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3 <br />MEMORANDUM <br />DATE: November 15, 2005 <br />TO: City Council <br />FROM: Mike Monrson, City .Manager <br />Roger Larson, Finance Director <br />ITEM: NEXTEL WESI' C'OR]3--'rE],RC`OMMIINICA'I'IONS LEASE <br />Nextel West Corporation desires to install a telecommunications facility at the City's <br />watcr, tower. Based on direction from the City Council and negotiations with Nextel, an <br />agreement of the terms of the lease has been reached. <br />In the City's initial proposal.staff asked to)- a starting monthly rate of $1,400.00 per <br />month, plus a 4% escalator or the CTI, whichever is greater. Nextel rejected the CPI <br />language and wanted to agree to the 4% escalator. <br />Staff countered with dropping the CPI language and added a starting monthly rate of <br />$1,d58 per month ($17,500 annual), plus a 5% escalator. Nextel countered by offering a <br />higher starting rate with a 4% escalator. <br />After calculation of the numbers to achieve the same bottom line number as a 5% <br />escalator, the starting monthly rate agreed to is $1,650.00 per month ($19,800 annual) <br />with a 4% escalator. <br />The highlights of the agreement include the following proposed conditions and terms: <br />® Initial Term of the Lease 5 Years. <br />® Renewal Terms Five 5 -year renewal options. <br />• Proposed Rent $1,650.00 per month ($19,800 Annual). <br />® Term Escalator 4% per year of the pervious year's rent. <br />The communications facility will require no City improvements and the cost of all <br />utilities, phone lines, necessary improvements and planning and zoning expenses will be <br />paid for by Nextel West Corp. <br />The lease of the facility to Nextel will provide a source of rental income to the General <br />Operating Fund at a higher monthly rental rate than Sprint Spectrum is paying ($1,456.00 <br />monthly, $17,472 annual). <br />