When approached by Verizon about putting an antenna on Oxford, Georgia’s water tank tower, Bob Schwartz realized the upcoming negotiation required expertise that went beyond his knowledge. Since Oxford already participated in GMA’s Cable and Telecommunications Management Service, Schwartz was pleased to find out that such negotiations were covered under that service. Schwartz ended up leveraging GMA’s decades of negotiation experience which, for no additional cost, also includes the services of an attorney who has expertise in federal telecommunications and cable laws.
Not only did GMA help Schwartz handle this negotiation, but he pointed out that GMA understands cities better than some telecommunications attorneys who don’t generally work with smaller municipalities. Schwartz took the time to chat with GMA about his experience, including its effect on the city’s bottom line along with the long-term benefits of securing a well-crafted legal agreement.
Describe how the tower lease negotiation situation came up for you.
For many years, we had been contracting with GMA for its Cable and Telecommunications Management Service. We mostly used the service for dealing with cable companies and some of our other franchises. In March, I got a call from an engineer who subcontracts with Verizon. He was locating potential tower spaces and he liked the location of our water tank tower. He wanted to put a cell phone antenna on it, and I said, “Maybe. What would you pay us?” He quoted me a number and we started talking.
At that point, I thought about different ways to negotiate the contract. First, the city attorney and I tried to become experts overnight. Eventually, we figured out that the learning curve was too steep. Second, I talked to a neighboring city that uses a telecommunications attorney out of Washington. That city has about eight or nine towers, so it’s a different sized operation than ours. And what they paid that attorney didn’t make sense to us. It was too expensive. Third, we looked at our company that we contract with to maintain our tower as a service. They get a percentage of the revenue over the term of the lease when they negotiate with a telecommunications company, but that approach didn’t seem financially attractive to us.
Finally, I learned that negotiating tower lease contracts is one of the services included with GMA’s Cable and Telecommunications Management Service package that we already use. So, we began working with GMA on the tower lease negotiation.
What was beneficial about working with GMA on the tower lease agreement?
Verizon’s engineer works on about 50-60 different contracts at any given time. Their team has a lot more experience than I do in negotiating cell tower contracts. Since GMA has comparable expertise in handling these kinds of contracts, that expertise helped us considerably. Working with GMA, we not only ended up with an increased offer from Verizon but also a 15-page agreement that I couldn’t have begun to draw up myself.
One of the great attractions about managing a small city is that I go from subject to subject to subject, and I have to become an expert in each subject. But that’s sometimes a problem, and there are some areas where it’s difficult to gain expertise quickly. I can’t become an expert in negotiating a telecommunications lease, so GMA fills in that expertise gap.
Also, Verizon could easily have built a tower somewhere else, within or close to our city that potentially could have made our skyline look bad. However, we already had our water tank as a part of our skyline, so putting antennas on the tank didn’t change the appearance of our skyline at all. GMA kept aesthetic considerations in mind with this agreement, which was great.
What positive results have you seen from this experience?
From a financial perspective, we were originally offered $1800 per month by Verizon. GMA helped us negotiate to $2,000 per month with an annual 2.5% escalator clause. That extra $2,400 per year plus the annual escalator provision produced a high ROI over and above the annual fee for GMA’s service. GMA also negotiated a onetime reimbursement of $2,000 to assist us in recovering our cost both in negotiating the agreement and also for any out of pocket costs we incurred with surveyors and engineering fees. Essentially, leveraging GMA’s knowledge and experience really cost us nothing. And this was a fair negotiation for both parties. In talking with other cities, we’re not overcharging Verizon, and Verizon is not underpaying us. GMA has a great sense of fair market costs.
But more importantly, we have a contract. It’s nice that our monthly rent amount went up, but we signed a 5-year initial contract for a piece of city infrastructure with the option for the company to extend the term for 4 additional 5-year terms. The city is protected, and Verizon is protected. We also added certain provisions where Verizon cannot advertise on the tower, and they have to move their equipment if the City has to perform maintenance on the tower. You can’t fool around with tower lease agreements like this. Cities need a valid legal agreement, and GMA helped us put that together.
We also received positive reinforcement that GMA helped us in the right way. I sent the agreement to our City Councilmember who has been the chair of our utilities committee for about 15 years. I asked the Councilmember what he thought of the contract, and here’s what he said:
“I feel very confident that this contract expresses the clarity for both parties. It protects the long-term for both parties and allows growth for both. Once Verizon reviews the document, I would support the execution.”
To me, that’s a pat on the back. GMA has done a good job drawing up a contract that protects the city but also makes sure that Verizon is protected too.
Cities are in the infrastructure business, so if you can take a piece of infrastructure and use it for another purpose, then everybody wins. If you need to negotiate a tower lease agreement, take advantage of the experience that GMA offers. Don’t reinvent the wheel.