Loading...
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. 1 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. 2 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. 3