HomeMy WebLinkAbout04 - CC-4 - Amendment to Site Lease Agreement with T - 9/20/2016CITY COUNCIL AGENDA REPORT
MEETING DATE: September 20, 2016 ITEM NUMBER: CC -4
SUBJECT: Amendment to Site Lease Agreement with T -Mobile West Tower LLC
DATE: August 22, 2016
FROM: Baron Bettenhausen, Deputy City Attorney
PRESENTATION BY: Rick Francis, Assistant Chief Excutive Officer
FOR FURTHER INFORMATION CONTACT: Baron Bettenhausen, (714) 446-1400
RECOMMENDATION:
Staff recommends that Council approve the attached amendment to the Lease
Agreement with T -Mobile West LLC for the cell tower located at Costa Mesa Tewinkle
Park.
BACKGROUND:
In 1960 TeWinkle was conveyed to the City through a federal surplus property program.
The 1960 deed included a covenant that the City shall use and maintain TeWinkle Park
as a public park for public recreational purposes for a period of twenty years. In 1973, the
State of California asked for a portion of the then existing park property to use for what is
now the 55 freeway. Because the 20 -year covenant restriction prohibited use of the
property for a freeway, the City asked the State to release the covenant restriction over
the applicable portion of park property. In exchange for the release, the City agreed that
the twenty-year restriction on the park property which remained in City possession would
extend into perpetuity (i.e. forever). Furthermore, violation of the covenant restriction
could result in the park property reverting back to the grantor or its successor -in -interest,
the National Park Service ("NPS").
In 2011 the City entered into a lease agreement with T -Mobile West LLC for the
placement of a cell tower at the Costa Mesa TeWinkle Park. The Lease Agreement has
produced $24,000 per year in rent with 3 percent annual increases. The initial term of the
lease was for five (5) years, with five- (5) year renewal options.
Subsequent to the 2011 approval of the Lease Agreement, it was brought to the City's
attention that the presence of the cell tower located on TeWinkle Park may conflict with
the covenant restriction on TeWinkle Park, as it is a commercial facility. In addition,
Crown Castle, the third party administrator of the T -Mobile lease agreement, approached
the City looking to collocate an additional wireless carrier on the existing tower.
Before any action can be taken regarding collocation, the underlying issue with the
covenant restriction must be addressed. Therefore, in April 2016, the City submitted a
letter to the National Park Service (NPS) requesting a determination that the wireless
communication facility located at TeWinkle Park did not violate the deed restriction.
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On July 7, 2016, the NPS issued a determination that the commercial nature of the
wireless facility was not a violation. They stated that:
1) the tower, being physically and visually unobtrusive, does not displace
nor interfere with the recreation use of the property and does not prevent
the accomplishment of the approved Program of Utilization of the park
now or in the future; 2) that there is a good argument that the cell tower
serves the function of a public utility including benefits to park users; 3)
that the lease amendment is written in such a way as to protect the
federal government's right of reversion of the property unencumbered,
and it does not convey a property right that in any way usurps the public
recreation purpose.
However, the determination was expressly conditioned upon approval of the lease
amendment brought before this council tonight.
ANALYSIS
In the event the NPS determines the City is in violation of the covenant restriction, the
most severe possible penalty is the potential loss of TeWinkle Park due to reversion back
to the grantor of the property, or its successor in interest, the NPS. Fortunately, the NPS
has agreed that the wireless facility in TeWinkle Park serves an important purpose for the
public seeking to use the park. The attached Amended Lease Agreement has been
approved by NPS and is required as a condition of their determination. The Amendment
makes it expressly clear that the park property is subject to restrictions found in the grant
deed. However, the Amendment also provides for a step up in rent in the amount of
$7,644.00, with all subsequent rent increases occurring in accordance with the provisions
of the original underlying lease.
ALTERNATIVES CONSIDERED:
The alternative would be to disapprove the requested Amendment in which case the City
faces risk of reversion of TeWinkle Park.
FISCAL REVIEW:
Since the 2011 Lease Agreement was enacted, it has generated revenue totaling
$121,242 through 2015. This revenue has been allocated to the General Fund.
LEGAL REVIEW:
The City Attorney's office has prepared this staff report and the attached amendment to
the lease.
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CONCLUSION:
Staff recommends the City Council approve the proposed Amendment to the Lease
Agreement with T -Mobile for the cell tower located at 980 Arlington Drive.
RICHARD L. FRANCIS
ASSISTANT CEO
THOMAS HATCH THOMAS DUARTE
CHIEF EXECUTIVE OFFICER CITY ATTORNEY
ATTACHMENTS: 1. Amendment to Site Lease Agreement with T-
Mohile
2. Original Site Lease Agreement with T -Mobile
Amendment 2016 T -Mobile lease August 22, 2016 1:00 P.M.
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