06-27-2018 Council Packet - final

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STAFF REPORT TO: Mayor Keis and Members of the City Council FROM: Joel Hanson, Resident At Large DATE: June 27, 2018 RE: Sale of Cell Tower Leases In completing my tenure with the City, I have been attempting to close the two cell tower lease sales. Both are with Crown Castle Towers. With the pending extension of the underlying property sale to Q3, I had asked Crown to extend the closing date that is currently scheduled for this Friday. The primary reason for the delay in completing this transaction was trying to define the new easement area whereby the tower tenants can access their respective sites. I believe we have now accomplished that based on the map entitled Attachment #1 to this memo. Here are the highlights of the lease sales: • The sale of the south tower will be in the amount of $660,000 payable over nine years with a down payment of $66,000 at closing. The remaining payments will have interest compounded on the outstanding balance at 2% per year. When we purchased this property back in 2013/14, we paid $250,000 for this lease. • The sale of the north tower will be for $252,000 with the full amount payable at closing. Please note that we did not purchase this lease. Rather, this tower was constructed after we acquired the property. Negotiations were held with at least two parties who could not exceed or match Crown’s offer. • During this process, I did consult with a Cell Tower Lease Expert on the values for each tower and we met/exceeded his recommendations. Steel In The Air was the consultant. • The sale of the south tower lease contemplates granting them an additional 1,000 square feet of land area to accommodate a generator in the future. Initially, we were proposing this land to be located immediately north of the north tower. However, after reviewing Q3’s site layout sketch, it seemed to make more sense to place it in the SE corner of the site given it will serve no useful purpose due to the configuration of parking and the access drive. (See Attachment #2). This option was reviewed with the Associate Planner and I believe it complies with our zoning code provisions. Even if it does not, I would recommend the consideration of a variance for this purpose to maximize Q3’s use of the site and given the unique characteristics of the property that does not have street frontage. The City Attorney has been involved in the review of the two leases and I believe is comfortable with them, subject to a couple of minor modifications for south tower. Chad Lemmons will be present tonight to review the documents and answer any questions. The one other issue is in the Q3 purchase agreement, we are allowing them to review these documents to make sure they, as the future property owner, are ok with the terms. So, if the EDA approves the lease sale documents tonight, the action should be contingent on Q3’s approval. Cc: Chad Lemmons