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Since 2004, Steel in the Air has served over 3,000 clients, reviewed over 10,000 cellular leases and tracked over 2,000 lease buyout offers. We represent private landowners, corporate property owners and public entities in lease negotiations against wireless carriers and tower companies. We also consult on cell site and cell tower valuation and brokerage. Our cell tower and cell site database has grown to encompass over 285,000 cell site locations nationwide.

property tax

Merry Christmas – Your Property Tax Just Went up $14,000 due to your Rooftop Cell Sites

December 4, 2018 by Ken Schmidt Leave a Comment

A client of ours reached out to us yesterday with the following request:

“The City of Philadelphia is undergoing a total reassessment of commercial properties. Until 2017 we have not been charged, as a component of our property taxes, for the cell sites on our roof. (There are reasons for this which are not relevant to the question I have for you). Let me say that all of our leases have a clause that says the cell companies are responsible for any real estate taxes pertinent to their installation. Also if we have a increase in taxes they would be responsible for that as well. The City is assessing our Cell Installations at approximately $280,000 each. The three (rooftop sites) now account for approximately $14,000/year in real estate taxes.

My question is; how do we deal with the cell companies? Should we do this on our own, should we hire an attorney, or are there companies such as yours that are more capable of handling cell companies and getting our reimbursement for increased real estate taxes? 

Our concern is that the cell companies are difficult to deal with and if we try to handle this without professional assistance we are not going to get anywhere with our efforts.”

While this admittedly click bait title was intended to draw your attention, the story nonetheless is real. You may not know this – but Pennsylvania taxes cell towers and cell sites as real property. Pennsylvania is in the minority of states that do so – and that include cell towers by statute.

 

             § 8811.  Subjects of local taxation.

(a)  Subjects of taxation enumerated.– Except as provided in subsection (b), all subjects and property made taxable by the laws of this Commonwealth for county, city, borough, town, township and school district purposes shall, as provided in this chapter, be valued and assessed at the annual rates, including all:

(1)  Real estate, namely:

(viii)  telecommunication towers that have become affixed to land.

One of the nuances for PA is that the basis for the taxation is that courts have deemed towers to be closer to real property – they are bolted to a concrete pad, require a crane to remove them, and are intended to be permanent (and not be moved/reused elsewhere). I question how this type of interpretation applies to rooftop cell site leases where the equipment is not permanent, is attached to the building, and can be reused elsewhere. (Interestingly enough other states have found the opposite) Furthermore, where in the world did the City come up with a valuation of the cell sites at a rate of $280,000 each? Assuming this is based upon equipment, it would seem that the value should be variable depending upon the tenant as the equipment costs vary depending upon the carrier and specific equipment at each location. If based upon some type of income, where did they arrive at $280K? If any of you have experience with PA taxes, I would be interested to know more about how they justify this amount for a rooftop cell site. I would also be interested in knowing if there are no personal property taxes for rooftop cell sites as a result of high real property taxes.

Fortunately for this client, this isn’t really their issue. The leases have strong language that provides that the tenant (wireless carrier) is required to reimburse them for taxes. Proper notice and follow up is required but ultimately, it will be up to the tenants to contest or pay the assessment on the towers. This just goes to show how important it is to have language in your lease that requires the tenant to pay for any taxes (real or personal) that are attributable to the improvements or use of the site as a wireless facility.  

Filed Under: Small Cell and DAS Management, Steel in the Air News Tagged With: Small Cells, property tax, rooftop cell site lease

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