Ground Lease Negotiations in Public-Private Developments
Created on October 30, 2017
Many public-private development projects are structured through the use of a ground lease. Given the competing objectives of the parties and the long-term nature of the relationship, ground lease negotiations are typically fairly complex, and while negotiations may be lengthy, the parties can find great value in a ground lease through careful consideration of its key provisions. For the public sector party, a ground lease provides a mechanism to structure its involvement in both the project's development and operational phases, the means to ensure that particular public interest objectives are achieved and the opportunity to realize longer-term economic value in the property once improved. For the private sector party, a ground lease allows for the opportunity to develop a project without carrying a significant upfront acquisition cost for the land, a means to access tax benefits in connection with the project and a structure that can adjust over time as the project enters different stages of its development and operations.
This course, presented by Patrick O'Sullivan, Partner at Herrick Feinstein LLP, reviews the use of ground leases in the public-private development context and highlights how negotiation of its key provisions can facilitate the successful development of such projects.
- Identify the key terms to be negotiated in a ground lease involving a public-private development
- Discuss what the key challenges are in negotiating each of these terms
- Understand the objectives of the public sector and private sector in negotiating ground lease terms
- Review the ways that parties can craft provisions to align their interests and optimally allocate risks in these transactions
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