At Vertical Consultants, we have helped many municipalities with issues related to cell tower or other cellular site leases. Municipalities are often approached for proposed cell towers or rooftop telecom equipment because many municipalities own large plots of land or have access to already existing structures that are ideal for cellular equipment attachment. These sites may be a water tower, a tall streetlight, or a multi-story city hall building. For municipalities, steady monthly revenue from a cell site is a great way to insert that needed cash into your budget. However, far too often we see municipalities make crucial mistakes in the negotiation and maintenance of their cellular site assets. That is why we are going to break down the three biggest mistakes municipalities commonly make:
- The first mistake we see municipalities make is failing to negotiate rental rates that correspond with the true value of the location they are leasing. A city counsel may look at an empty lot and think, “Hey, $500 a month sure beats the $0 we are currently getting.” This line of thinking will put you in a hole from the get-go. Instead, negotiate a rate based off the value your interested tenant places in the site, which likely equals several thousands of dollars a month. Determining a tenant’s value in a site is a tricky task. We understand that many municipalities lack the needed data and industry knowledge needed to truly ascertain the value of a particular site. That is why we recommend that municipalities seek out a cell tower-lease expert to assist them with this crucial discussion. Failure to reach out to an expert could result in your municipality passing up hundreds of thousands of dollars over the course of your lease.
- The second common mistake we see is municipalities selling their lease to third-party companies at an undervalued rate. Similar to the issue at play in our first mistake, the value of your lease on the open market corresponds to the value your tenant places in the particular location. Most municipality cell sites are tied to an undervalued lease agreement and are receiving rents that equal a fraction of the sites worth. When third-party lease acquisition companies approach municipalities, the municipality is offered a price corresponding to the reduced rental rate being received. Do not let these third-party companies pay you a quarter of what your lease is worth!
- The final common mistake we see involves municipalities failing to incorporate landowner-friendly provisions into their agreements. On average, cell site leases run for a period of time in excess of 25 years. As your municipality grows, the needs of your citizens evolve. Failure to preserve certain rights, such as steps for relocating cellular sites, can lead to costly barriers to development in the future. For example, let us say your municipality is in desperate need of a new school. There is a large plot of land on the edge of town that would make for the perfect site; however, there is a cell tower right in the middle of the lot. Relocating the cell tower is going to be a costly and time-consuming battle, unless you address this possibility up-front.
Vertical Consultants is always here to assist you with all your cellular site needs and questions. Whether it is calculating the value of a cell site, drafting provisions, or negotiating rents on your behalf, we have the experience and knowledge to assist you, and we get results!
In 2018, Vertical Consultants averaged an immediate 305% increase in rents being received by its clients, and since 2010, has been able to assist its clients in the recovery of over 300 years worth of combined underpaid, and, in some cases, unpaid rents and other expenses that were rightfully due to these property owners located throughout North America.
To learn more about our services, visit https://www.celltowerleaseexperts.com or contact Vertical Consultants at info(at)vertical-consultants(dot)com or 877.456.7552.