REQUEST FOR CITY COUNCIL ACTION
SUBMITTED TO: Honorable Mayor and City Council Members
SUBMITTED BY: Eric G. Parra, Interim City Manager
VIA: Jennifer Villasenor, Director of Community Development
PREPARED BY: Bill Krill, Real Estate and Project Manager
Subject:
title
Approve and authorize execution of Amendment No. 2 to Schedule No. 2, and the Associated Lease Memorandum for Leased Property at Bushard Fire Station Between the City of Huntington Beach and T-Mobile West Tower LLC, for a Wireless Communications Facility
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Statement of Issue:
The City Council is requested to approve Amendment No. 2 to Schedule No. 2 of Leased Property for Bushard Fire Station between the City of Huntington Beach and T-Mobile West Tower LLC which will extend the existing lease term for an additional ten years and increase the monthly rental rate.
Financial Impact:
Under this Amendment, monthly rent will increase from $2,816.79 to $3,100.00 upon execution. This represents a 10% increase in monthly rent for this site. Monthly rent will escalate annually at a rate of 3.5%. Additionally, the City will be paid a $20,000 signing bonus upon complete execution of the Amendment and the Lease Memorandum. All funds will be deposited into General Fund Account No. 10000100.45100.
Recommended Action:
recommendation
A) Approve and authorize the Mayor and City Clerk to execute “Amenment No. 2 to Schedule No. 2 of Leased Property” between the City of Huntington Beach and T-Mobile West Tower LLC; and
B) Approve and authorize the Mayor and City Clerk to execute the “Memorandum of Amendment No. 2 to Schedule No. 2 of Leased Property” between the City of Huntington Beach and T-Mobile West Tower LLC
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Alternative Action(s):
Do not approve, and advise staff accordingly.
Analysis:
In April 1996, the City and Pacific Bell Mobile Services entered into a Master Communication Site Lease Agreement. This Agreement allowed Pacific Bell to install cellular communication towers on City-owned property. The term of this Agreement included an initial period of five years, with the option for five additional renewal terms, each consisting of five years. The combined total lease period under this Agreement was 30 years.
The Master Agreement required the parties to enter into separate Schedules of Leased Property to define the specific details of individual site leases on City owned property. On April 18, 1996, the City and Pacific Bell Mobile Services executed Schedule No. 2 of Leased Property, which was governed by the terms of the Master Communication Site Lease Agreement. The commencement date of the lease for 19711 Bushard Street (Bushard Fire Station) was defined as May 1, 1996.
On June 20, 2011, the City and T-Mobile West Corporation, successor in interest to Pacific Bell Mobile Services, entered into Amendment No. 1 to the existing Agreement. This Amendment allowed T-Mobile to make certain site improvements and increased the monthly rent.
Under the current agreement, the expiration of this site lease will be April 30, 2026. T-Mobile has approached the City to negotiate an extension to the Schedule of Leased Property affecting this location.
The negotiated terms of this extension include two additional five-year renewal periods, granting a total of ten additional years to the existing site lease, which would extend the lease term to April 30, 2036. As consideration for this extension, the City will receive a one-time fee of $20,000, and the monthly rent will increase from $2,816.79 to $3,100.00 upon execution of both the Amendment and a Lease Memorandum. Additionally, escalations will now be fixed at 3.5%. This rent increase aligns the lease with current market rates, while the annual escalation ensures the rate remains competitive within the industry.
Environmental Status:
This action is not subject to the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no potential for resulting in physical change to the environment, directly or indirectly.
Strategic Plan Goal:
Non Applicable - Administrative Item
Attachment(s):
1. Amendment No. 2
2. Lease Memorandum
3. Certificate of Insurance
4. PowerPoint Presentation