CC WORKSESSION 10042005 - Laserfiche WebLink

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MEMORANDUM DATE: September 26, 2005 TO: City Council FROM: Mike Morrison, City Manager Roger Larson, Finance Director ITEM: NEXTEL WEST CORP — TELECOMMUNICATIONS LEASE Nextel West Corporation desires to install a telecommunications facility at the City's water tower. The highlights of the agreement include the following proposed conditions and terms: • Initial Term of the Lease 5 Years. • Renewal Terms 4 — 5 year renewal options. • Proposed Rent $1,400.00 per month. • Term Escalator 4% per year of the former years rent. The communications facility will require no City improvements and the cost of all utilities, phone lines, necessary improvements and planning and zoning expenses will be paid for by Nextel West Corp. The lease of the facility to Nextel will provide a source of rental income to the General Operating Fund at the same monthly rental rate and terms that Sprint Spectrum is paying. In addition, to the benefit of enhanced revenue, the new facility will improve wireless and emergency communication services. Another added benefit is that the antennas are taxed as personal property and this lease will generate $3,830.40 in property taxes. The taxable value and calculation is based on the amount of the annual lease. The following example is based on collectible 2005 taxes: Annual Lease $ 16,800 • Gross Rent Multiplier X 8 134,400 • Tax Rate for Preferred Property .0285 $3,830.40 To compare the annual lease charges and to what other cities are charging, St. Anthony's annual lease and escalator is competitive. Cities with similar leases and escalators include St. Louis Park, Champlin Park, Robbinsdale, New Hope and Hopkins. They all have current leases in the lower $20's, but all are several years into their escalator.