Envelope on a Front Gate Leads to Multiple Offers and Lump Sum Payout
Rochester Rugby, a private rugby club in Rochester, NY is a nonprofit recreation organization founded in 1966. With the purpose of growing and promoting the sport of rugby, their mission is to help their community by teaching the values of teamwork, camaraderie, and sportsmanship.
Twenty years ago, the Club was approached with an offer to add a cell site on top of an electric tower existing on their property. Being a nonprofit, the additional revenue the cell site would generate monthly would greatly benefit them and their mission, so after a few internal meetings, the president and the board of directors entered into an agreement with AT&T for the cell site lease.
In the beginning, there really weren’t any issues with the cell site lease. In fact, all was going well, and Rochester Rugby was pleased with the additional monthly revenue generated from the cell site agreement. Five years into the contract the current lessee offered a 15-year lump sum in lieu of monthly rent payments. The club president looked into the value of the cell site and did some light research on his own, which led him to a website called Steel in the Air. The resources he found helped him understand a lot about the obligations as a land owner and opportunities within the lease. At the time, the club decided the 15-year lump sum was a good idea and decided to table any further research.
Under the direction of a new Rochester Rugby Club president, something interesting happened one morning in 2019 when an envelope on the front gate leading up to the club was discovered. To everyone’s surprise, inside the envelope was a perpetual buyout offer for the cell site from the then current lessee. Not quite sure what to make of the offer, the board of directors decided to reach out directly to Steel in the Air to ask a few questions.
STEEL IN THE AIR APPROACH
Explaining the ins and outs of a cell site agreement helps customers like Rochester Rugby understand what to expect with a buyout offer. SITA took time to answer the initial questions from John Vakiener, the new club president. After several complimentary consultations, John and the board of directors agreed to have SITA begin a complete assessment of the contract to evaluate the offer.
This was not a cookie-cutter evaluation and one that took a unique approach. Since AT&T placed the cell site on top of an existing electric tower, it meant the valuation of the tower included a lot more than just the initial lease or the envelope offer. There were even taxes from the past 18 years that had to be taken into consideration, as well as concerns with future technologies and industry trends.
THE SOLUTION AND OUTCOME
The evaluation took almost six weeks to complete and included more than just looking into the buyout offer. SITA researched the lease documents and discovered that AT&T also had a lease with the utility company that included a ground lease for the utility line. While this was not a new situation for SITA, there were some unique twists and turns uncovering that the township had recently begun taxing the current lessee for the tower improvements which meant Rochester Rugby would not have to pay any further tax obligations.
SITA took on the challenge of researching all of the previous tax documents and billings, which took a great deal of time. Once the research and evaluation were complete, SITA presented Rochester with their assessment and offered several plans of action. The first recommendation was not to accept the initial envelope buyout offer because upon evaluation, the lease was worth at least 50% more than that offer.
Next, with a follow-on agreement with the rugby club, SITA solicited perpetual lease bids on behalf of Rochester Rugby. Within two weeks, there were six offers that were higher than the original assessment and much higher than the buyout offer in the envelope.
As stated by John Vakiener, president of Rochester Rugby, “Steel in the Air made this such an easy process. We had no idea we had to even consider tax research, and they helped direct us to what our club leadership and attorney should be looking at. What’s even better is that we had no idea if the offer in that envelope was good or bad, and little did we know there were others out there wanting what we already had. For us though, it made for a tremendous financial impact on our club, Click or tap here to enter text. enabling us to create a long-lasting endowment, improve our fields, facilities, and the impact we can now have on our community.”
Since 2004, Steel in the Air has been the expert in negotiating cell tower leases and managing the contracts for more than 4,000 private and public landowners and municipal governments. The above success story is a perfect example of how the Steel in the Air team can put their experience to work for you.