We recently received a Request For Proposals from the City of Allentown, PA. This RFP was intended to procure a “consultant” to assist the City with the sale of its cell tower lease income. The City of Allentown wants the consultant to review the city’s cell tower leases and advise the City on whether it makes sense to sell them. Then the “consultant” is supposed to solicit offers to buy the leases. But instead of paying the consultant, the City of Allentown expects that the consultant will work out side deals with the prospective buyers and get paid by the buyers. In short, the City wants an independent and unbiased “consultant”. But in reality, the “consultant” will end up being neither because they are paid by the buyers of the leases instead of by the City.

The “consultant” has little incentive to bring offers to the City that won’t pay the consultant as much regardless of whether those offers would be better for the City. Because the “consultant” gets paid by the buyer, if a particular buyer doesn’t pay as good a commission, the “consultant” will ignore that company and the City will not get all the offers that it should. Furthermore, the “consultant” won’t bring offers to the City that may have more favorable terms and conditions if those same offers don’t pay as much in commission. We wonder whether the “consultant” will advise the City of the fact that it might have increasing recurring tower maintenance and operational expenses in the future after selling its leases. Perhaps not because it might otherwise reduce the “consultant’s” finder’s fee.

In this case, it seems that the City received a proposal to purchase its leases and a proposal from a “consultant” to review the proposal perhaps from the same entity at the same time. I assume that the City could not authorize a commission based contract without putting it out to RFP and thought that they would be thrifty by putting the cost burden on the “consultant” to collect his fee from the same people that are interested in buying the leases.

In the end, it is very unlikely that the City will end up with the best deal for its citizens. The City will save money by not having to pay for an unbiased consultant- small savings considering the money it will almost certainly leave on the table. If you review our blog, you will see that this is the first time we have called out a municipality by name. We are hoping that exposure to this ill-conceived endeavor will encourage the City to reconsider and think long term instead of short term.

In a tale of “strange bedfellows”, we are starting to wonder whether Crown Castle and Wireless Capital Partners are working together. A letter that Crown Castle is sending out to its landowners warns of the pitfalls of dealing with various lease buyout companies. However, the letter has one noticeable buyout company not included in the list- Wireless Capital Partners. We assume that this is because Crown Castle and Wireless Capital Partners have come to an agreement whereby they have coordinated their efforts to negotiate lease buyouts.

We could see where this might make sense for Crown Castle. Because of the rigidity of their proposals for buying out their lease agreements, they typically must buy a perpetual easement. However, some landowners are rightfully scared of selling anything in perpetuity. That’s where we assume Wireless Capital Partners come in- they offer their “non-recourse loan” for a shorter term purchase. The offer is less than Crown’s offer, but the landowner doesn’t have a perpetual easement on their property either to Crown.

So why should the landowner care? Because Crown Castle would not be working with Wireless Capital Partners unless they had something to gain from Wireless Capital. This gain might come at the disadvantage of the landowner. We surmise (but don’t know) that Wireless Capital Partners has committed to Crown Castle that they won’t increase the lease rates at the expiration of the purchased Crown Castle lease agreement. How does this negatively impact the landowner? Because as part of the WCP agreement, the landowner gives WCP the right to negotiate an extension to lease even if the extension is for a period greater than the amount of time granted in the non recourse loan. So WCP could bind the landowner to an extension of the lease that benefits WCP and Crown Castle, but is significantly undervalued as compared to what the landowner could get if he/she were aware of the value of his/her property to Crown at the expiration of the WCP non-recourse loan.

In our opinion, this “partnership” is not improper provided that WCP discloses any such relationship with Crown Castle to the landowner prior to any purchase of a lease agreement. If Wireless Capital doesn’t disclose, than the landowner might end up selling to WCP without knowledge of what they are giving up.

If you have been approached by Wireless Capital Partners regarding purchasing a Crown Castle lease agreement, speak with your attorney to fully understand what rights you are giving up. Ask them what WCP’s intentions are at the expiration of the current lease agreement. If you need help understanding the actual value of the lease buyout or what the lease should be worth after the purchased term, contact Steel in the Air.

If you have found this post while searching for Crown Castle’s or Wireless Capital Partner’s websites- please note that Steel in the Air is not affiliated with either entity. You can find more information about Crown Castle at http://www.crowncastle.com/ or for Wireless Capital Partners at www .wirelesscapital.com.

A landowner sold their cell phone tower lease to Wireless Capital Partners. The Wireless Capital Partners lease assignment and successor lease provided that they controlled the rights to the cell phone tower lease for 30 years. The lease actually has only 26 years remaining, so Wireless Capital Partners received 26 years under the assignment of lease and 4 years under a successor lease. A successor lease provides for the rights vested under the current cell phone tower lease after the expiration of the current lease.

Crown Castle notified the landowner that to “process” the efficient transfer of payment, they needed an “Acknowledgement” of the sale of the agreement. Never mind that Crown Castle actually received a Signed Affidavit from Wireless Capital Partners and the landowner “acknowledging” the sale.

What we specifically dislike about the letter from Crown Castle is that it suggests that if the landowner does not sign the “acknowledgement” that payments to WCP may be delayed. (As if WCP would allow this to happen). To make matters worse, the proposed acknowledgement is not an acknowledgement at all- but a questionnaire about completely irrelevant questions to the transfer of the lease to WCP.

As part of the Crown Castle Lease Cell Phone Tower Lease Extension Program, Crown offers a nominal one time payment of $4000, plus reinstatement of the lease (AT THEIR OPTION) at the conclusion of the successor lease for 15% escalation of the current lease rate then in effect. The landowner ends up extending the lease at what may be below market terms for a cell phone tower lease. Crown gets the security of extending their lease without any real obligation.

We cannot suggest to anyone that they accept this offer. If you have sold your lease to Wireless Capital Partners or to Unison Site Management, simply keep the lease as is. We don’t even suggest that you contact us for help- because this offer is so one-sided as to be ridiculous in most cases.

Steel in the Air, Inc. got into this business because we felt that the tower companies and wireless carriers were taking advantage of landowner’s ignorance. It is this type of one-sided offer that makes us glad that we did.