy costs (heating, cooling, electricity, water) and turn-key costs (carpeting, partitioning).}

^{As can be deducted from this text "rent" does not include maintenance costs, energy costs, and turn-key costs. These costs are explicitly mentioned separately from rent.}

^{In principle the tenant of a building is confronted with two categories of costs.}

^{a. (basic) rent, i.e. the amount of money he has to pay to the owner of the building for the use of the building as such}

^{b. costs of tenants' wishes, i.e. costs of investments done by the tenant or on his behalf for adaptations of the building in order to make the building suitable for the specific use by the tenant.}

^{In the basic rent are included the ground-costs, standard facilities (such as lifts, ceilings with light boxes, installations for cooling, heating, lighting, sanitary, wall ducts) and the maintenance costs (not cleaning costs) for the building and those installations.}

^{The tenant's wishes are those investments which are done especially for one specific tenant. Generally the tenant himself will do those investments. The variety and extent of those investments are in principle unlimited as long as the owner of the building agrees with the adaptation of his building. In most tenancy-agreements such investments can only be made after written permission from the owner.}

^{Of course it is possible to agree with the owner that he delivers the building "turn-key" to a specific tenant, especially when the building is brand-new. In principle every variant is conceivable. In such a situation the owner pays for the initial investments done on behalf of the tenant. This necessitates an extra agreement between the owner and the tenant how to compensate those costs. Those costs, however, are not part of the basic rent.}

^{Also in the situation that a tenant decides to hire an existing building, he has to pay for the fit-up costs in addition to the rent. The height of those fit-up costs is entirely determined by and subject to the tenant's own wishes. Therefore those costs are open-ended. That is the reason why a guarantee that those costs will not exceed a certain amount of money can never be given.}

^{A real-life case is the present office-building of the PTS/OPCW at Laan van Meerdervoort 51. The OPCW-Foundation pays the basic rent to the owner, Delta Lloyd. And in addition to that rent, the OPCW-Foundation also paid for partitioning walls, carpeting and cabling. The owner was in no way financially involved in those costs.}

^[signed]

^{G. K. Hamming}

^{OPCW-Foundation}

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