HomeMy WebLinkAboutSupplemental Information Distributed after Posting of Agenda - Item GRobin Roberts
From: Patrick Gallegos
Sent: Monday, April 10, 2017 4:17 PM
To: Robin Roberts
Subject: FW: Item G - Resident Inquiry
FYI
Patrick Gallegos, Assistant City Manager
City of Seal Beach - 211 Eighth Street, Seal Beach, CA 90740
(562) 431 -2527 Ext. 1308
o ON,-,
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From: Patrick Gallegos
Sent: Monday, April 10, 2017 1:52 PM
To: Sandra Massa - Lavitt <S Massa Lavitt @sealbeachca.gov >; Mike Varipapa <MVaripapa @sealbeachca.gov >; Ellery
Deaton (ellerydeaton @gmail.com) <ellerydeaton @gmail.com >; Thomas Moore <tmoore @sealbeachca.gov>; Schelly
Sustarsic <ssustarsic @sealbeachca.gov>
Cc: Jill Ingram <jingram @sealbeachca.gov>
Subject: RE: Item G - Resident Inquiry
Good afternoon Council,
Below are responses to Robert Goldberg's inquiry regarding Item G. Let me know if you have any questions.
Item G: Lease of Cell Towers
• Page 2 of the staff report states that the proposed rent for the STC One site is $23,800. However, the
contract states $24,514.
Which figure is correct? The lease is correct as it accounts for the escalation that occurred on 10/1/2016, which
explains the difference /increase from the staff report to the lease. (878999)
• The Tennis Center site (Cingular 845383) is the largest of the four sites. However, at the proposed rent
of $20,400, it is priced about the same as the STC site (878999) which is half as large. Additionally, the
smaller STC site lease has a 15% kicker in 2022, but the Tennis Center site doesn't.
Why aren't we getting a 15% kicker in 2022 at the Tennis Center? Crown is paying a $90K signing bonus for the
Tennis Center site (845383) within 60 days of full execution of the lease and memorandum. Further, a 3% rent
escalation is added by the new lease, which makes it directly comparable with the other leases where the rent increases
and the escalation changes to 3 %.
• In all of the four agreements, we are giving a 30' wide easement for an access road construction. The
location of each easement is not clear from document. It is also not clear if Crown Castle intends to
build access roads. This provision may be "boiler plate."
Recommendation: Remove this provision from each contract or provide a clear lay person map as to where the
access road will be built. Discuss potential impacts of access road on adjacent city facilities. These are existing
sites and there is not a current intent to relocate the access roads. However, this language grants the existing access
rights and allows relocation if necessary in the future to accommodate the public utility. Crown would not be able to
access the sites without this provision.
• All four lease agreements allow Crown Castle to construct improvements. The agreements place no
restrictions on these improvements.
Are there other agencies that regulate the height and appearance of these improvements? Crown's right to
make improvements is subject to all federal, state and local regulations, including local zoning and permitting
requirements, which regulate height and appearance of improvements where applicable. Local governments have
construction permitting regulations related to improvements to meet the applicable building code. Many local
governments, such as Seal Beach, have zoning regulations regarding construction of wireless telecommunications
facilities, which include height regulations. These towers meet the goal to lease public property or towers. Further, the
new leases comply with the City's regulations by encouraging use of existing facilities by multiple providers with direct
financial benefit to the City.
• All four lease agreements allow Crown Castle to sub -lease the site to additional sub - tenants. A revenue
sharing provision promises 20% of the additional revenue to the City. However, no sharing is required
if Crown Castle "sublease(s) ... the leased premises prior to execution of this Agreement."
Has Crown already signed sub - leases (to avoid the 20% payment to the City)? No
If not, why is this provision is this provision in the agreements? Currently, the applicable anchor tenant operates at
each site without subtenants and the City will receive a future income stream in the event a subtenant collocates at any
site. There are no current applications for additional carriers at any of the four sites.
• The lease agreements do not clearly provide the City with the right to conduct independent audits of
Crown Castle to verify whether reporting of sub - leases (and revenue) is accurate.
Can the agreements be modified to have such audit language? Section 28 of each lease sets forth the right for the
City to request a business summary report, which contains a written accounting pertaining to the rent obligations.
• The Financial Impact section of the staff report states that the four new leases will generate about
$81,513 per year. Adding in the loss revenue at the Tennis Center of $63,600 should mean that we are
currently getting about $145,000 per year now. However, the FY 16 -17 Budget shows revenue from
"Rental of Telecom Property" at $290,000 (p 21).
Please explain the difference between these two numbers. The City holds other telecom lease interests unrelated
to these four leases.
Regards,
Patrick Gallegos, Assistant City Manager
City of Seal Beach - 211 Eighth Street, Seal Beach, CA 90740
(562) 431 -2527 Ext. 1308