City of Gonzales
CITY ATTORNEY
STAFF REPORT
TO: Honorable Mayor Rios and City Council
DATE: July 22, 2024
FROM: Michael Rodriquez, City Attorney
THROUGH: Carmen Gil, City Manager
SUBJECT: Resolution No. 2024-51 Approving a Telecommunication Easement Agreement Between the City of Gonzales and TPA VI, LLC, Concerning the Acquisition of Lease Agreements with Verizon and T-Mobile for Cellular Tower Sites on the City Water Tower at 700 5Th Street
RECOMMENDATION
It is recommended that your Council consider and adopt Resolution No. 2024-51, A Resolution of the City Council of the City of Gonzales Approving a Telecommunication Easement Agreement Between the City of Gonzales and TPA VI, LLC, Concerning the Acquisition of Lease Agreements With Verizon and T-Mobile for Cellular Tower Sites on the City Water Tower at 700 5th Street.
BACKGROUND
The City currently has two cellular tower lease agreements, one each with Verizon and T-Mobile, for wireless communication facilities on the City’s Water Tower located at 700 5th Street. As was previously discussed with and considered by Council, the City has the opportunity to maximize the value of these assets with an up-front one-time lump-sum lease payment, rather than smaller monthly payments over time, by selling its lease rights to a qualified outside party.
Per Council approval, Consultant SteepSteel, LLC marketed the aforesaid leases on behalf of the City to prospective, highly qualified bidders and thereafter began negotiations based on the best response received from TowerPoint Acquisitions, LLC. On May 6, 2024, the Council approved Resolution No. 2024-13 authorizing the City Manager to enter into a Letter of Intent with TowerPoint related to the prepayment of lease agreements with Verizon and T-Mobile and authorizing negotiation of an Easement Agreement for lease prepayment.
REVIEW & ANALYSIS
AGENDA
ITEM
17 Staff has been able to negotiate the essential terms and conditions of an Easement Agreement with TowerPoint (DBA “TPA VI, LLC.”). Although the original Letter of Intent between the parties anticipated a 100-year term agreement, difficulties involving the length of the term caused the parties to consider and agree upon a shorter 55-year term for a purchase price of $1,425,000.00. The terms and conditions of the Easement Agreement are substantially similar to those that were entered into with TowerPoint in the City of Soledad in 2022. Basically, TowerPoint is stepping into the City’s shoes and will be entitled to collect and retain lease payments from Verizon and T-Mobile on a monthly basis. They will also have the right to seek replacement leases should the leases with Verizon and/or T-Mobile terminate, and to seek additional cellular users for the Water Tower, with the City receiving 60% of new revenues. Finally, they will also be entitled to an additional 550 sq ft. of space, as necessary, for placement of equipment needed to serve new users. The City will still retain permitting and approval authority as to new users.
Although the Agreement is not in final form, time is of the essence in this matter and Staff is requesting that the Council approve the Easement Agreement as to substantial form and content, with direction and authority being provided to the City Manager to execute the document once it has been determined by the Manager, Finance Director and City Attorney to be in acceptable final form. Staff anticipates that we will be able to iron-out final details within a few days and quite possibly by the time this matter is considered at Monday’s meeting.
Staff has determined that the proposed Agreement is exempt from analysis under the California Environmental Quality Act (“CEQA”) pursuant to the Class 32 Infill Exemption (CEQA Guidelines Section 15332), or because it is not a project for the purposes of CEQA since it has no potential for resulting in either a direct or indirect impact on the environment- CEQA Guidelines Section 15378.) Explain Recommendation and How it Supports the Vision
Gonzales will continue to be a safe, clean, family-friendly community, diverse in its heritage, and committed to working collaboratively to preserve and retain its small-town charm.
Explain: The advance lump-sum payment of cellular lease revenues that would have otherwise been paid on an incremental basis over a course of years will provide much needed financial assistance to current efforts to maintain the City’s vision.
Explain how the Recommendation Directly Implements the Mission The City Council and Staff of the City of Gonzales will realize our Vision by providing the leadership, commitment and resources necessary to provide excellent services that enhance the quality of life of our diverse community. X Yes ___No ___ NA
Explain: Please see above.
Strong fiscal policies allow us to provide appropriate infrastructure for:
• Public Safety X Yes ____No __NA
• Housing X Yes ____No NA
• Recreation X Yes ____No NA
• Environment X Yes ____No __NA
• Education X Yes ____No NA
Explain: Please see above.
ALTERNATIVES
Your Council has the following alternatives:
• Approve Resolution No. 2024-51.
• Modify, delete and/or add to the language of the proposed resolution or Easement Agreement. • Do not approve Resolution No. 2024-51and provide direction. This is not recommended as failure to close this transaction in July may jeopardize funding for the proposed lease acquisition.
BUDGET IMPACT
The City currently receives approximately $6,021 per month or just under $72,300 per year in lease revenue from the two existing cellular tower leases. The proposed Agreement will result in a onetime advanced lump-sum payment of $1,425,000.00 in addition to 60% of new lease revenue that may be derived from the Water Tower over the course of the Agreement’s 55-year term.
CONCLUSION
It is recommended that your Council consider and adopt Resolution No. 2024-51, A Resolution of the City Council of the City of Gonzales Approving a Telecommunication Easement Agreement Between the City of Gonzales and TPA VI, LLC, Concerning the Acquisition of Lease Agreements With Verizon and T-Mobile for Cellular Tower Sites on the City Water Tower at 700 5th Street.
Attachments:
1. Resolution No. 2024-51