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1

Protecting Your Business
Issues to Consider When Sharing Offce Space After a Disaster
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1

Introduction
During a disaster, companies have valuable physical, business, and human assets to protect. Business continuity planning
is a critical component of a companys preparedness for the disruptions that a disaster may bring and can help minimize
or even prevent serious damage to a companys employees, facilities, reputation, and future. An important element of
business continuity planning is identifying and securing alternative locations to maintain your companys operations.
This guide provides an overview of key issues that businesses should consider when entering into an offce-sharing
agreement immediately following a disaster. The guide is divided into two sections one specifc to the hosted company
and the other for the host company and addresses the following areas:
*
Organizational and cultural differences
*
Real estate and leasing concerns
*
Tax credits
*
Security provisions
*
Insurance coverage
*
Communications
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2

Assembling a Team
Crisis and business continuity managers should use this guide
in consultation with a team of representatives from across the
company, including:
*
Senior Management
*
Corporate Affairs
*
Legal
*
Insurance
*
Technology
*
Human Resources
*
Security
*
Real Estate
*
Accounting
*
Communications
*
Community Affairs

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Safeguarding employees and critical business
data are the two most important goals of any
disaster plan. A companys particular needs
are the key factor in deciding how and where
to relocate after a disaster.
Businesses that are seeking temporary
offce space should evaluate the importance
of geographical proximity to their current
space if they need access to their plants and
warehouses, clients, government agencies,
public transportation, and other resources to
successfully maintain operations.
In addition, a company must consider security
concerns, especially access to confdential
data and information, and choose a location
that protects its core assets and allows for
continued operation until adverse circum-
stances return to normal.
For the company seeking temporary offce
space, it is important to meet with the hosting
company in advance to establish rules and
protocols, including:
*
Workspace requirements (e.g. comput-
ers/laptops, telephones, printers, fax
machines, meeting space, etc.)
*
Payment structure
*
Cost-sharing agreements for offce
supplies, mail/courier services and
administrative and technical support
*
Access and use of facilities (e.g.
cafeteria, parking spaces, and
confdential areas)
*
Use of reception and common areas
*
Building signage
*
General hours of operation
Consider the social and cultural differences
between your company and the host company
when exploring an offce-sharing agreement.
A transition to a dramatically different environ-
ment may add to the stress of employees who
are already experiencing increased levels of
stress from the disaster. Involve Human
Resource managers whenever possible to
ensure the welfare of your companys workforce.
determine
determine your needs
Hosted Company
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1

determine
Host Company
As the organization that is offering its space on loan
or for a short-term lease, it is important to protect
your business. Establish clear rules with the hosted
company and prepare a license agreement to avoid
having the company stay past its expected time.
The license agreement should contain an indem-
nifcation clause an article within a contract that
requires the company that is borrowing space to
compensate or reimburse the hosting company for
any expense or loss due to any breach, or alleged
breach, of contract. This agreement serves as an
extra level of protection against any liability incurred
by the hosted company or its employees, consul-
tants, or guests while on the premises.
your needs
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Before looking for temporary rental space,
your company should determine if your
current landlord has included a reloca-
tion clause in the offce lease that gives
the landlord the authority to relocate your
business to another location.
If the host company does not own its space,
make sure it has a fully executed copy of its
lease and is permitted to host another frm.
Verify that the lease allows for subletting
and short stays and determine if hosting a
frm technically a sublease could trigger
any rent sharing or even an owners right to
terminate the lease.
evaluate
evaluate your lease
Hosted Company
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Review your right to make alterations to your
lease so your company does not incur any
unexpected costs or impediments. Deter-
mine who would be responsible for repairing
and restoring the premises and making any
capital improvements.
your lease
Host Company
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check for
check for tax credits
Hosted Company
There are a number of tax credits and
extensions your business may qualify for
after a disaster that can be used to help
cover the costs of renting space. For
example, the Hurricane Katrina Tax Relief
Act of 2005 provides various credits to
employers affected by Hurricane Katrina.
Before entering into any agreement, con-
tact the IRS for information regarding:
*
Loss of W2s and permission to recon-
struct lost records
*
Eligibility to receive payroll and end-of-
year tax form extensions
*
Rules that enable uninsured losses to
be deducted on your federal tax return
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8

As the host, your company should
determine the extent of its rights and tax
allowances. These may include the ability
to obtain deductions for disaster-related
expenses, tax credits, or other benefts for
hosting another company that has been
displaced by a disaster.

Your company should also check with
municipal or state development agencies to
determine if it is entitled to special credits,
deductions, or program benefts as a result
of hosting another organization due to a
casualty.
check for
Host Company
tax credits
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D

American Express
September 11th caused massive destruction
to lower Manhattan and displaced thousands
of employees in a matter of hours. Ameri-
can Express occupied a large portion of the
World Financial Center and now had over
4,000 employees without a place to work.
This situation affected employees, organiza-
tional structure, and business operations.
Immediately, company leaders assembled a
cross-functional team which included senior
management, corporate security, technol-
ogy, business continuity planning, and real
estate to determine how they could quickly
and effectively relocate their employees.
The real estate team immediately contacted
real estate brokers, building managers, and
other companies in the tri-state area to
determine where there was available space.
Key criteria in the search included access to
public transportation, readiness to occupy,
area amenities, and fexible lease terms to
allow for American Express continued opera-
tion until circumstances permitted them to
return to Lower Manhattan.
American Express chose to move to multiple
offce buildings owned by different com-
panies in Connecticut and New Jersey and
signed leases of varying lengths. Once the
leases were fnalized, the space was ftted
with proper technology, security and furni-
ture for immediate occupancy.
Throughout this effort a separate team began
working with insurance carriers to iden-
tify needs in order to continue operations
through the disaster.
Clients were notifed of the relocation plans
and Kenneth Chenault, CEO of American
Express, held a town hall meeting for all New
York City employees to communicate the
companys plans, answer questions, and
praise them for their support.
After the town hall meeting, senior
managers began communicating specifc
relocation plans and procedures to their
teams. Seventeen days after the attacks,
American Express began occupying its new
temporary facilities and 4,000 people went
back to work.
September 11th left everyone to scramble
for alternative offce space, said a spokes-
person for American Express. It reinforced
the need to have cross-functional teams and
comprehensive systems established before
a disaster in order to quickly and effectively
respond.
Nine months later, American Express was
able to relocate all of its employees back to
New York City. Having a plan in place helped
American Express protect its operations,
employees, and assets and mitigate the
effects of the attacks.
case
case study
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1
0

study
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1
1

During the rental term, your company
should add the hosting company as an
additional insured party on your insurance
policy. Your company should obtain Com-
mercial General Liability (CGL) Coverage
and Property Insurance. CGL is primary
coverage and provides protection against
liability claims for a variety of matters,
including third-party claims and slips and
falls on the premises. Property insurance
is coverage for losses due to fre, foods,
leaks, etc.
Consider purchasing additional insurance
before a disaster to cover the losses and
expenses incurred during the transition
period:
*
Businessinterruptioninsurance com-
pensates companies for income lost
during the restoration period or the time
necessary to repair the physical damage
to the covered property.
Companies should also consider get-
ting the Extended Period of Indem-
nity which extends coverage until the
companys business returns to its level
of performance immediately prior to the
date of the damage.
*
Extraexpenseinsurance pays the
extra expenses incurred to get back
to business immediately, including the
cost of renting other premises while the
original premises are being repaired.
*
Alesseesinterestinleaseendorse-
mentcovers the cost of renting
alternative space for the remainder of
the companys lease term should the
landlord terminate the lease due to
damage.
A prepackaged business owners policy
generally includes all three types of
insurance, and is more affordable than
purchasing coverage separately.
assess your
assess your insurance coverage
Hosted Company
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2

assess your
assess your insurance coverage
Host Company
Companies often do not realize that their
business insurance polices cover only the
physical property they own. As the host,
your company should ensure that the com-
pany you are offering space to is insured
and is able to show a Certifcate of Li-
ability. This is a document that shows the
type and amount of property and liability
insurance that the company has purchased.
The hosted companys policy should also
contain an expressed or implied Waiver
of Subrogation. This provision prohibits
the hosted companys insurance carrier to
pursue claims against your company that
may arise due to hazards or complications.
These are two ways of protecting your com-
pany from any liability that can occur and
can prevent the hosted companys insurer
from fling a liability claim.
insurance coverage
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Inquire about the hosting companys se-
curity procedures in order to protect your
companys data and information during
your stay. Make sure you clearly address
who will have access to your companys
information and how you will be able to
connect to computer servers or other
communications systems that support
your companys operations. For extra
protection, insist on temporary creation of
frewalls or segregated offce space.
secure your
secure your business
Hosted Company
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1

Host company
Determine the security needs of the hosted
frms employees, but be sure to defne the
length of time employees will have access
to the space to prevent unintended over-
stays. Address any and all security
issues including:
* Restricting access to buildings, meeting
rooms, computers/laptops, worksta-
tions, data centers, labs, and other
areas that could jeopardize confdential
company information
* Confict of interest concerns or other
privacy concerns that require special
consideration (e.g. locked offces and
fling cabinets for payroll, medical
claims, credit card processing, and
other sensitive documents or
processes)
* Creation of frewalls or segregated
space to protect valuable information
business
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Establish a protocol for communicating the
details of the space-sharing arrangement
with employees, customers, accountants,
fnancial planners, suppliers and, if
applicable, other tenants. Be sure to
include the most up-to-date plans for
relocation in your emergency message to
employees following a disaster.
Designate an incidence manager to be
responsible for coordinating and communi-
cating the companys relocation plans and
guiding employees to their new workspace.
Having one point of contact will help
eliminate confusion and frustration.
communicate
communicate your plans
Hosted Company
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communicate
Host Company
Determine how your company will commu-
nicate the offce-sharing plans to your em-
ployees (via email, intranet, and company
meeting). Explain the situation, length and
terms of the space-sharing arrangement,
additional security measures that you have
put in place and make employees aware of
any changes that may affect their day-to-
day work activities.
Provide direction on how they should
communicate the relocation to clients and
customers, if necessary.
your plans
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Conclusion
This guide is meant to provide a broad overview of the issues companies should consider when entering into an offce-sharing agree-
ment. Companies that are willing to provide host services can address some of these issues in advance by posting on their Web site the
number of people they could potentially host and the infrastructure they could provide. Companies with a need for loaned space could
then match their needs with those offering space and either make arrangements in advance or when a disaster occurs.
Alternatively, companies can consider entering into offce-sharing agreements with several businesses before a disaster to prevent
confusion, disruption, and interruption. Based on the number of employees that need to be relocated, this option provides companies
with a range of relocation options.
After agreeing to the leasing and rental arrangements, both companies should revise their business continuity plans to refect the cur-
rent situation. All relevant parties should be familiar with these relocation plans and they should be incorporated into regular disaster
planning communications and drills. Having a comprehensive plan in place will help companies protect their operations, employees and
assets, and mitigate the effects of a disaster.
Additional Resources
For more information, please visit:
* American Bar Association (www.abanet.org)
* American Insurance Association (www.aiadc.org)
* Federal Emergency Management Agency (www.fema.gov)
* Institute for Business and Home Safety (www.ibhs.org)
* Office Scape (www.officescape.com)
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1
8

The Business Roundtable frst activated the PartnershipforDisasterResponse (www.respondtodisaster.org) immediately following
Hurricane Katrina. The Partnership is an effort to expand corporate commitment beyond fnancial contributions-to respond to natural
disasters. The Partnerships goal is to enhance the effciency of the private sectors disaster response by facilitating public-private collabo-
rations to prepare for the health, social and economic burdens that natural disasters can create.
BusinessRoundtable (www.businessroundtable.org) is an association of chief executive offcers of leading U.S. companies with
$4.5 trillion in annual revenues and more than 10 million employees. Member companies comprise nearly a third of the total value
of the U.S. stock markets and represent over 40 percent of all corporate income taxes paid. Collectively, they returned $112 billion
in dividends to shareholders and the economy in 2005.
Roundtable companies give more than $7 billion a year in combined charitable contributions, representing nearly 60 percent of total
corporate giving. They are technology innovation leaders, with $90 billion in annual research and development spending nearly half
of the total private R&D spending in the U.S.
1717 Rhode Island Avenue, NW
Suite 800
Washington, DC 20036
(202) 872-1260
www.businessroundtable.org
www.respondtodisaster.org