Leasing Cell Phone Towers and Rooftop Cell Sites
Cell Tower Lease Experts AirWaveSites.com's Wireless Industry Blog, All About Developing Cell Phone Towers on Private Property, Municipal Properties and Rooftop Cellular Antenna Sites.
Wednesday, August 4, 2010
Navigating the challenges of a potential lease agreement
by Steve Kazella
“Catch for us the foxes, the little foxes that ruin the vineyards, our vineyards that are in bloom.” Song of Solomon 2:15
Besides the obvious financial benefits of having a cellular-phone tower built on your church property, there are many hidden pitfalls that churches entering into a cell tower lease with a wireless carrier need to be aware of.
My friend and church minister, Larry, got a new cell phone from his wife recently for his birthday. It was a model that didn’t have a camera, the ability to surf the Internet, send text messages, play games or do any high-tech applications. It was just a cool cell phone with a keypad, LCD screen and voice mail. He loved the gift – until he saw a commercial for the exact same phone being marketed to baby boomers as a cell phone with big buttons that was easy to dial.
The high-tech cell phones of today are mini wireless computers that eat up a lot more bandwidth than the devices of just a few years ago, fueling the increased demand for as many as 100,000 more new cell towers across the United States that will need to be built in the next five to 10 years. Churches that are prepared to lease space for cell tower development can avoid many of the problems experienced by other congregations and get rid of those annoying little foxes that want to ruin their vineyards. The first step is familiarizing yourself with some cell tower leasing and development tips.
1. Watch Your Lease and Tax Language Closely
Fortunately, most congregations have a good CPA on their financial committee who can provide localized tax advice on a state-by-state basis. Make sure that you are protected by having specific tax language included in your cellular carrier lease, which protects you from being hit with tax assessments because of an improvement on church premises. Most carriers want the lessor to pay the taxes upfront, and they then reimburse them within 60 to 90 days. Many churches don’t have the ability to do that, so you want to make sure the language in your lease protects the church from paying these fees upfront – and places the responsibility on the carrier, in the rare event your municipality decides to collect from you.
2. Count the Costs of Leasing before You Build
One of the biggest problems you’ll face with your initial cell tower lease and future co-location (bringing additional wireless carriers to your site) is having the budget to hire proper representation for dealing with wireless carriers. Carrier site acquisition contractors know that a church might not be able to afford a top-notch cell tower attorney to negotiate on its behalf, and the carriers take advantage of that. Many cell tower leasing consultants are actually paid big bonuses for bringing in a cheaper cell tower lease with better terms for the carrier. Churches often end up retaining good real-estate attorney generalists, or they’ll have an attorney who is a member review and negotiate the lease pro bono. However, they usually have no or very limited cellular site leasing experience and end up agreeing to unfavorable terms or negotiating their clients entirely out of the deal. Because cell tower leases are complicated and highly specialized, the added expense of retaining an experienced wireless attorney is recommended.
3. Select a Location Suitable for Tower Placement
Proper tower placement is essential. You want to make sure that a cellular site is not built anywhere that could impact future growth and expansion of your church.
4. Have a Professional Review Your Cell Site Design
At the end of the day, the congregation is not going to select the type of cell tower that gets built. Your municipality will ultimately decide on what design (steeple, bell tower, flagpole, fake tree, monopole, lattice tower) is acceptable, and within those parameters, you’ll have the choice to approve or reject what the carrier proposes. In many cases, a lattice tower or monopole looks better than a “stealth tree.” Decide whether you want a one- or two-carrier wireless steeple or steeple replacement, an 80-foot, three-carrier flagpole or a 110-foot to 150-foot, four- to five-carrier tower. As a rule of thumb, the higher the tower, the more potential you have for expansion and maximizing the revenue the site can generate. Have you ever heard the joke about the guy who hadn’t been to church in 20 years; he walked in one Sunday, and the roof crashed in on him? Make sure it doesn’t happen at your church. Spend $500 to have a local licensed structural engineer review all proposed wireless construction plans the carriers are proposing, especially on your roof.
5. Understand the Health Concerns
Your neighbors who you are reaching out to may be concerned about the rash of baseless negative articles that the wireless industry as a whole has not done a very good job of rebutting. For most, the biggest fear is the fear of the unknown, and the overwhelming majority of people don’t know anything about cell tower health issues except the negative articles that the cell-phone-owning media seem to publish regularly. Make sure your group is unified on the cell tower issue before you move forward.
6. Be Shrewd When Dealing with the Carriers
All wireless leases are heavily slanted in favor of the cellular service providers – and you don’t actually deal with the carriers directly, rather, with their subcontracted site leasing consultants and attorneys. Unfortunately, on the leasing end of the industry, the majority of vendors have limited wireless leasing experience, and have never worked both sides (working internally at a carrier or owning a cell tower property). Additionally, there are a number of charlatans negotiating cell tower leases. Carriers and their vendors are not going to tell you what kind of subletting language to include to maximize revenue for your church. Nor will they offer advice on how to protect your congregation’s ground space or rooftop space rights, proper right of first refusal, indemnification, tax language or proper co-location terms.
7. Avoid Death by Committee
Many cell tower leasing consultants can learn to recite the Book of Leviticus faster than it takes many churches to decide to move forward on a cell tower lease. If a carrier contacts your church about a cell tower but you only check your answering machine on Sundays, chances are you’ll be looking at the Elk’s Club’s cell tower for the next 25 years instead of it benefiting your church. Although the Bible teaches us to be quick to listen and slow to speak, it also tell us to be prepared to answer. Make sure that phone numbers of your pastor, deacon of facilities, administrator or church Web site are posted or listed, and that the carriers can reach you within 24 hours of initial site identification, or they will find another location.
How Can You Get a Cell Tower on Your Church Property?
Make sure that you are at least a mile from the nearest tower. Your church should not be in a flood plain or listed on a historical registry, have any environmental issues or have any endangered species nesting in your steeple.
Churches have several options for getting the cellular carriers to consider their sites for wireless development. They can: ...
•Wait for a wireless carrier or one of their real-estate site acquisition consultants to approach them. It’s essential to respond within 24 hours or the site acquisition consultant will go to the next location.
•Market their sites on their own by submitting information online, directly to the carriers. Unfortunately, this is probably the least-effective method for getting your site selected, but as long as you have a good location and a mustard seed of faith....
•Contact a tower construction company who then builds a tower at their expense and markets the site to the carriers. They keep 50 percent to 70 percent of all rental income if you are lucky enough to get a site built.
•Use a wireless management company to tap into their industry contacts and attempt to bring a carrier to your site at the carrier’s expense.
Regardless of how you promote your church site, you should assign one point of contact (who is easy to reach) to deal with the carriers. Cell towers will need 600 to 2,000 square feet of ground space, and church steeple cell sites will require up to 1,200 square feet of ground space to locate equipment cabinets. Your facilities deacon or church office secretary should have copies on hand of documents such as site plans, easements, deeds and surveys. I suggest preparing a one-page flier containing a site photograph, church address, property information (block, lot, what zone it’s in), attached copy of a tax map with your church property highlighted, property elevation, steeple or bell tower height, and latitude/longitude.
As much as possible, avoid contacting your municipality to get their opinion about a proposed cellular site at your church. Let the cellular carriers approach the town on all matters pertaining to cell tower development.
These tips are just a starting point in helping churches make sure they protect themselves as they consider entering into a legally binding agreement that will easily fall to the next generation. Remember, if it were easy to get a cell phone tower built at your church, every congregation would have one.
Steven Kazella is a Partner at Tower Genius (http://www.cell-phone-towers.com), a wireless telecommunications consulting firm which helps churches, municipalities, property owners and landlords with cell site lease negotiations and also purchases select cell tower lease rental streams.
Thursday, April 29, 2010
Evaluating Cell Tower Lease Buyouts
By Steven Kazella
Landlords of wireless leased properties contemplating a cell tower lease buyout need to determine their need for cash today vs. money in the future. Fair market value of cellular leases should to be appraised and evaluated. The problem is that your average real estate appraiser usually isn't a cell phone tower lease procurement expert. Cellular lease valuations and lease purchase offers can vary broadly depending on a number of influencing factors:
• Wireless carrier lease values
• Does the cell site allow additional carriers to pay rent
• Are the cell tower leasing terms favorable for the lease buyer
• Location of the cell tower site
• Credit worthiness of the seller
• Does the cell tower lease match the buyer's requirements
• How aggressive is the tower portfolio buyer
Unfortunately, many cell tower lease buyout offers that wireless landlords are presented with are quite low. A certain percentage of the cell tower lease purchasing financial institutions blatantly take advantage of wireless landlords, sending letters which create a sense of doubt in their minds regarding the future need for their particular site, due to advancing cellular technology and wireless carriers who may merge, causing tower leases to lose their values. They prey on the fears of landlords, and acquire cell tower leases at bare-bones prices.
It never makes sense to cash out of your cellular tower lease because you are afraid your tower may become obsolete. If your lease had no value, then they wouldn't be asking you to sell your leases. The ever-popular smart phones more and more people are using are also bandwidth hogs. Carriers need a lot more capacity to handle the load. Tuck that thought away in the back of your mind.
The better scenario which favors the cell tower landlord is when they are presented with a cellular lease purchase offer from a professional wireless lease portfolio manager representing a reputable investment group. These wireless capital investors seek to acquire specific cell tower leases to expand their portfolios. Buyout deals from wireless financial services funds will tend to offer better deals than the industry bottom feeders who flash the cash and take advantage of the uninformed landlord. However, even lease buyouts offered by the larger and established wireless lease portfolio investors who are offering outstanding deals on cellular lease buyouts need to be reviewed and evaluated.
The one big question most cell site landlords have, is what the future holds for cell tower leasing. They are weighing the options of either selling their lease leases for a lump sum, or rolling the dice to see if they will be able to collect those large monthly rent checks for the cell phone carriers. A good indicator or the future of wireless leasing is Europe, since their wireless infrastructure and networks are built out far better than cellular networks in the USA. The last time we visited, countries like the nation of Hungary, with a population of 10 million citizens had over 11 million wireless subscribers. So, the answer is, the future of leasing wireless sites long-term in the United States is good, regardless of what threatening letters some of these tower lease buyers are claiming.
What's the secret to negotiating a successful cell tower lease buyout when you swim with the sharks on Wall Street? First, understand that your wireless lease is a commodity that has value, and is not going to disappear tomorrow because of a new innovation or industry merger. Secondly, you can avoid dealing with the sharks altogether with the proper due diligence. Wireless landlords negotiating their lease purchase armed with this information improve their chances of walking away from the closing table with a smile.
Steve has nearly ten years of wireless site acquisition, cell site lease negotiation and wireless project management experience. He is a Partner at Tower Genius, an Idaho-based wireless lease consulting firm. Steve's firm also specializes in the acquisition of cell tower ground lease rental streams and makes cell tower lease buyout offers to wireless landlords in the United States. They can be found on the web at http://www.Cell-Tower-Leases.com.