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Item 4B - AT&T Cell Site Lease RenewalM E M O R A N D U M August 20, 2019 To: Shana Yelverton, City Manager From: Sharen Jackson, Chief Financial Officer Subject: Item 4B: Approve the AT&T Mobility cell site lease renewal located at 400 North White Chapel (Bicentennial Park) location. Action Requested: Approve the AT&T Mobility cell site lease renewal located at 400 North White Chapel (Bicentennial Park) location. Background Information: The purpose of this item is to approve the AT&T Mobility cell site lease renewal located at 400 North White Chapel (Bicentennial Park) location. The terms of the lease include receiving an annual payment of $33,232.24 per year beginning August 2020. They are also proposing extending the lease agreement until August 2055, with a 10% rent increase every 5 years. In fiscal year 2018, the City of Southlake received $44,232.24 for this lease. The terms proposed in this renewal do reflect a decrease. After speaking with the lease consultant for AT&T and reviewing legislative changes that will have a significant impact on leases at the local government level, staff is recommending moving forward with the agreement. Financial Considerations: The 2020 proposed fiscal year budget reflects the lease agreement revenue outlined in AT&T’s proposal. Strategic Link: This agenda item is linked to the Southlake Strategy Map through the following objectives: • B2 Collaborate with select partners to implement service solutions • B4 Provide high quality services through sustainable business practices Citizen Input/ Board Review: No requirement exists to review the lease with citizens or boards. Honorable Mayor and City Council Page 2 of 2 Legal Review: No requirement exists to review the lease with the City Attorney. Alternatives: The alternative to approving the lease would be terminating the lease contract with AT&T. This would impact revenue received by the City of Southlake, as well as reception in the area. Supporting Documents: AT&T Mobility Cell Site Lease Proposal Staff Recommendation: Staff recommends approving the lease agreement as proposed. Md7, LLC | 10590 West Ocean Air Drive, Suite 300 | San Diego, CA 92130 | 888.553.6599 July 29, 2019 Kodi Wilder 1400 Main Street Suite 320 Southlake, TX 76092 Re: Communications Facility located at 400 NORTH WHITE CHAPEL BOULEVARD, SOUTHLAKE, TX 76092 Dear Landlord, As you are aware, AT&T Mobility (“AT&T”) has partnered with Md7 to work with you to facilitate certain modifications to the cell site lease on your property. These modifications will allow AT&T to meet current business requirements and enhance your site’s value to the network. Changes in the Wireless Industry Recent industry developments are changing how wireless telecommunications carriers operate. In the past, carriers focused on rapidly building out their networks in order to provide the best coverage. Today, while consumers are enjoying greater services and better coverage than ever before, operating costs continue to escalate. As a result, the wireless industry is also focusing on operating networks as efficiently as possible. Eliminating Risk and Increasing Value AT&T is addressing this shift by reviewing its cell site portfolio. AT&T has partnered with Md7 to offer selected landlords like you the opportunity to minimize the business risks associated with industry uncertainties and to increase the value of your cell site lease. Criteria for Cellular Site Retention/Rent Guarantee Period AT&T is willing to offer the following option to secure a longer-term lease with you:  $33,232.24 per year, commencing August 9, 2020  10% rent increase every 5 years/year, commencing August 9, 2020  Extension of Lease through August 8, 2055  STANDARD Expansion of Permitted Use “Lessee, its personnel, invitees, contractors, agents, sublessees, or its authorized sublessees, or assigns may use the Premises, at no additional cost or expense, for the transmission and reception of any and all communications signals and to modify, supplement, replace, upgrade, expand, including but not limited to the number and type(s) of antennas, or refurbish the equipment and/or improvements thereon, or relocate the same within the Premises at any time during the term of this Lease for any reason, or in order to be in compliance with any current or future federal, state or local mandated application, including but not limited to emergency 911 communication services or for any other reason. Lessor shall reasonably cooperate in obtaining governmental and other use permits or approvals necessary or desirable for the foregoing permitted use. If Lessor does not comply with the terms of this section, in addition to any other rights it may have at law, Lessee may terminate this Lease and shall have no further liability to Lessor. If Lessor does not comply with the terms of this section, Lessee will have the right to exercise any and all rights available to it under law and equity, including the right to cure Lessor’s default and to deduct the costs of such cure from any monies due to Lessor from Lessee.” Md7, LLC | 10590 West Ocean Air Drive, Suite 300 | San Diego, CA 92130 | 888.553.6599  Termination “In addition to any rights that may exist in the Lease, Lessee may terminate the Lease at any time with thirty (30) days prior written notice to Lessor.”  STANDARD Expansion of the Premises “Lessor grants, to the extent practicable and on a space available basis, at no additional cost or expense, the Lessee the right to enlarge the Premises or the Lessor shall make space available on the Property for Lessee so that Lessee or its authorized sublessees may implement any necessary modifications, supplements, replacements, refurbishments, or expansions to the Communications Facility or to any equipment related thereto, or for any other reasons, as determined by Lessee in its sole discretion.”  24/7 Access “Lessor hereby grants to Lessee, its authorized sublessees, and to any public or private utility serving Lessee’s Communications Facility or related equipment, access to the Premises and to and over the Property twenty-four hours per day, seven days per week (24/7), including but not limited to, access from an accessible, open and maintained public road to the Premises, for the installation, maintenance, repair, modification, alteration, or refurbishment of the Communications Facility or any equipment related to such Communications Facility as such access is deemed necessary by Lessee, in its sole discretion, without the requirement of notice by Lessee to Lessor. In the event that any public or private utility serving Lessee’s Communications Facility is unable to use the access provided to Lessee, the Lessor hereby agrees to grant additional access to Lessee or to such public or private utility, for the benefit of Lessee, at no cost to Lessee and pursuant to the same terms and conditions as noted above. The terms and conditions regarding access in the Agreement remain in full force and effect, except as modified by this paragraph.”  Sale of Property (a) “Lessor shall not be prohibited from the selling, leasing or use of any of the Property or the Surrounding Property except as provided below. (b) If Lessor, at any time during the Term of this Agreement, decides to rezone or sell, subdivide or otherwise transfer all or any part of the Premises, or all or any part of the Property or Surrounding Property, to a purchaser other than Lessee, Lessor shall promptly notify Lessee in writing, and such rezoning, sale, subdivision or transfer shall be subject to this Agreement and Lessee’s rights hereunder. In the event of a change in ownership, transfer or sale of the Property, within ten (10) days of such transfer, Lessor or its successor shall send the documents listed below in this subsection (b) to Lessee. Until Lessee receives all such documents, Lessee shall not be responsible for any failure to make payments under this Agreement and reserves the right to hold payments due under this Agreement. i. Old deed to Property ii. New deed to Property iii. Copy of current Tax Bill iv. New IRS Form W-9 v. Completed and Signed AT&T Payment Direction Form vi. Full contact information for new Lessor including phone number(s) (c) Lessor agrees not to sell, lease or use any areas of the Property or Surrounding Property for the installation, operation or maintenance of other wireless communications facilities if such installation, operation or maintenance would interfere with Lessee’s Permitted Use or communications equipment as determined by radio propagation tests performed by Lessee in Md7, LLC | 10590 West Ocean Air Drive, Suite 300 | San Diego, CA 92130 | 888.553.6599 its sole discretion. Lessor or Lessor’s prospective purchaser shall reimburse Lessee for any costs and expenses of such testing. If the radio frequency propagation tests demonstrate levels of interference unacceptable to Lessee, Lessor shall be prohibited from selling, leasing or using any areas of the Property or the Surrounding Property for purposes of any installation, operation or maintenance of any other wireless communications facility or equipment. (d) The provisions of this Section shall in no way limit or impair the obligations of Lessor under this Agreement, including interference and access obligations.”  Right of First Refusal “Notwithstanding any other provisions contained in the Agreement, if at any time after the date of this Third Amendment, Landlord receives a bona fide written offer from a third party seeking any sale, conveyance, assignment or transfer, whether in whole or in part, of any property interest in or related to the Premises, including without limitation any offer seeking an assignment or transfer of the Rent payments associated with the Agreement or an offer to purchase an easement with respect to the Premises (“Offer”), Landlord shall immediately furnish Tenant with a copy of the Offer. Tenant shall have the right within ninety (90) days after it receives such copy to match the financial terms of the Offer and agree in writing to match such terms of the Offer. Such writing shall be in the form of a contract substantially similar to the Offer, but Tenant may assign its rights to a third party. If Tenant chooses not to exercise this right or fails to provide written notice to Landlord within the ninety (90) day period, Landlord may sell, convey, assign or transfer such property interest in or related to the Premises pursuant to the Offer, subject to the terms of the Agreement. If Landlord attempts to sell, convey, assign or transfer such property interest in or related to the Premises without complying with this Section 6, the sale, conveyance, assignment or transfer shall be void. Tenant shall not be responsible for any failure to make payments under the Agreement and reserves the right to hold payments due under the Agreement until Landlord complies with this Section 6. Tenant’s failure to exercise the right of first refusal shall not be deemed a waiver of the rights contained in this Section 6 with respect to any future proposed conveyances as described herein.”  Removal/Restoration “In addition to the terms set forth in the Lease, Lessor agrees that the Communications Facility and any related equipment brought to the Premises by Lessee, its agents, contractors, predecessors-in- interest or sublessees, shall be and remain Lessee’s personal property or the personal property of its sublessee(s), as the case may be. Lessor waives any and all rights it may have, including any rights it may have in its capacity as Lessor under the Lease to assert any liens, encumbrances or adverse claims, statutory or otherwise, related to or in connection with the Communications Facility or any portion thereof. Lessee, in its sole discretion, may remove the Communications Facility or any portion of the Communications Facility at any time during the Term of the Lease, without notice to Lessor and without Lessor’s consent. Notwithstanding any terms to contrary, Lessee will not be responsible for the replacement of any trees, shrubs or other vegetation, nor will Lessee be required to remove from the Premises or the Property any foundations or underground utilities. Lessee, may, in its sole discretion, transfer any improvements or alterations to the Premises to Lessor at any time during the Term of the Agreement without notice to the Lessor and without the Lessor’s consent.” This letter of understanding is subject in all respects to the preparation, execution and delivery of a definitive amendment in form and substance mutually agreeable to each of us. This letter will not be legally binding between us with respect to the proposed business relationship, but instead serves as a statement of our mutual intent to work toward entering into such an amendment. Md7, LLC | 10590 West Ocean Air Drive, Suite 300 | San Diego, CA 92130 | 888.553.6599 AT&T values its affiliation with you and hopes to continue a long and mutually profitable relationship in the years to come. After having reviewed these options, please contact me prior to August 7, 2019. Thank you for your consideration. Sincerely, David Palet Lease Consultant d: (858) 775-0967 a: 10590 West Ocean Air Drive, Suite 300 San Diego, CA 92130 e: dpalet@md7.com Authorized Agent for AT&T Mobility cc: Gregory D. Ohmer Director-Network Planning, AT&T Mobility