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Yes, cell tower leases can generate a steady stream of revenue and, in many cases, have automatic “renewal terms” which, in the aggregate, can last between twenty-five (25) and thirty (30) years. Depending on the site, these leases can bring in tens of thousands of dollars a year; however, carriers will often try to renegotiate the rent mid-lease in exchange for extending the term. These proposals can reduce current rent payments in return for longer-term commitments. Prior to evaluating any proposal, your community should carefully review the lease’s termination provision and identify the municipality’s rights and how easily the carrier can terminate the lease. We often see many leases that will grant the carrier the unilateral ability to terminate the lease annually by providing sufficient notice. This unilateral right to terminate can undercut the promise of an extended term. If considering an offer during the lease term, communities should consider revisions to the termination provision to provide better protections and stability. Alternatively, communities should identify what right they have to terminate the lease, and what provisions, if any, the lease has related to removal of carrier property and an obligation to restore the site. These provisions are generally labeled “removal/restoration,” and may sometimes be absent from a lease.

For more information on cell tower leases and governmental contracting in general, stay tuned for an upcoming e-letter and webinar later this year.