With the ongoing explosion in wireless communication, there is a race among telecom providers to keep up with customer demand. At the same time, tower companies are always looking for additional space to provide telecom providers with the infrastructure that they need in order to meet such demand. Oftentimes, tower companies negotiate long-term leases or easement agreements with land and building owners for the placement of towers and antennas on their property. Other times, tower companies attempt to extend the duration of existing agreements with property owners with whom they already have a relationship. Sometimes property owners receive monthly rent payments as a result of these agreements, while other times they receive large, sometimes life-changing, lump-sum payments upon deal execution. Regardless of the deal structure, land and building owners sometimes become overwhelmed by the complexity of these agreements and need assistance to ensure their interests are protected.
When being approached by a tower company, property owners should understand that tower companies are mostly concerned about only a few key issues. Ultimately, they want their operations to run smoothly; thus, under only the rarest of circumstances will a tower company enter an agreement where access or utilities may be restricted or impaired. In addition, tower companies require assurances that their interests, especially when making a large lump-sum payment in exchange for property rights, will not be extinguished via a mortgage or tax foreclosure. Last, tower companies will not enter agreements that will cause them to default under their loan indentures, or which will cause undue hardship for potential telecom providers at the site.
While there may be other property-specific details that tower companies insist upon, once a property owner is armed with an understanding of a tower company’s “absolute” needs at a site, he or she will become better equipped to negotiate a deal which is mutually beneficial. For example, a property owner should require the tower company and its licensees to maintain and repair the leased premises and/or easement areas. If a property owner fails to require such a concept, that property owner could be deemed liable for the acts and omissions of the tower company and its licensees, potentially nullifying any profit which he or she may have received from the venture.
Moreover, a property owner should consider requiring the tower company to create a separate tax parcel for its leased premises and/or easement area. If a property owner fails to require such a concept in the agreement, then upon a reassessment, that property owner’s taxes may increase significantly as a result of the improvements made by the tower company. If a separate tax parcel is not, or cannot be created, that property owner should make sure the agreement requires the tower company to pay for any and all increases in property taxes which are directly attributable to the tower company’s presence at the site.
Much like certain issues are deal killers for tower companies, property owners also need to become aware of their deal killers. For example, if the leased premises and/or easement areas are located on a ranch, a property owner may want to require the tower company to install fences around the guyed wires and their anchors to prevent horses, cows and other animals from getting injured. In other locations, a property owner may require that the tower be of the “stealth” variety so it blends in with its surroundings. If the leased premises and/or easement areas are located on the rooftop of a building, a property owner may want to limit the number of penetrations which a tower company makes in the roof membrane to minimize leaks and other issues. Also, although a tower company will push back, it is not unreasonable for a building owner to establish reasonable rules and procedures for accessing the roof, thereby making sure other building tenants are not disturbed.
As mentioned above, tower companies often offer large lump sum payments in exchange for certain kinds of property interests. Tower companies sometimes get into bidding wars among each other in order to lock-up an interest at a valuable site. While these bidding wars often benefit property owners, and while it may be hard for certain property owners not to jump at the chance to earn a life-changing payday, sometimes it makes sense to step back, consider how the applicable agreement may affect the marketability, safety and overall use of the property, and determine what concepts should be added to the agreement to ensure that those property attributes are not compromised.
Matthew Kwasman is an attorney with Nason, Yeager, Gerson, White & Lioce in Palm Beach Gardens. He represents tower companies, property owners and easement holders in the purchase, sale and lease of real estate for telecommunications towers. He is a former supervising attorney with tower operator American Tower Corp.