Navigating the challenges of a potential lease agreement
by Steve Kazella
“Catch for us the foxes, the little foxes that ruin the vineyards, our vineyards that are in bloom.” Song of Solomon 2:15
Besides the obvious financial benefits of having a cellular-phone tower built on your church property, there are many hidden pitfalls that churches entering into a cell tower lease with a wireless carrier need to be aware of.
My friend and church minister, Larry, got a new cell phone from his wife recently for his birthday. It was a model that didn’t have a camera, the ability to surf the Internet, send text messages, play games or do any high-tech applications. It was just a cool cell phone with a keypad, LCD screen and voice mail. He loved the gift – until he saw a commercial for the exact same phone being marketed to baby boomers as a cell phone with big buttons that was easy to dial.
The high-tech cell phones of today are mini wireless computers that eat up a lot more bandwidth than the devices of just a few years ago, fueling the increased demand for as many as 100,000 more new cell towers across the
1. Watch Your Lease and Tax Language Closely
Fortunately, most congregations have a good CPA on their financial committee who can provide localized tax advice on a state-by-state basis. Make sure that you are protected by having specific tax language included in your cellular carrier lease, which protects you from being hit with tax assessments because of an improvement on church premises. Most carriers want the lessor to pay the taxes upfront, and they then reimburse them within 60 to 90 days. Many churches don’t have the ability to do that, so you want to make sure the language in your lease protects the church from paying these fees upfront – and places the responsibility on the carrier, in the rare event your municipality decides to collect from you.
2. Count the Costs of Leasing before You Build
One of the biggest problems you’ll face with your initial cell tower lease and future co-location (bringing additional wireless carriers to your site) is having the budget to hire proper representation for dealing with wireless carriers. Carrier site acquisition contractors know that a church might not be able to afford a top-notch cell tower attorney to negotiate on its behalf, and the carriers take advantage of that. Many cell tower leasing consultants are actually paid big bonuses for bringing in a cheaper cell tower lease with better terms for the carrier. Churches often end up retaining good real-estate attorney generalists, or they’ll have an attorney who is a member review and negotiate the lease pro bono. However, they usually have no or very limited cellular site leasing experience and end up agreeing to unfavorable terms or negotiating their clients entirely out of the deal. Because cell tower leases are complicated and highly specialized, the added expense of retaining an experienced wireless attorney is recommended.
3. Select a Location Suitable for Tower Placement
Proper tower placement is essential. You want to make sure that a cellular site is not built anywhere that could impact future growth and expansion of your church.
4. Have a Professional Review Your Cell Site Design
At the end of the day, the congregation is not going to select the type of cell tower that gets built. Your municipality will ultimately decide on what design (steeple, bell tower, flagpole, fake tree, monopole, lattice tower) is acceptable, and within those parameters, you’ll have the choice to approve or reject what the carrier proposes. In many cases, a lattice tower or monopole looks better than a “stealth tree.” Decide whether you want a one- or two-carrier wireless steeple or steeple replacement, an 80-foot, three-carrier flagpole or a 110-foot to 150-foot, four- to five-carrier tower. As a rule of thumb, the higher the tower, the more potential you have for expansion and maximizing the revenue the site can generate. Have you ever heard the joke about the guy who hadn’t been to church in 20 years; he walked in one Sunday, and the roof crashed in on him? Make sure it doesn’t happen at your church. Spend $500 to have a local licensed structural engineer review all proposed wireless construction plans the carriers are proposing, especially on your roof.
5. Understand the Health Concerns
Your neighbors who you are reaching out to may be concerned about the rash of baseless negative articles that the wireless industry as a whole has not done a very good job of rebutting. For most, the biggest fear is the fear of the unknown, and the overwhelming majority of people don’t know anything about cell tower health issues except the negative articles that the cell-phone-owning media seem to publish regularly. Make sure your group is unified on the cell tower issue before you move forward.
6. Be Shrewd When Dealing with the Carriers
All wireless leases are heavily slanted in favor of the cellular service providers – and you don’t actually deal with the carriers directly, rather, with their subcontracted site leasing consultants and attorneys. Unfortunately, on the leasing end of the industry, the majority of vendors have limited wireless leasing experience, and have never worked both sides (working internally at a carrier or owning a cell tower property). Additionally, there are a number of charlatans negotiating cell tower leases. Carriers and their vendors are not going to tell you what kind of subletting language to include to maximize revenue for your church. Nor will they offer advice on how to protect your congregation’s ground space or rooftop space rights, proper right of first refusal, indemnification, tax language or proper co-location terms.
7. Avoid Death by Committee
Many cell tower leasing consultants can learn to recite the Book of Leviticus faster than it takes many churches to decide to move forward on a cell tower lease. If a carrier contacts your church about a cell tower but you only check your answering machine on Sundays, chances are you’ll be looking at the Elk’s Club’s cell tower for the next 25 years instead of it benefiting your church. Although the Bible teaches us to be quick to listen and slow to speak, it also tell us to be prepared to answer. Make sure that phone numbers of your pastor, deacon of facilities, administrator or church Web site are posted or listed, and that the carriers can reach you within 24 hours of initial site identification, or they will find another location.
How Can You Get a Cell Tower
Make sure that you are at least a mile from the nearest tower. Your church should not be in a flood plain or listed on a historical registry, have any environmental issues or have any endangered species nesting in your steeple.
Churches have several options for getting the cellular carriers to consider their sites for wireless development. They can: ...
•Wait for a wireless carrier or one of their real-estate site acquisition consultants to approach them. It’s essential to respond within 24 hours or the site acquisition consultant will go to the next location.
•Market their sites on their own by submitting information online, directly to the carriers. Unfortunately, this is probably the least-effective method for getting your site selected, but as long as you have a good location and a mustard seed of faith....
•Contact a tower construction company who then builds a tower at their expense and markets the site to the carriers. They keep 50 percent to 70 percent of all rental income if you are lucky enough to get a site built.
•Use a wireless management company to tap into their industry contacts and attempt to bring a carrier to your site at the carrier’s expense.
Regardless of how you promote your church site, you should assign one point of contact (who is easy to reach) to deal with the carriers. Cell towers will need 600 to 2,000 square feet of ground space, and church steeple cell sites will require up to 1,200 square feet of ground space to locate equipment cabinets. Your facilities deacon or church office secretary should have copies on hand of documents such as site plans, easements, deeds and surveys. I suggest preparing a one-page flier containing a site photograph, church address, property information (block, lot, what zone it’s in), attached copy of a tax map with your church property highlighted, property elevation, steeple or bell tower height, and latitude/longitude.
As much as possible, avoid contacting your municipality to get their opinion about a proposed cellular site at your church. Let the cellular carriers approach the town on all matters pertaining to cell tower development.
These tips are just a starting point in helping churches make sure they protect themselves as they consider entering into a legally binding agreement that will easily fall to the next generation. Remember, if it were easy to get a cell phone tower built at your church, every congregation would have one.
Steven Kazella is the president of New Jersey-based AirWave Telecom Property Management (cell-phone-towers.com), a telecommunications consulting firm which partners with property owners and building owners to develop cell towers and rooftop antenna sites with wireless carriers. Kazella’s partners have nearly 50 years’ combined wireless lease negotiation and cell site development experience.
See also Spires for Hire, about building cell phone towers inside a church steeple.
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3 comments:
I received an email with more updated information. I thought it was worth sharing:
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I just wanted you to know that I can tell that you did get some sparse information from someone in the industry, and some of it was accurate – but there were some things that were not. I have worked for both tower companies, for site acquisition companies direct, for cellular companies direct and through their vendors over the last ten years. Some inaccuracies –
• Site acquisition Agents to my knowledge are not bonus-ed based on the rent they sign with a Landlord. If they are, or you have heard differently, it is very rare. They are given a criteria and they have to stay within that range.
• There is never any reason to have a professional engineer review the design for structural integrity. The carrier/tower company is much more concerned than any church is, due to the fact that if there is any issue in the future that people always go after the deepest pockets. The carriers/tower companies jump through many hoops to be sure that there are no issues with the structural integrity of the entire build.
• #6 - The majority of vendors have limited leasing experience? Who told you that? That is their primary function.
• #6 – the rest of #6 is pretty accurate – but is also business. Why would the cell tower company tell you how to take more money out of their pocket? Is the church going to accept less than what the tower company offered just to be nice? Landlords and people out of the industry do not realize the investment in the property, and so they think that every tower/cell site is this huge money making opportunity.
• Nearly the entire “How Can You Get a Cell Tower on Your Church Property” is inaccurate.
o Contact a tower construction company – completely a waste of time.
o Use a wireless management company – again, unless this is a church that is a 4 story building, this is also a waste of time. These wireless marketing companies compile properties just based on the sheer number of properties will eventually get a hit. There is no serious marketing going on.
• Cell Towers need a minimum of 600 feet, and go up to 100,000 square feet.
Dear Church Sound Guy,
I wrote the original article which appeared in Church Solutions in late 2009, and I appreciate the re-post on your blog. The email that you received and posted disputing my article was likely from a competitor who is entitled to their own opinion.
Best,
Steve K.
Steve (at) AirWaveSites.com
I have been in the wireless Industry for over 23 years and was in charge of the build program for one of the major carriers in the Northeast U.S.
On top of that I have negotiated deals for every major telecom carrier in the U.S.
With that being said, I would like to answer your post on "Cell Towers and Your Church". First many site acquisition agents are paid on a bonus structure with incentives given to pay lower sums or lower escalation figures. Clearwire & T-Mobile are just two of the firms currently using this method to reduce expenses long term.
While I agree that many carriers do a fine job in their design and construction, it does not hurt to have an independent set of eyes review the drawings just to make sure, especially if a structure is questionable. SOme construction companies have cut corners and very few of the inside "project Managers" have any real construction experience so I would not trust their experience. While people do tend to go after the deep pockets...all parties involved are sued if a real problem develops. The carriers are insured and can ride out the court process but its a strain a small congregation does not need to deal with.
I agree with the author regarding the experience level of most of the vendors serving the industry at this time. They used to require professionals, now most vendors just provide bodies. Eighty percent of the site Acquisition people I have met in the last five years can not read a lease and understand it.
Fair market value dictates what should be paid. You wont make $1 million dollars a year but you should be able to bill enough to help a church substantially. From a tower owner perspective If I own a tower with revenues of $100k I could sell it for the industry standard of 12 x revenue or about $1.2.million. It is a very lucrative business, just ask Crown or American tower.
You can list your property with a tower company or a carrier and though you most likely will never hear from them, sometimes the property is chosen from database. I also represent properties, and I qualify each property to judge the need, construction needs and zoning requirements before I bring it to a carrier. I have roughly a 20% success ratio on getting carriers to move on projects and this number would be much higher but the carriers are cutting back on developing rural areas.
As per area, the smallest compound I have ever down was about 250 square feet for a monopole and T-Mobile cabinets.
I thought the article was pretty good and gave a nice introduction and advice to people unfamiliar with the site leasing process.
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