The benchmark used to determine a tenant's proportionate share of taxes and operating expenses for premises located in a multi-tenant building. Depending on the terms of the lease, each lease year (other than the first lease year) the tenant usually pays to the landlord its proportionate share of taxes and operating expenses which are in excess of the amount incurred by the landlord during the base year.

The base year is usually the first year of the lease term, but it can be earlier or later depending on what is negotiated between the parties.

For more information on base years, see Practice Note, Office Lease Negotiations for Tenants: Box, Calculating the Tenant's Operating Expenses and Real Estate Taxes Using a Base Year.