HomeMy WebLinkAbout101-Extension of Existing Communications Site Lease Agreement with TowerCo.pdf
Page 1 of 2 SARATOGA CITY COUNCIL MEETING DATE: April 20, 2011 AGENDA ITEM: DEPARTMENT: Recreation & Facilities CITY MANAGER: Dave Anderson PREPARED BY: Michael Taylor DIRECTOR: Michael
Taylor SUBJECT: Extension of Existing Communications Site Lease Agreement with TowerCo RECOMMENDED ACTION: Staff recommends the Council approve an extension to the existing communications
site lease agreement with TowerCo for an additional five (5) years. REPORT SUMMARY: The City entered into a Communications Site Lease Agreement with Nextel of California on September
17, 1998. The agreement allowed Sprint/Nextel to place a wireless cell tower at Congress Springs Park near Highway 85. TowerCo purchased 3,080 towers from Sprint/Nextel in September
of 2008, including this subject tower. The current site lease agreement expires in December 2013, but TowerCo would like to add an additional five (5) year option to the current term.
Because the ground rent for this site is greater than the amount which TowerCo earns on the tower, they are requesting that the rental and the escalations remain the same. Staff believes
revising Section 5 in the current agreement, extending the lease for an additional five (5) years would meet all conditions, satisfying TowerCo’s needs and protecting City interests.
DISCUSSION: There are several options the Council could consider related to the agreement with TowerCo: 1. Extending the existing lease as requested by TowerCo; 2. Extending the existing
lease with new terms (e.g. length of agreement, annual increase, etc.); or 3. Denying the request and renegotiating a new agreement closer to the end of the term of the existing agreement.
Page 2 of 2 FISCAL IMPACTS: Accepting the recommendation will extend the receipt of lease payments of approximately $21,000 (plus a 4% increase each year) for an additional five (5)
years. The projected annual revenue for the extension (including the escalator) is as follows: 2013 $23,412.27 2014 $24,348.76 2015 $25,322.71 2016 $26,335.61 2017 $27,389.04 CONSEQUENCES
OF NOT FOLLOWING RECOMMENDED ACTION: By not extending the lease, the City risks losing approximately $21,000 per year (plus increases for the next five years) in lease payments. If the
current Lease Agreement is allowed to expire it may be re-negotiated or the existing TowerCo equipment and easement would have to be removed per the terms of the agreement. FOLLOW UP
ACTION: As directed by Council. ADVERTISING, NOTICING AND PUBLIC CONTACT: Pursuant to Government Code 54954.2, this item was properly posted as a City Council agenda item and was included
in the packet made available on the City’s website in advance of the meeting. A copy of the agenda packet is also made available at the Saratoga Branch Library each Monday in advance
of the Council meeting. ATTACHMENTS: Attachment A – Original Lease Agreement with Nextel (TowerCo)