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These excerpts are taken from an article called "How to Show Your Administrative Fees Are Fair" from a newsletter called "Shopping Center Management Insider":

On Administrative Fees:

"...tenants don't always feel that they're getting their money's worth. Some of these tenants refuse to pay some or all of their assessed CAM charges to protest high administrative fees."

How to Deal With Tenants:

"One winning strategy is to meet face to face with them to try to persuade them to pay, says shopping center executive Alan Alexander. Show them how much effort it takes to administer your center and the benefits they get from good administration. Once they understand the value they're getting for their fees, they're more likely to pay, says Alexander.

How To Convince Tenants That Your Administrative Fees Are Fair:

"List items covered by the administrative fee. Let each tenant know about all the tasks of your center that you supervise. If a tenant understands how many there are, he or she is more likely to consider your administrative fee to be justified."

On Administrative Tasks:

"You can say something like: Administering the common areas is a time consuming job. We are constantly inspecting the property to see what maintenance work is needed. We spend much of our time dealing with outside contractors that provide services to our center. We must supervise work done by HVAC contractors, roof specialists, lighting specialists, landscaping contractors, security personnel, tax appeal consultants, insurance carriers, construction contractors, and other contractors as the need arises. We first inspect the property, decide on what has to be done, write a bid specification, get bids for work that needs to be done, negotiate contracts with contractors, supervise the contracts while they're being carried out, deal with any tenant complaints or contractor problems during the life of the contract, keep and maintain records to ensure that the contractor is charging a fair amount, and make sure you're billed that proper amount for the contractor's services. And we do this for every contractor."

A Specific Example:

"You can say something like: Take the example of parking lot sweeping. We had to send out bids and determine which company to hire. We had to set up a plan for our sweepers, telling them what to sweep, when and how often. We had to take time to explain the plan to them and then more time to supervise them, especially at first, to make sure they showed up and did the job properly. This easily consumed 35 to 40 man hours, which didn't include the time we needed to deal with special problems that cropped up. We also had to determine the proper levels of insurance coverage to protect the owners, managers, and tenants, and be sure that the contractors provided evidence of such coverage and kept it current. And keep in mind that this was the time it took to deal with just one contractor doing a relatively uncomplicated job."

On Other Benefits of Administration:

"You can say something like: You may not know it, but by spending enough time and effort to administer the center, we've avoided a number of crises. For example, during a roof inspection we noticed some cracks and quickly got them sealed. If we hadn't inspected and acted so promptly, the damage to the roof might have become major and cost a lot more to repair. If the problem had gone undetected for a long time, we might have noticed it only when water started leaking into your tenant space. But because we take the time to make regular inspections of the roof, you don't have to worry about that happening."

On Profit From the Fees:

"Some tenants object to administrative fees because they believe the management companies are making a profit on them, or that the salaries of your operations people and managers are bloated. Consider giving these tenants a general idea of the range of salaries you pay your operations people and managers, says Alexander. Doing so can convince the tenant that salaries are reasonable, making the tenant likelier to pay. You can say something like: We really need the fees to cover the salaries of our operations people and managers. The salaries of most of our operations people and managers range from $25,000 to $35,000 a year in salary and benefits, well in line with industry figures."

On Results:

"End your discussion by asking the tenant if she now is willing to pay the administrative fee. Nine times out of ten, the tenant will say yes, says Alexander. Then, if the tenant agrees to pay, ask when you can expect to get the check."

(Alan Alexander is the Senior Vice President of Woodmont Real Estate Services of Belmont, CA.)

To receive a copy of the entire article call 1-800-643-8095.

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