Agenda Report
Fullerton City Council
MEETING DATE: JANUARY 16, 2024
TO: CITY COUNCIL / SUCCESSOR AGENCY
SUBMITTED BY: SUNAYANA THOMAS, DIRECTOR OF COMMUNITY AND ECONOMIC DEVELOPMENT PREPARED BY: TAYLOR SAMUELSON, SENIOR ADMINISTRATIVE ANALYST SUBJECT: CELLULAR TOWER LEASE AMENDMENT WITH VB RUN, LLC FOR CITY OWNED REAL PROPERTY AT 2100 NORTH GILBERT STREET
SUMMARY
VB Run, LLC seeks a lease amendment with the City of Fullerton to continue leasing real property for a cell site at 2100 North Gilbert Street identified as the Coyote Hills Park clock tower structure.
RECOMMENDATION
Approve amendment number two to lease agreement with VB Run, LLC for continued operation and maintenance of Telecommunication Facilities located at 2100 North Gilbert Street with a commencement date determined on final Building Permit.
Authorize City Manager to execute lease agreements on behalf of the City of Fullerton, in a form approved by the City Attorney.
Authorize purchase of Clock Tower fixture for $1.00.
CITY MANAGER REMARKS
The City Manager recommends approval of the agreement and transfer of ownership of Clock Tower fixture.
The City Council could additionally request staff to budget the one time amendment fee of $12,500 to the Parks & Recreation Fund for future Maintenance of West Coyote Hills in the 2024-2025 Budget.
PRIORITY POLICY STATEMENT
This item matches the following Priority Policy Statement:
Fiscal and Organizational Stability.
FISCAL IMPACT
The previous lease agreement expired July 31, 2023 and generated $60,677 annually. The City has not received revenues since the expiration of the term. The First Amendment would initially generate $45,447.72 and escalate by three percent each year. The First Amendment transfer ownership of the Clock Tower fixture from the Lessor to the City for a $1.00 purchase price. The First Amendment also includes a negotiated one-time $12,500 amendment fee that staff requests appropriating to the Parks and Recreation Fund (Fund 15) and used for West Coyote Hills Park improvements which include initial maintenance and improvements to the clock tower.
The first ten-year term of the amended lease would provide $521,007.18 in General Fund revenues.
The amendment could generate a net $2,162,194.17 over the lifetime of the lease period (30 years), assuming both parties execute all optional renewal terms retaining existing terms.
DISCUSSION
The City seeks to amend the agreement with VB Run, LLC to operate the telecommunication facilities at 2100 North Gilbert Street, since the previous lease expired on July 31, 2023. The City utilizes CA Department of General Services (CADGS) standardized lease rates (Attachment 3) for government properties to facilitate lease negotiations with carriers to adjust for market conditions and ensure the most feasible revenue generation. Staff negotiated lease rates and value-add clauses to ensure continuous revenue generation and net new revenue.
The existing sheathed cell tower system located at Coyote Hills Park is a mock clock tower on the intersection of Gilbert Street and Rosecrans Avenue. The applicant has leased the site from the City for 20 years and the seeks to continue leasing the property with a new carrier.
Generated revenue would increase based on a three percent escalator each year. The following amortization schedule would begin following securing a permit for a new cellular carrier the site, installing necessary equipment and assuming the carrier would execute all lease renewal terms.
All Renewal Terms
Term Lease Revenue
1st Term (ten years)
$521,007.18
2nd Optional (five years)
$324,271.05
3rd Optional (five years)
$375,919.03
4th Optional (five years)
$435,793.18
5th Optional (five years)
$505,203.74
Total Revenue Projection
$2,162,194.17
Staff negotiated a rate aligned with CADGS guidelines that achieves clock tower ownership and secures a $12,500 one-time payment for Park maintenance needs.
VB Run, LLC owns the tower and operates the former Sprint site. The original lease terminated November 2022 (Attachment 1) because no carrier used the site.
Attachments:
• Attachment 1 – Original Lease Agreement
• Attachment 2 – First Amendment to Lease Agreement
Attachment 3 – CADGS Standardized Lease Telecom Rates Guidelines Cell Tower Lease Amendment
January 16, 2024 - Page 4