
16.	Commitments and Contingencies

The Company, as an owner of real estate, is subject to various Federal, state and local environmental laws. Compliance by the Company with existing laws has not had a material adverse effect on the Company. However, the Company cannot predict the impact of new or changed laws or regulations on its current properties or on properties that it may acquire in the future. During the year ended December 31, 2016, the Company recorded an environmental reserve of $4.7 million related to vacant land that it owns adjacent to one of its operating properties.

The Company was party to a housing discrimination lawsuit brought by a non-profit civil rights organization in April 2006 in the U.S. District Court for the District of Maryland. The suit alleged that the Company designed and built many of its properties in violation of the accessibility requirements of the Fair Housing Act (“FHA”) and Americans With Disabilities Act (“ADA”). The suit sought actual and punitive damages, injunctive relief (including modification of non-compliant properties), costs and attorneys’ fees. On March 31, 2016, the Court found that certain features at seven of the Company’s properties did not satisfy the accessibility requirements of the FHA. During the fourth quarter of 2016, the Company settled the lawsuit for $3.1 million, net of insurance recoveries already received, which was recorded as other expenses in the consolidated statements of operations and comprehensive income. The Company also agreed to undertake the remediation of certain inaccessible features at a limited number of properties.

The Company has established a reserve related to various litigation matters associated with its Massachusetts properties and periodically assesses the adequacy of the reserve and makes adjustments as necessary. During the year ended December 31, 2016, the Company settled one matter, paying approximately $1.5 million, and recorded a reduction to the reserve of approximately $0.5 million, resulting in a total reserve of approximately $1.0 million at December 31, 2016. While no assurances can be given, the Company does not believe that the ultimate resolution of any of these remaining litigation matters, if adversely determined, would have a material adverse effect on the Company.

The Company does not believe there is any other litigation pending or threatened against it that, individually or in the aggregate, may reasonably be expected to have a material adverse effect on the Company.

As of December 31, 2016, the Company has six wholly owned projects totaling 2,064 apartment units in various stages of development with commitments to fund of approximately $260.6 million and estimated completion dates ranging through December 31, 2018, as well as other completed development projects that are in various stages of lease up or are stabilized.

As of December 31, 2016, the Company has two completed unconsolidated development properties that are stabilized. Both properties were co-developed with the same third party development partner in different ventures. The development venture agreements with this partner are primarily deal-specific regarding profit-sharing, equity contributions, returns on investment, buy-sell agreements and other customary provisions. The Company currently has no further funding obligations related to these properties. While the Company is the managing member of both of the joint ventures, was responsible for constructing both of the properties and gave certain construction cost overrun guarantees, the joint venture partner has significant participating rights and has active involvement in and oversight of the ongoing operations. The buy-sell arrangements contain provisions that provide the right, but not the obligation, for the Company to acquire the partner’s interests or sell its interests at any time following the occurrence of certain pre-defined events (including at stabilization) described in the development venture agreements. See Note 6 for further discussion.

During the years ended December 31, 2016, 2015 and 2014, total operating lease expense for ground leases and office space, including a portion of real estate taxes, insurance, repairs and utilities, aggregated $26.2 million, $24.5 million and $21.2 million, respectively.

The Company has entered into a retirement benefits agreement with its Chairman of the Board of Trustees and deferred compensation agreements with its Vice Chairman and one former chief executive officer. During the years ended December 31, 2016, 2015 and 2014, the Company recognized compensation expense of $0.3 million, $0.4 million and $0.5 million, respectively, related to these agreements.

The following table summarizes the Company’s contractual obligations for minimum rent payments under operating leases and deferred compensation for the next five years and thereafter as of December 31, 2016:



(Payments)/Receipts Due by Year (in thousands)
	2017			2018			2019			2020			2021			Thereafter			Total
Operating Leases:
Minimum Rent Payments (a)	$	(15,917	)	$	(16,027	)	$	(15,890	)	$	(15,489	)	$	(15,256	)	$	(826,259	)	$	(904,838	)
Minimum Rent Receipts (b)	73,171			60,004			54,486			50,705			46,634			211,853			496,853
Other Long-Term Liabilities:
Deferred Compensation (c)	(1,387		)	(1,723		)	(1,128		)	(1,079		)	(1,079		)	(4,383		)	(10,779		)


(a)	Minimum basic rent due for various office space the Company leases and fixed base rent due on ground leases for 11 properties.


(b)	Minimum basic rent receipts due for various retail/commercial space where the Company is the lessor.


(c)	Estimated payments to the Company's Chairman, Vice Chairman and one former CEO based on actual and planned retirement dates.