HomeMy WebLinkAbout2007 02 12 Regular 307 Crown Castle Internation - Revenue Share Agreement Cell Tower
COMMISSION AGENDA
ITEM 307
Regular
February 12.2007
Regular Meeting
MGR.DEPT.
Authorization
REQUEST: City Manager requesting the City Commission to review a request from Crown
Castle International to amend the revenue share agreement for the cell tower located at 411 Shore
Road.
PURPOSE: This agenda item is needed to determine if the Commission is willing to amend the
revenue share provided in the current agreement with Crown Castle International.
CONSIDERATIONS:
The City entered into a lease agreement with Bellsouth Mobility on November 7, 2000 to lease
BellSouth Mobility property for purposes of constructing, operating and maintaining a
telecommunications tower on 411 Shore Road. This lease was subsequently assigned to Crown Castle
South, LLC.
Financial terms of the lease provide for an annual lease payment, currently $40,202.82, with a 5%
annual escalation factor. Additionally, the lease provides for co-location of additional
telecommunication systems, up to four, on the existing tower. All co-locators shall pay the City a
monthly rental amount of $1,000.
The City is now in receipt of a request from Crown Castle to amend/modify the current lease agreement
as it relates to co-location revenue. Crown Castle is now subleasing tower space to an additional tenant,
Metro PCS. Crown Castle contends that the financial arrangement provided for in the current lease
agreement is not profitable and therefore not financially feasible to Crown Castle.
As shown below in the Funding Section of this agenda item, accordingly to data provided by Crown
Castle it is receiving $1,800 per month from its current tenant, Cingular, and $1,400 per month from its
subleasee, Metro PCS, for a total of $3,200. Total required payments to the City would be $4,350.24
($3,350.24 lease payment plus $1,000 co-locate lease payment for Metro PCS). This places Crown
Castle in a $1,150.24 negative position, according to data provided by Crown Castle.
Crown Castle further contends that, if it is required to make the associated payment of $4,350.24, which
would include the co-locate payment of $1,000 as required by the current lease agreement, it may be
forced to terminate the lease in its entirety, resulting in $0 revenue to the City for this tower.
Crown Castle is thus proposing a reduction in the co-locate payment to the City from $1,000 to $425 per
co-locator. Crown Castle asserts that this reduction would enable its lease to be financially feasible and
on-going.
The City Manager and staff have repeatedly advised Crown Castle representatives to appear before the
City Commission in order to present and defend their request. Crown Castle has informed the City that
it is unable and unwilling to do so.
FUNDING: The current agreement generates approximately $40,203 in annual revenue to the City of
Winter Springs. The proposed sublease at $1,000 per month would generate an additional $12,000 per
year in revenue. The proposed reduction of the sublease to $425 per month would reduce the $12,000
additional dollars in lease revenue by $6,900, as follows:
Current Scenario (per Contract)
Current Lease Revenue
Add'l Sublease Revenue at $1,000 per month
Total
$40,203
$12,000
$52,203
Crown Castle Proposed Scenario
Current Lease Revenue
Add'l Sublease Revenue at $425 per month
Total
$40,203
$5.100
$45,303
Delta
$6,900
RECOMMENDATION: Staff, in consultation with our cell tower consultant Arthur K. Peters,
recommends the City Commission take no action on this request until such time as authorized
representatives of Crown Castle appear before the City Commission to present and defend their position
on this matter. If the Commission chooses to make a decision tonight, staff would recommend denial of
the request.
ATTACHMENTS:
COMMISSION ACTION: