More than ever, municipalities are contacted to extend or sell their current cell-tower leases, yet they are not getting true value for the use of their land in return. This is another reason why it is vital to understand a cell tower or third-party company’s method in determining cell-tower value.
When it comes to a lease extension, some municipalities may be in a position to decline the extension and take over ownership of the existing tower. While there are numerous reasons why this should be considered as an alternative, the main reason is that the revenue from this option could directly benefit the municipality.
Once a cell-tower location becomes an established foundation point for the wireless networks it serves, wireless carriers located on the tower do not want to leave. This is when a municipality can use wireless carriers’ dependency to their advantage.
If a municipality converts ownership of the existing tower through tenant forfeiture or conveyance at the end of a lease term, or builds a replacement tower, it is providing wireless carriers an easy transition—far easier than a migration to a location even right down street. The best part is you, the municipality, will pocket all rent received from these carriers instead of the mere fraction from your current tenant as ground rent.
A cell tower with two or more tenants can garner $100,000 to $200,000 a year in site rental revenue. In contrast, if a municipality leases its land directly to a wireless carrier or tower company, it may receive only a fraction of that amount, with no or limited upside potential, no matter the amount of revenue being generated from the cell tower site. Even if a municipality receives a share of a tower company’s subtenant rents, it would fall far short of the revenue generated from operating a cell tower on its property.
Vertical Consultants can assist your office in reviewing all options available to you, no matter if you have been asked to enter into a new cell tower lease or have existing cell site leases.
Vertical Consultants is always open to providing you with not only references from clients we have assisted, but we will let you speak to them directly.
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