Cell Tower Leases

Government entities are often approached by wireless communication companies searching for a site to build communication facilities.  Towards that end, below are some issues to keep in mind during cell tower lease negotiations. 1.      Term – Many wireless companies are looking for long term leases that average about 25 years.  Typically, this is in the form of 4 five year terms with automatic renewal clauses with little to no control on the part of the Landowner in terminating the lease.  A better approach is to negotiate a 10-15 year lease with an option to terminate after the first or second extension term.

2.      Rent Escalation – Some companies might suggest a term escalation (i.e. 5% increase every 5 years, etc).  The better option is to negotiate a yearly rent increase around 3%.

3.      Co-Location – Landowners should ensure there are lease provisions allowing for additional rent if other carriers co-locate (i.e. install antennas) on the site.  This additional rent can be in the form of co-location fees or ground space rental for the equipment required to co-locate.

4.      Equipment – Landowners should also require exact drawings of the equipment allowed on the site.  Any additional equipment should require written consent from the landowner.  This is particularly important for governmental entities who are concerned with site aesthetics.

5.      Bankruptcy Affirmation Clauses – It is also prudent for landowners to require a bankruptcy affirmation clause, particularly when renting to smaller, start-up carriers.  These clauses ensure that when a wireless company files for bankruptcy they are required to affirm the lease.  This offers some protection if the company abandons the site in the event of a bankruptcy.

6.      Easements – Carriers might ask for easements to access or build on the property.  Instead of granting easements, if possible, allow a right of access or license to access the property.

7.      Design – Encourage the carrier to use more aesthetically pleasing designs and retain final design approval.  The more integrated the design is with the existing structure or site, the better.

8.      Location – Remember, the carrier has chosen this site for a reason - because it is advantageous for them and there is a need for coverage.  Do not hesitate to negotiate with the carrier for higher rents!  Yearly rents can run from $700-$2000 a month.