Board of Contract Appeals General Services Administration Washington, D.C. 20405 _______________________________________________ Granted in Part: August 3, 1998 _______________________________________________ GSBCA 13525-REM CAFRITZ COMPANY, Appellant, v. GENERAL SERVICES ADMINISTRATION, Respondent. Rebecca L. Kehoe and Ki W. Nam of Cotten & Selfon, Washington, DC, counsel for Appellant. Kevin S. Anderson, Office of General Counsel, General Services Administration, Washington, DC, counsel for Respondent. Before Board Judges BORWICK, HYATT, and DeGRAFF. BORWICK, Board Judge. Appellant is the Cafritz Company (Cafritz), which seeks damages for the Government's holdover in premises leased by Cafritz to respondent, the General Services Administration (GSA). Cafritz seeks fair-market value holdover rental for an extended lease term or trespass damages from the Government. Both Cafritz and GSA had filed cross-motions for summary relief on appellant's entitlement to holdover damages. We granted the Government's motion for summary relief on the basis that appellant's claim for fair market value rental during the holdover sounded either in tort or implied-in-law-contract, over which we lacked jurisdic- tion. Cafritz Co. v. General Services Administration, GSBCA 13525, 97-1 BCA 28,680. The matter was remanded to the Board by order of the United States Court of Appeals for the Federal Circuit upon the motion of the United States for the Board to evaluate Cafritz's claim for holdover damages under a breach of contract theory. Cafritz Co. v. Barram, No. 97-1295 (Fed. Cir. Sept. 20, 1997) (remand order). After the remand we convened a hearing to receive evidence on the basis of which we could make supplemental findings on remaining factual issues in the appeal. At the hearing, respondent conceded that appellant was entitled to fair-market value rental for the holdover period, under a breach of contract theory. Transcript at 4. The only disputed issue was the amount of holdover rent due. In this regard, appellant makes two basic contentions: (1) that the holdover period should extend from November 25, 1994 through August 31, 1995 and (2) that the Government's appraisal of fair market value rent was too low because the appraiser failed to make certain upward adjustments in the rental rate for the short term of the holdover and for a premium for a large block of space. Appellant also maintains that the value of certain engineering services provided to respondent by appellant, and paid for by respondent throughout the lease and during the holdover period, must be added to the damage award. For the reasons that follow, we conclude that appellant is entitled to fair market value rent for the holdover period November 25, 1994 through July 31, 1995. We accept the GSA appraisal as the basis for establishing the fair market value of the leased premises. Respondent has paid once for the engineer- ing services; it does not have to pay for those services again. We modify our earlier opinion and grant the appeal in part, with quantum described below. Findings of Fact Original findings The parties have accepted the Board's original findings set forth in the remanded decision, which we quote (including foot- notes) below: Basic terms of lease The material facts are not in dispute. The Government and appellant entered into a lease for premises--1201- 1211-1221-1301 South Fern Street, Arlington, Virginia-- (known hereafter as the premises or the building) for a term from June 1, 1983 through November 25, 1986 at a rate of $61,041.67 per month. Appeal File, Exhibit 2. The lease allowed the Government to terminate the lease, at any time after December 21, 1984, by giving at least 120 days notice in writing; the lease did not contain a holdover clause. Id. The monthly and annual rent reflected a base rental rate and an operating costs escalation rate. The base rental rate was increased or decreased based on the agreement of the parties. The operating costs escalation rate was increased or decreased in accor- dance with the lease, with such increase or decrease based on changes in the consumer price index. Respon- dent's Motion for Summary Relief, Attachment 1, 5 (Declaration of John C. DeCosta, Deputy Director, Procurement and Contracts Office, Washington Headquar- ters Services, Pentagon (Sept. 9, 1996)). The operat- ing cost escalation rate also reflected costs for supplies, materials, maintenance, engineering services, and other maintenance expenses, which, according to the lease, were adjusted by the consumer price index. Id.1 Lease extensions By supplemental lease agreement (SLA) 7, the parties extended the lease's term until November 25, 1987, and provided the Government with a two year renewal option at the same rental rate and terms and conditions. Appeal File, Exhibit 5. On June 10, 1987, GSA exercised the option, extending the lease term through November 25, 1989. Id., Exhibit 7. By SLA 11, the parties extended the lease term through November 25, 1990, and provided the Government with a one year renewal option. Id., Exhibit 8. On August 1, 1990, the Government exercised that option, extending the lease term through November 25, 1991. Id., Exhibit 9. On November 25, 1991, the lease expired, with the Government not having obtained alternate space. On July 30, 1992, the parties entered into a standstill agreement, in which the parties agreed to enter into good faith negotiations for a succeeding lease, at a monthly rental retroactively effective from November 26, 1991. The parties agreed to undertake no actions that would damage the position of the Government with respect to its use of the property or the position of the landlord with respect to its ownership of the building. Respondent's Motion for Summary Relief, Attachment 3 at 1 ( 2), and 2. This agreement re- flected the landlord's desire to avoid a condemnation action, the Government's desire to avoid disruption to its operations, and the desire of both parties to avoid holdover status. Id. at 1 ( 2). As negotiated, the standstill agreement was to terminate on the earlier of September 18, 1992 or the date a new lease agreement was signed by the parties. ____________________ 1 The adjustments were calculated by multiplying the estimated total first year cost of these items by the percent of change in the consumer price index (CPI) figure from the base figure, i.e. the index figure published for the month prior to lease commencement. Appeal File, Exhibit 2 at 13 ( 7B). The percent change in the CPI would be determined by comparing the base figure with the index figure published for the month which began each successive twelve month period. Id. ___ Respondent's Motion for Summary Relief, Attachment 3 at 4. On September 30, 1992, the parties extended the standstill agreement through February 18, 1993. Lease payments and final lease extension Between November 26, 1991 and February 2, 1994, the Government paid, and Cafritz accepted, the monthly and annual rental of the expired lease, increasing the rental amount as required for operating cost escala- tion. Respondent's Motion for Summary Relief, Attach- ment 1 at 3 ( 8). The Government also paid, and Cafritz accepted, real estate tax payments during that period. Id. On February 3, 1994, the parties executed SLA 12, which extended the lease term through November 25, 1994. Appeal File, Exhibit 10. The SLA also gave the Government the right to terminate on or before March 31, 1994, upon written notice to the lessor at least thirty days before the intended termination date. Id. SLA A011 adjusted lease rental to account for increases in operating expenses and real estate taxes; the monthly rental under the lease after the adjustment and effective June 1, 1994, was $81,049.37. Respon- dent's Motion for Summary Relief, Attachment 1, Attach- ment 12 at 26. ____________________ 2 The second "attachment one" consists of separately paginated exhibits to the DeCosta Declaration, which itself is designated by respondent as "attachment one." Lease expiration, subsequent payments, and events leading to claim On September 12, 1994, the Government forwarded to Cafritz a proposed standstill agreement. Appeal File, Exhibit 11. On September 16, GSA advised the Depart- ment of Defense (DOD) that GSA had determined that long-term occupancy of the building would not be feasi- ble due to the cost to rectify numerous fire and life safety deficiencies in the building. Id., Exhibit 12. After lease expiration on November 25, 1994, Cafritz and the Government did not have a new agreement as to a monthly and annual rental rate; the Government continued to pay Cafritz the previously established monthly rental rate of $81,049.37. Respondent's Motion for Summary Relief, Attachment 2 at 2 ( 5) (Declara- tion of Marc Rappaport, Contracting Officer, General Services Administration (Sept. 9. 1996)). Cafritz did not demand that the Government quit the property or object to the Government's continued use of the build- ing. Id. At no time in 1994 or 1995 did Cafritz claim that the Government was a trespasser. Cafritz contin- ued to accept the monthly rental payments at the previ- ously established monthly rental rate. Id. In February or March of 1995, Cafritz advised the Government that it was not willing to renovate the property at its expense in order to satisfy National Fire Protection Association guidelines. Respondent's Motion for Summary Relief, Attachment 2 at 3 ( 7). On March 15, GSA personnel advised Cafritz that it was the Government's intent to vacate the property by July 31. Appeal File, Exhibit 28; Respondent's Statement of Undisputed Facts at 5 ( 17). Cafritz disputes the statement immediately above only to the extent that respondent did not make clear that the notice was oral. Appellant's Statement of Genuine Issues at 3 ( 17).3 For the purposes of deciding these cross-motions for summary relief, we will assume that the Government's notice of March 15, to Cafritz, was oral. On March 16, Cafritz advised GSA that while it had been willing to contemplate entering into another standstill agreement on the condition of GSA's entry ____________________ 3 Appellant submitted two statements of genuine issues, one on October 1, 1996, and an expanded version on October 4. The Board understands that the October 4 statement replaces the version submitted on October 1; all references to the Appellant's Statement of Genuine Issues are to the version submitted on October 4. into a long-term lease, "the short term in which you now expect to occupy the premises forces the Lessor to view your occupancy of the space as a holdover." Appeal File, Exhibit 15. Cafritz demanded "double the term rate, inclusive of all adjustments" for the pre- mises to "reflect the current fair market value of [the] lease." Id. Adjustments would include "the economic uncertainty of having a month to month tenant, the Lessor's inability to sell the property, and the potential increase[d] damage and remodeling costs due to the Government's tenancy." Id. On March 23, Ca- fritz wrote GSA and acknowledged that the Government intended to vacate the property "by the end of July 1995." Id., Exhibit 16. GSA responded on March 28, noting that it had been interested in negotiating a succeeding lease, that "negotiations were stalled by concerns over Fern Street," and that GSA "had requested a proposal from the owner for a long-term lease at Fern Street but the owner was not interested in providing a proposal to the Government." Appeal File, Exhibit 17. GSA denied any liability for remodeling costs because "those expenses would be incurred for any new tenant the lessor would house." Id. On April 27, Cafritz sent an invoice to the Gov- ernment for $486,296.22 for alleged holdover [rent] under the lease. This sum was comprised of $- 324,197.484--$81,049.37 per month for the alleged four-month holdover period November 26, 1994 through March 25, 1995--and $162,098.74 for the alleged hold- over through the month of April. Appeal File, Exhibit 18. On May 9, GSA refused to pay the invoice, stating that "there is no reference to the Lessor being permit- ted to unilaterally and arbitrarily setting [sic] a rental rate for the space." Id., Exhibit 19. On July 28, the Arlington County Fire Department advised Cafritz that "for all intents and purposes," with the exception of a small engineering staff, the premises would be vacant on July 31. Appeal File, Exhibit 26. As of August 1, the Government had physi- cally vacated the premises, including furniture and other items, with the exception of a few chairs and a forklift. Respondent's Statement of Undisputed Facts at 7 ( 25); Appellant's Statement of Genuine Issues at 4 ( 25); Respondent's Motion for Summary Relief, Attachment 2 at 4 ( 9). ____________________ 4 This was in addition to the rental payments already made. The Government retained the keys to the property through July 31, because Government employees were at the property removing items late into the evening of that day. During the first week of August, the few remaining items were removed from the property after Cafritz employees assisted the Government in gaining access to the property. Respondent's Statement of Undisputed Facts at 7 ( 25); Appellant's Statement of Genuine Issues at 4 ( 25). On August 1, Cafritz, at the request of the Fire Marshall, changed the locks of the premises, preventing the Government from gaining entry. Respondent's Statement of Undisputed Facts at 7 ( 26); Appellant's Statement of Genuine Issues at 4 ( 26) On August 24, Cafritz wrote to GSA and argued that the Government had been in holdover status for more than eight months. Appeal File, Exhibit 29. Cafritz argued that: [I]n accordance with Virginia law, VA Code 8, Title 55-223, the Government's willful hold- over, due to the negligence of the Government which could have been avoided with adequate planning by the Government, creates a new lease term in accordance with the terms of the previous Lease. Therefore, [Cafritz] elects to renew the Lease for one year, in accordance with Virginia law and the terms of [the] Expired GSA Lease No. GS-11B-20085, due to the Government's eight month holdover. The Lessor expects lease payments to continue in arrears through the term of the new Lease. Id. Cafritz stated that "the general rule in the law of landlord and tenant [is] that where a tenant [for] a year or other definite term holds over after the term and the landlord elects to hold the tenant for another term, the tenant is bound thereby." Id. Cafritz further argued that "the law implies an agreement on the part of the tenant." Id. Cafritz stated that: if it [was] the Government's intention to end the lease, the Government must provide writ- ten notice sufficiently in advance of the proposed termination in accordance with the terms of the lease, and per VA Code 8, Title 55-222. As stated in our previous correspon- dence, the Government has failed to provide the required written notice of its intent to terminate the lease. Id. On August 30, GSA replied to Cafritz's letter, stating that the Government gave Cafritz the required notice upon the Government's vacating the premises, and that, in any event, Cafritz acknowledged control over the building by changing the locks on August 1. Appeal File, Exhibit 30. Cafritz responded to GSA's letter on September 6. Appeal File, Exhibit 33. Cafritz maintained that (1) the Government had the general right to vacate the premises without terminating the lease, (2) the mere act of removing people and furniture from the property was insufficient to terminate the lease, (3) Cafritz construed GSA's letter of August 30 as the written notice of termination, and (4) Cafritz would take possession of the premises "for remediation purposes" on September 30, thirty days after GSA's "notice of termination." Id. On September 28, Cafritz submitted a certified claim to the contracting officer, maintaining that: 1. [T]he Government [had] been in holdover at the subject property for over ten (10) months, November 26, 1994, to September 30, 1995, and owes the Lessor double rent for the period of the holdover. The current amount past due is $810,493.70, or $81,049.37 per month of holdover, with interest. 2. Alternately, and in accordance with our letter dated August 24, 1995, as the Govern- ment has failed to pay rent in the amount stated above for the holdover period, and should the Government elect not to pay rent as stated above, the Lessor has no other recourse than to consider the Government's holding over as a renewal of the lease for an additional year's term in accordance with Federal and State Laws and the provisions of the original lease. The Government is there- fore liable for all damages from the Govern- ment's default under the lease. Appeal File, Exhibit 42. Cafritz maintained that the damages from the Government's default were those damag- es associated with the "removal and preparation" of the property for receipt of new tenants--$536,803 of im- provements necessary to make the space rentable. Id. The mistaken check On August 24, the Government informed Cafritz that it had mistakenly sent a check in the amount of $81,- 049.[3]7 to Cafritz for the August rent and asked that Cafritz return the check. Respondent's Statement of Undisputed Facts at 7 ( 28); Appellant's Statement of Genuine Issues at 4 ( 28). On September 1, Cafritz advised GSA that it had received a check from the Government for August 1995 rent. Cafritz deposited the check and advised GSA that it considered receipt of the check further evidence of the Government's intent to remain in the premises "for a full additional term." Appeal File, Exhibit 32. GSA immediately advised Cafritz that the check was mailed in error. Id., Exhibit 33. On May 10, 1996, the Government offset funds from the Government's real estate tax payments due to Cafritz under the lease, to recover a portion of Cafritz's debt of $81,049.[3]7 due to what the Govern- ment considers improper cashing of the check. Respon- dent's Motion for Summary Relief, Attachment 9. Cafritz Co., 97-1 BCA at 143,267-70. Supplemental findings Pricing of engineering services in lease Supplemental lease agreement seven The original lease provided an annual rent of $732,500 per year, or $61,041.67 per month, which included $247,500 per year for operation and maintenance of mechanical equipment on a continuous twenty-four hour per day, seven days per week basis. Appeal File, Exhibit 2. Effective February 1, 1985, SLA three reduced the portion of the rent for operation and maintenance of mechanical equipment to $185,500 per year and at the same time reduced the operating hours from twenty-four hours per day, seven days per week, to weekdays (legal holidays excepted), 8:00 a.m. through 6:00 p.m. Id., Exhibit 4. The rental reduction due to the change in the hours of operation and maintenance amounted to $62,000 per year. Id. SLA seven, effective November 26, 1986, established the annual rental at $708,149.25 per year, or $59,012.44 per month. The SLA also provided that "[i]n addition the Government shall pay the lessor a fee for engineering services in the amount of $16,293.08 per month." Appeal File, Exhibit 5. The yearly rate is $195,516.96 or $195,517 (rounded). GSA's internal pricing justifications explain that these services represented a "Govern- ment requirement . . . for operation and maintenance of Govern- ment installed above standard equipment on a [twenty-four] hour per day basis" and that the $195,517 per year was for those above standard services. Id., Exhibit 46. GSA's negotiator for SLA seven explained the intent of the negotiations and the signifi- cance of the SLA pricing: Q. It's not your testimony that the $195,517 is a payment for all services that are provided by the lessor for this property, is it? A. Yes, sir. Q. That is your testimony? A. All above standard services. Yes, sir. Q. All above standard services. When you say that, what do you mean by that? A. In this particular instance the offeror's proposal was net of any services. So his base rent did not include any services. In order to accommodate the requirements of this particular requirement [sic], the lessor was required to provide [twenty-four] hour-a-day engineering services. The cost of those services had to be negotiated and incorporated into his offer and subsequently into the lease. Q. I think this is where you and I are getting a little bit confused. This [twenty-four] hours of service provided, wasn't that service actually broken down by two separate payments? A. No, sir, it wasn't. Q. So you're saying that the entire [twenty-four] hour service was covered by the $195,517? A. Correct. JUDGE BORWICK: That was reflected in the monthly rental that was paid by GSA to the lessor? THE WITNESS: Yes, sir. JUDGE BORWICK: What was that monthly amount? THE WITNESS: For that specific service? JUDGE BORWICK: Yes. THE WITNESS: I would have to reflect my recollection, but it was approximately $16,000 per month. Transcript at 30-32. The witness's unrebutted testimony is supported by appel- lant's proposal for this SLA offering the space at $7 per square foot, with a separate charge for engineering services at $195,517 or $1.86 per square foot. Appeal File, Exhibit 45. It is also supported by GSA's contemporaneous price negotiation memorandum (PNM), which recognized that appellant was offering "$7.00 [per square foot] base rate plus $1.86 [per square foot] services" and that "lessor agreed to reduce his price to $6.75 [per square foot] plus services at $1.86." Id., Exhibit 47. The GSA lease negotiator further explained that, while at the beginning of the lease, the base rent did include engineering services, it was the intent of SLA seven to separate and distinguish the costs of engineering services from the costs of the base rent. Transcript at 36. The parties have stipulated that during the holdover period, respondent paid appellant at the rate of $81,049.37 per month and that the monthly payment during the holdover included a $16,293.08 component for the $195,517 included in SLA seven. Transcript at 31-32. There is a dispute of fact as to whether the Government's monthly payment of $81,049.37 during the holdover period included payment for all engineering services required under the lease to be provided by appellant to the Government. Based upon the unrebutted testimony of the GSA lease negotiator as to the intent of SLA seven, and the contemporaneous documents concerning the negotiation of SLA seven, we find as fact that the monthly payment covered all engineering services appellant was to provide under the lease. The GSA appraisals GSA contracted for an appraiser to estimate the fair annual rent of the leased premises. Appeal File, Exhibit 40 at 60.5 The appraiser is certified and licensed in Virginia and the District of Columbia. For five years, he served as a staff appraiser for Fairfax County, Virginia, and for five years after that, as an appraiser with GSA's National Capital Region (NCR). He also served as Director of NCR's appraisal staff for two years, and as a contract review appraiser with the Condemnation Section of the Environmental & Natural Resources Division of the Department of Justice for nearly two years. At the time of the appraisal, he was an appraiser with a private firm in Centre- ville, Virginia. Id. at 17; Transcript at 55. While he was with GSA, the appraiser conducted about thirty commercial appraisals per year, and when with Fairfax County, Virginia, he conducted over 900 residential (mass) appraisals per year. Transcript at 55. The appraiser conducted the appraisal of the fair market value rent of the appellant's premises on a fully serviced basis, which included all the services that would typically be provided to an office building cleaning, electricity, gas, oil, heating, ____________________ 5 Pagination reference is to the hand-written pagination at the bottom right of each page of the exhibit. ventilating and air conditioning (HVAC), water and sewer, re- pairs, management, and general building operations, based on a typical eleven-hour work day, five days per week. Transcript at 9-10; Appeal File, Exhibit 40 at 54. The appraiser researched the rental market at the time of valuation and compared the square foot rental rates of seven comparable older buildings in the Arlington, Virginia, market. The buildings surveyed were comparable to the appraised property in the following respects. Regarding location, the comparables were in the Arlington, Virginia, area, had similar access to Metrorail, and were located in similar neighborhoods. As to story height and overall condition, all of the office buildings were in poor to fair condition and built in the 1950s or early 1960s. As to space measurement, all buildings were measured on the basis used by the Washington, D.C. Association of Realtors (WDCAR) and adjusted by the appropriate percentage from the WDCAR basis to the industrial gross basis. All the leases on the comparables were fully serviced. All leases for the comparables had CPI escalation clauses. All rates for comparables were office rates and all comparable properties were in "as is" condition. Appeal File, Exhibit 40 at 45. With the exception of comparable seven, which had a Government lease of ten years, five of the other six comparables had relatively short term leases of three years; the remaining comparable was under a one-year lease. Id. at 46-52. The leases were for smaller properties, so the rental range is at the upper end of the market rental range. Appeal File, Exhibit 40 at 53; Transcript at 49. The appraiser adjusted the rental rate for the comparables based upon their location and building quality, in order to produce an "apples-to-apples" comparison. For example, he deducted $.50 per square foot from the rental rate of comparable one, to compensate for comparable one's closer location to Metrorail as compared to the leased premises. The appraiser reasoned that if the location of compa- rable one had been the same distance from Metrorail as the leased premises, the square foot rental rate would have been $.50 less. Conversely, he added $.50 to the square foot rental rate of comparable two because the location of that comparable was inferior to the location of the leased premises. All office comparables were escalated by a flat CPI adjustment of 3% or 35% of the CPI annually, with the exception of comparable seven--the Government lease. Appeal File, Exhibit 40 at 53; Transcript at 49. The square foot rates of comparables one through six were adjusted downward to reflect a conversion from a rentable mea- surement to an industrial gross measurement. Appeal File, Exhibit 40 at 53. The appraiser did not adjust the rental rate of the comparables to reflect a rental premium for large blocks of space. While acknowledging that "there is some argument for that possibility . . . it's hard to show clear evidence that it is the case in the market." Transcript at 62. He noted that the rental rates for comparables one through six, which were smaller blocks of space, were higher than the rate for comparable seven, which was the large block of space. Id. at 64. The appraiser did not give a premium rate to the leased space for the holdover of less than a year because he viewed the holdover as a continua- tion of the existing term. Id. at 63. The adjusted square foot rental rates for the properties ranged from a low of $13.11 to a high of $14.78. Appeal File, Exhibit 40 at 53. The appraiser concluded the fair annual rental to be $14 6 per square foot on a fully serviced basis. Id. The appraiser testified at the hearing and we have reviewed his testimony and appraisal report. We find the appraiser's conclu- sion as to the annual fair market rental rate per square foot to be thoughtful, convincing, and, significantly, unrebutted by contrary evidence presented by appellant. The leased premises contain 104,911 square feet. Appeal File, Exhibit 40 at 54. The appraiser derived a gross fair annual rental of $1,468,754 per year, or $122,396 per month or $4,023.98 per day. Id., at 57. The appraiser assumed a holdover period of November 25, 1994, through September 30, 1995. Thus the fair market rent for each of the nine holdover months was $122,396. The tenth holdover period was August 25 through September 30, 1995, which was one month plus an additional six days. The appraiser estimated $146,5407 for that period. Id. The lease for appellant's premises, however, was not on a fully serviced basis. Rather, the property was leased net of meterable utilities and janitorial services, which meant that the Government paid for those services directly. Appeal File, Exhibit 44 at 58; Transcript at 16. Based on specifications provided by GSA, the appraiser assumed that appellant was respon- sible for monitoring the fire alarms on a twenty-four hours per day, seven days per week basis, as well as for operation and maintenance of mechanical equipment twenty-four hours per day, seven days per week. Appeal File, Exhibit 44 at 5. The apprais- er therefore adjusted his appraisal to exclude the estimated cost of the utilities and janitorial services from the appraisal and to include the cost of appellant's providing fire alarm monitor- ing and operation and maintenance of mechanical equipment on a ____________________ 6 In this case, the appraiser estimated $5.87 per square foot for the expenses of a fully serviced property for a typical eleven hour work day, five days per week. Transcript at 10; Appeal File, Exhibit 40 at 54. 7 If one adds the product of six days at the daily fair market rental rate of $4,023.98 to the fair monthly market rental rate of $122,396, one obtains $146,539.88. The appraisal figure of $146,540 is that amount rounded. 8 Pagination reference is to the hand-written pagination at the bottom right of each page of the exhibit. twenty-four hours per day, seven days per week basis over and above a typical work day. Id. at 15; Transcript at 15-16. In making these adjusments, the appraiser first established the cost of meterable utilities and janitorial services for the holdover period to be $27,111.36 per month. The fair market value rental rate per month less those services was $95,284.64 for each holdover month. Appeal File, Exhibit 44 at 6. The appraiser then established the cost of monitoring the fire alarm system at $3,134.74 (annualized), or $261.23 per month for each holdover month for a total of $2,655.22 for the lease term. Appeal File, Exhibit 44 at 6. He derived the cost of twenty-four hour per day engineering services by referring to SLA three, which reduced the rent by $62,000 per year for the change from twenty-four hour per day engineering services to engineering services during normal working hours under the lease. He then applied a CPI adjustment factor of 1.4123 to account for a 41.23% increase in the CPI between the time SLA three was effective and the beginning of the holdover. He thus derived $87,562.60 as the adjusted annual cost for the twenty-four hour per day engineering services, or $7,296.88 per month. Id. at 6, 7, 15. Adding the monthly fair market value rent of $95,284.64, the monthly cost for monitoring the fire alarm of $261.23 and the monthly cost for engineering services of $7,296.88 results in a total monthly fair market value of $102,842.75. Id. Respondent notes, however, that SLA one relieved appellant of the responsibility for monitoring the fire alarm. Appeal File, Exhibit 3. Thus the cost of that service $261.23 per month--must be subtracted from the monthly fair market value rent. Subtracting that cost results in a proven monthly fair market value for the leased premises of $102,581.52. Discussion The parties' contentions Length of holdover period GSA maintains that the holdover period extends only to July 31, the date the Government actually vacated the premises. Appellant argues that the Government was in holdover "through the month of August" because the Government "left in the premises substantial amounts of furnishings." Appellant's Post-Hearing Brief at 11. The Government argues that the furnishings left were small in number. Appellant's argument does not convince us. The record does not establish that the Government left substan- tial furnishings in the premises which affected the appellant's use and occupancy.9 In this regard, appellant's reliance on T.W. Cole, PSBCA 3076, 92-3 BCA 25,091, is misplaced; that case in fact supports respondent's position. In Cole, the Government leased one floor of a multi-story building. After lease expira- tion the Government left in the premises so much furniture behind that dismantling of the existing aluminum and glass storefront system was required to remove the furniture. Cole, 92-3 BCA at 125,075. Thus, the board found that the Government was removing items up to November 15, 1990. However, the board refused to extend occupancy for the presence of items that did not bar the landlord's possession and use of the premises. Id. at 125,077. Here, the record does not suggest that the presence of a few chairs and a forklift hindered appellant's possession and use of the premises. Additionally, appellant locked the Government out of the building on August 1, 1995, thereby effectively taking posses- sion. Atkinson v. Rosenthal, 598 N.E 2d 666, 668 (Mass. Ct. App. 1992); Aldrich v. Olson, 531 P.2d 825, 827 (Wash. Ct. App. 1975). The holdover period, consequently, is November 25, 1994 through July 31, 1995. Appellant argues that GSA's mailing (to Cafritz) of a check for the August rent was GSA's recognition of a holdover term extending through August. GSA, however, had vacated the building on July 31. GSA sent that check by mistake, and GSA so advised Cafritz before the landlord received the check. Cafritz could not have been misled. Quantum Appellant is entitled to the fair market rental value of the premises for the holdover period less what GSA has paid appellant during the holdover period. Burdette A. Rupert v. General Services Administration, GSBCA 10523, 93-1 BCA 25,243, at 125,730. The proven fair market value for the leased premises is $102,581.52 per month. GSA paid appellant $81,049.37 per month for the holdover period, which began on November 25, 1994. GSA must pay appellant an additional $21,532.15 per month, calculated from the 25th of each calendar month, for the holdover period. The holdover period is from November 25, 1994 through July 31, 1995, a period of eight months and nine days. In its brief, GSA suggests that appellant is due an additional payment for six days beyond the eight month holdover period, or a total of $192,- ____________________ 9 Appellant attaches to its opening brief photographs of tables and chairs which it states the Government left in the building. Appellant did not introduce these photographs as evidence during the motion phase of this appeal or during the hearing. The Board closed the evidentiary record at the conclusion of the hearing. Transcript at 68. Appellant may not now introduce new evidence during the briefing phase of the appeal. Attachment B to appellant's brief is rejected. 773.50. Respondent's Post-Hearing Brief at 20. GSA's calcula- tions would be correct if GSA's last rent check covered rent through July 25. However, if the last check covered occupancy only through July 22, then GSA owes appellant $203,031.66.10 Appellant argues it deserves a higher amount. It maintains the GSA appraisal is too low and suggests a "modest" upward adjustment of 10% for size and 15% for the term. Appellant's Post-Hearing Brief at 6-7. Appellant argues that the appraiser did not take into account an allegedly tight rental market for large blocks of space and did not assign a premium for the supposedly short term of the lease. We disagree. Here, the appraiser chose as comparables older buildings, similar to the leased premises, with short term leases of three years or less. One of the comparables had a lease of one year, a term close to the holdover period of the leased premises. These short-term lease comparables were balanced by the last comparable for a large block of space with a relatively long term. Finally, the appraiser chose comparables with limiting factors that appellant alleges were ignored, with leases that were entered into at about the time of the holdover period. Appellant does not explain why the square foot rental rates the appraiser studied are unrepre- sentative of the rental market conditions in the Arlington, Virginia, area. We recognize, as does the Court of Federal Claims, that appraising is as much an art as a science, Park Village Apart- ments v. United States, 32 Fed. Cl. 441, 449 (1994), and thus involves subjective judgments. Appellant here takes issue with minor aspects of the appraisal but has not introduced contrary expert testimony or otherwise demonstrated that the appraiser's conclusions are unreliable. Finally, appellant argues that either the amount the Govern- ment paid as holdover rent should be reduced, or the amount of the appraisal increased, because the payment for the engineering services added to the GSA lease by SLA seven "was the equivalent of a service type contract" and the funds "[were] not paid to the appellant for the use of the property, but for the services provided." Appellant's Post-Hearing Brief at 11. This argument is unpersuasive. The parties negotiated SLA seven as an integral part of the lease negotiation process to satisfy the requirements of the lease. The purpose of SLA seven, as the lease negotiator testified, was to incorporate the cost of the services into the lease. The parties have stipulated that the monthly holdover payment included the monthly cost of those services. Appellant has not shown a basis for its requested adjustment; granting its ____________________ 10 That figure is derived by taking $172,257.20 as the difference between the fair market value rent and the monthly rent GSA had paid for the eight-month holdover period ending on July 22, plus an additional $30,774.46, which is nine days of fair market value rent. request would result in a double payment to appellant for the services provided. Decision The appeal is GRANTED IN PART. Appellant is entitled to the fair market value rent for the holdover term of November 25, 1994 through July 31, 1995, with quantum as described above, plus applicable interest under the Contract Disputes Act of 1978. _________________________ ANTHONY S. BORWICK Board Judge We concur: __________________________ _______________________- ___ CATHERINE B. HYATT MARTHA H. DeGRAFF Board Judge Board Judge