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Home My WebLink About2/21/2001 - STAFF REPORTS (9) DATE: February 21, 2001 TO: City Council FROM: Director, Department of Facilities CONSENT TO SUBLEASE BETWEEN VERIZON AND CALIFORNIA TOWER, INC. RECOMMENDATION: That City Council approve a Consent to Sublease between Verizon and California Tower, Inc., a subsidiary of SpectraSite Holdings, Inc., regarding Lease Agreement No. 3281 between PacTel Cellular (subsequently AirTouch, now Verizon) and the City of Palm Springs, dated October 6, 1993, for access rights to cellular tower located at 1901 East Baristo Road. SUMMARY: PacTel Cellular (now Verizon) entered into a Lease Agreement with the City of Palm Springs on October 6, 1993, for a cellular tower located at 1901 East Baristo Road, adjacent to Palm Springs Stadium.The term of that lease is for 15 years with two five-year extension options. The Tenant is requesting this Consent to Sublease, as required by the Lease Agreement, to allow it to sublease the premises to California Tower, Inc. for marketing and maintenance of the tower.Tenantwill remain the City's Lessee and be liable and responsible for each and every term of the Lease Agreement. The proposed Consent to Sublease provides for a 20%increase in the current monthly rental amount.The current monthly rent will increase from $569.41 to $683.29, for a total net annual increase of $1,366.56 to the City. This new rental amount is consistent with two other ground lease agreements that were approved by the City of Palm Springs in the past year. BACKGROUND: The City currently has five cellular ground lease agreements with four different carriers for sites located in the city. Three of these sites are located at Palm Springs Stadium, and there is one each at DeMuth Park and the Palm Springs Police Department.All agreements are similar in nature in that payments to the City are annually adjusted by a CPI factor, however, lease payments differ because the agreements were all entered into at different times. Originally PacTel did not propose to pay any additional cost to enter into this sublease agreement.Staff was initially opposed to that position and has gradually negotiated a lease payment increase from zero to a 10% increase, ultimately ending in a 20% increase as is being proposed. The proposed 20% increase adjustment in the monthly lease payment for the PacTel site will make this location the second highest revenue-producing site in the city, although it was the first ground lease agreement instituted by the City. Furthermore, no modifications are being done to increase the cellular carrying capacity of the tower itself as a result of the CONSENT TO SUBLEASE BETWEEN VERIZON AND CALIFORNIA TOWER, INC. DATE: February 21, 2001 PAGE Two proposed sublease. Therefore, the amount of rental consideration being provided to the City is proportionately higher than competitive towers in the community when comparing the volume of traffic that the site can accommodate. L 1 ,SCOTT MIKESELL, Director ` Department of Facilities APPROVED City Manager _ �i ATTACHMENTS: 1. Letter dated January 30, 2001 from SpectraSite 2. Consent to Sublease 3. Minute Order REVIEWED BY DEn OF FINANCE 942, �0� SpectraSite January 30, 2001 Scott Mikesell, Facilities Director *Courtesy Copy Faxed— Original Mailed* City of Palm Springs P.O. Box 2743 Palm Springs, CA 92263 Re: Lease dated 10/06/93 ("Ground Lease") between AirTouch Cellular ("Tenant")and City of Palm Springs ("Landlord")of premises located at 1901 E. Bariste Rd., Palm Springs, CA("Tenant's Premises") Dear Mr. Mikesell: This is in response to your request for further explanation of the letter from Verizon Wireless (formerly known as "AirTouch") seeking the city's consent to the Verizon/SpectraSite Communications sublease ("Sublease") of the above-referred Tenant's Premises. The letter requesting consent was sent to you because the city's consent to any assignment or sublease by Verizon to another entity is required by a clause in the city's Ground Lease. As you are probably aware, Verizon and SpectraSite Communications have entered into a master "Sublease Agreement' that involves Verizon's portfolio of communication towers in the Los Angeles and San Diego markets. While called a "Sublease', this agreement is more like a "marketing/site maintenance' arrangement whereby SpectraSite will perform acts relative to the marketing and maintenance of each of the towers involved in the transaction. Verizon will remain the city's lessee and will continue to pay the rents under the lease to the city in the same manner as presently paid. In addition, Verizon will remain liable and responsible for each and every term of their lease with the city. By signing the requested "Consent to Sublease" the city is only agreeing to permit Verizon and SpectraSite Communications to enter into their Sublease as to the city's Premises; nothing more. As a result of the city's execution of the Verizon consent letter, no physical changes will occur on, at, or to the Premises, nor will the city lose the control over its property that the city currently enjoys. By consenting to the Verizon/SpectraSite sublease, the city gives up none of its rights nor is Verizon released from any of its obligations, under the lease,without further consent by the city. SpectraSite is a "tower" company, and as such, is in the business of providing locations (towers and roof-tops) to telecommunications providers ("Carriers") such as Verizon, Sprint, Nextel, AT&T, etc. These Carriers require locations in order to transmit communications signals. As I said above, this Sublease, in and of its self, does not place any new carrier on the Tenant's Premises. If in the future, however, an opportunity does arise to place another carrier on this tower (a process called "Collocation"), SpectraSite's obligation under the Ground Lease would be the same as Verizon's obligation under the Ground Lease, and SpectraSite would be required to submit the collocation request to you for the citV's consent prior to making any changes to the Premises. At the time of submitting a collocation request, SpectraSite would provide any information regarding the physical impact on the site that you might require. If the city were not satisfied with the request for collocation on any level, SpectraSite would not have the right to proceed. If no requests to collocate are received from any other carriers, or if the city's permission cannot be obtained, SpectraSite would continue to manage and operate the Premises on behalf of Verizon, and remain subject to all of the terms of the Ground Lease. SpectraSite Communications,Inc. www.SpectraSite.com 2301 Dupont Drive,Suite 200 • Irvine,CA 92612 • Tel 949.255.2300 • Pax 949.255,2301 A4 3 Hopefully this letter clarifies any concerns you may have regarding the Verizon/SpectraSite transaction and provides enough information to allow you to execute the Consent to Sublease Letter. Should you have any questions or require additional information, please do not hesitate to contact Robert Ballmaier, SpectraSite's Real Estate Manager for Southern California, or me at (949)255.2300. Very truly yours, 0 0 - Terry Dyer -� Project Director C'nnfracts Management TDD/ cc: Ralph Deppisch Erica Rigik Q� Y Vert-Onwireless Verizon Wireless Property Management January 24 2001 15505 Sand Canyon Avenue r3 , Building D, 1st Floor Irvine,California 92618 Scott Mikesell,Director Parks,Recration and Golf Division City of Pahn Springs 401 South Pavilion Way Pahn Springs, CA 92262 Re: Lease dated 10/16/39 ("Ground Lease")between Los Angeles SMSA Limited Partnership, of which AirTouch Cellular is the General Partner("Tenant") and City of Palm Springs ("Landlord") of premises located at 1901 E. Bariste Rd., Pahn Springs, California ("Tenant'sPremises") Dear Landlord, As you are aware, Tenant has requested your consent to permit Tenant to sublease all or a portion of Tenant's Premises to California Tower, hic. ("Subtenant'), a subsidiary of SpectraSite Holdings, Inc. Please note, Tenant is willing to pay you ("Landlord") additional ground rent in exchange for consent and agreement to the terms contained in this letter. Landlord will receive a twenty percent (20%) increase in the current ground rent ("Rent Increase") as consideration for consenting to the sublease ("Sublease") of all or a portion of Tenant's Premises by Tenant to Subtenant. If accepted, this Rent Increase will be effective with the next rental payment to Landlord during the next full calendar month following the effective date of the Sublease by Tenant to Subtenant. Tenant will continue to remain liable to you under the Ground Lease, and except as contained in this agreement, all other terms, covenants, conditions or provisions contained in the Ground Lease shall remain in hill force and effect. Thank you very much for your attention to this matter. By signing below, the parties agree that this letter shall constitute a binding amendment to the Ground Lease. If you have any questions regarding the foregoing, please call Mr. Robert Balhnaier, Real Estate Manager, Real Estate Department for SpectraSite Communications, at(949)255-2300 Ext. 2335. LANDLORD HEREBY AGREES TO THE TENANT HEREBY AGREES TO THE FOREGOING AMENDMENT TO THE FOREGOING AMENDMENT TO THE GROUND LEASE GROUND LEASE LANDLORD: TENANT: f f By: By:� Its: Name: Robert F. Swame Dated: Its: Area Vice President, Area Network(Southwest) Dated: January 24, 2001 P.V. #436; CA-0217 49416000 MINUTE ORDER NO. 6803 APPROVING CONSENT TO SUBLEASE BETWEEN VERIZON AND CALIFORNIA TOWER, INC., A SUBSIDIARY OF SPECTRASITE HOLDINGS, INC., REGARDING LEASE AGREEMENT NO. 3281 BETWEEN PACTEL CELLULAR (PREVIOUSLY AIRTOUCH) AND THE CITY OF PALM SPRINGS, DATED OCTOBER 6, 1993, FOR ACCESS RIGHTS TO CELLULAR TOWER LOCATED AT 1901 EAST BARISTO ROAD. ------------------ I HEREBY CERTIFY that this Minute Order, approving consent to sublease between Verizon and California Tower, Inc., a subsidiary of Spectrasite Holdings, Inc., regarding lease Agreement No. 3281 between Pactel Cellular (previously AirTouch) and the City of Palm Springs, dated October 6, 1993, for access rights to Cellular Tower located at 1901 East Baristo Road, was adopted by the City Council of the City of Palm Springs, California, in a meeting thereof held on the 21'c day of February, 2001. PATRICIA A. SANDERS City Clerk 4 $.t