Cell Tower Info Blog » water tower http://www.steelintheair.com/Blog A Blog by Steel in the Air Mon, 09 Jan 2012 10:34:41 +0000 en hourly 1 http://wordpress.org/?v=3.3.1 Municipal Lease Negotiations- When Cities Undervalue Their Assets http://www.steelintheair.com/Blog/2010/01/municipal-lease-negotiations-when-cities-undervalue-their-assets.html http://www.steelintheair.com/Blog/2010/01/municipal-lease-negotiations-when-cities-undervalue-their-assets.html#comments Wed, 27 Jan 2010 18:31:00 +0000 admin http://blog.steelintheair.com/?p=129 There are times when I come across a news story and am saddened when I read about a municipal landowner who has negotiated an undervalued lease. This particular story is about a Village in the Chicago, IL area who negotiated their own agreements with Verizon, US Cellular, Clearwire, and T-Mobile for use of a water [...]
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There are times when I come across a news story and am saddened when I read about a municipal landowner who has negotiated an undervalued lease. This particular story is about a Village in the Chicago, IL area who negotiated their own agreements with Verizon, US Cellular, Clearwire, and T-Mobile for use of a water tower on school district property. The lease rate negotiated was less than the average of what the typical tower company charges for a collocation lease.

This particular site water tower is located in an urban area. Without knowing anything else about the area, it is easily clear that just by the fact that there were four users interested in going on the site, that this is a unique site and should have commanded significantly higher rents.

I assume that the decision maker’s had the best of intentions. I assume they contacted other municipalities nearby to find out what other villages were being paid. However, they were incorrect in assuming that their location was average and that the comparable lease rates should apply. As a result, they did their constituents a disservice. As a result, this particular Village will lose out on a minimum of $500,000 in future value over the course of the leases. All because they failed to understand the unique value of their property and relied upon average lease rates.

]]> http://www.steelintheair.com/Blog/2010/01/municipal-lease-negotiations-when-cities-undervalue-their-assets.html/feed 0 Water Tower Cell Site Lease Buyouts http://www.steelintheair.com/Blog/2007/08/water-tower-cell-site-lease-buyouts.html http://www.steelintheair.com/Blog/2007/08/water-tower-cell-site-lease-buyouts.html#comments Sat, 04 Aug 2007 14:08:00 +0000 admin http://blog.steelintheair.com/?p=69 We recently provided a consultation for a municipality that was pondering the sale of its cell tower leases on its water towers and electric transmission poles to a lease buyout firm. Like many municipalities, this particular city was looking at the lease buyout as a means of increasing available funds without raising taxes. The lease [...]
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We recently provided a consultation for a municipality that was pondering the sale of its cell tower leases on its water towers and electric transmission poles to a lease buyout firm. Like many municipalities, this particular city was looking at the lease buyout as a means of increasing available funds without raising taxes.

The lease buyout firm had offered approximately 9 times the annual rental income for the rights to these leases for 30 years. We advised them on what the proper amount of the lease buyout should be were they to go forward with the lease buyout firm’s offer. We also advised them that if their goal was to maximize the lump sum, that they were better off considering the sale of the “wireless asset” entirely. Since a municipality would not have an interest in selling the water tower- we suggested that they could sell the current wireless leases and the potential for future leases.

By offering the sale of the “wireless asset” (like a cell tower), the municipality could capitalize on the robust tower market and open the bidding opportunity up to 10-15 more bidders. (There are only a few lease buyout firms). By doing so, the municipality would receive higher offers- possibly ranging to as much as 15 times their annual rent.

The transaction would be structured as the purchase of a fixed term easement- say for 30 years. The municipality would sell the current and future rights to lease the water tower to wireless carriers for that period of time. In return they would receive a higher lump sum today. The easement would mirror the current leases. The purchaser would have the opportunity to market and collect income from any wireless tenant using the water tower. Given that some of the lease buyout firms request 50% of the additional revenue as part of the purchase of the site, the municipality was in essence selling the additional 50% for almost a 60% increase in the purchase price.

Clearly, the municipality gives up some rights with the sale of the easement. However, these rights should mirror those given up in the existing leases. If the leases prohibit unauthorized access to the water tower or set established times when the sites can be accessed, those can be in the easement as well.

This is not the ideal solution for all municipalities- but if the goal is to maximize the lump sum from the sale of the existing leases on the water tower, than it may be appropriate. If you are a municipality and are considering the sale of your water tower leases, please contact us for a free valuation of your water tower cell site leases.

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