Cell site leasing information (1) (2) (3) (Help with cell site questions) (Government agencies) (Selling a lease?)

Government agencies and cell site leases

Hi. Ken Schmidt here, of Steelintheair.com (external link.) I can help negotiate or evaluate any wireless lease offer that comes your way. But some background first. Let me explain my working with governmental agencies, before giving you some suggestions.

I haven't always represented the property owner, many times I worked for "the other side." As a past leasing representative for Nextel, T-Mobile, and numerous tower companies, I approached many municipalities and county governments to lease ground space to build towers. Usually as a last resort. Due to strict requirements and often unrealistic terms, I only went to a governmental entity because I ran out of choices. Too often while negotiating the city or county relied on historical lease data from neighboring municipalities or other planners. Bad idea. Unrealistic expectations.

Agencies often assume that because the county or municipality near them charges one rate that they should as well. This analysis ignores the basic tenet regarding land value: every parcel is unique. This tenet holds even more true in wireless where countless factors weigh upon the carriers need for a location in the area or for a specific parcel.

One property, for example, may be within one mile of a major highway or a population center. Good! Another property may be a service island, connecting 18 people and 2000 cattle. Bad! One parcel might have little competition, with other towers ten miles away. Another property might be in eyesight of another carrier's tower. Are these properties alike?

Certainly there is merit in using comps (or comparables) to determine going rates for leases. Doing this from county to county, however, relies on assuming, wrongly, that land is similar enough for building a cell tower from one county to another. That may be true for real estate development or sales, but not here. Again, many factors effect where to place a cell tower, making every parcel unique and therefore every lease rate unique.

The result is that by relying upon anecdotal evidence such as nearby county or city lease rates, the municipality does one of two things: they either undervalue or overvalue their location.

In the first case, many parcels have much greater value to a tower company than others and by relying upon comparable rates in other locations, the municipality fails to request enough money. Additionally, just because one county worked out a template agreement with one carrier does not mean that the agreement is the best that could have been done. In the second case, a city or county may price themselves out of the revenue that a tower could bring by overvaluing a particular location and forcing the carrier to look at non-governmental parcels or to redesign their network to fit elsewhere. In either scenario, the city or county fails to maximize the revenue they could command.

I counsel private landowners by determining how unique their individual parcel is to cell tower companies. The more unique a parcel, the greater the fair market value, and the greater the lease rate. The same holds true for municipalities. By better evaluating the fair market value of potential leases when a carrier approaches, a municipality can better increase revenue.

Please feel free to visit our website at Steelintheair.com (external link) We would be happy to help you evaluate each individual offer on its own merits to help you and your agency arrive at a lease rate that maximizes your return while minimizing the risk that the carrier goes elsewhere.

Thanks, Ken Schmidt

E-mail us: ken@steelintheair.com

Steelintheair.com (external link)

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Cell site leasing information (1) (2) (3) (Help with cell site questions) (Government agencies) (Selling a lease?)