Does Your City or County have an Assignment Clause in its Cell Site Lease?

The answer to this question is, “All cell site leases have assignment clauses.”

When a lease is assigned, it is transferred to another lessor or lessee (in this case, lessee) for some type of consideration.  In this case, the lessee or tenant was a carrier who may have needed financial help and assigned the lease to a tower company.  Perhaps the tower company gave the carrier a break on the rent in trade for keeping future rents from future co-locatees.  All the tower company had to do was go out and find those future co-locatees.

That’s when our City client called and said two new carriers are requesting development approvals to co-locate on a monopole owned by a third carrier on city land.  Since the City was leasing the land to the existing carrier, the City expected a call from its tenant. 

So when that didn’t happen, the City called the carrier and said, “You need to see us about adding those two carriers to your monopole.” 

Kreines & Kreines, Inc. had to tell the City it had no say if the lease has been assigned.  Under the terms of some leases, landlords get no approval of, or revenue from, the new tenants.  Accordingly, the assignee, a hustling and fast-moving tower company, is now dealing with the two carriers as prospective tenants.  The City, the landlord of the ground lease but not the cell site, is left out of those negotiations.

Cities and counties should never forget the difference between a lease and a development approval:

·         A lease is a proprietary business document.  The local government can enforce some things on its tenant through a lease that it can’t do via land use controls.

·         Development approvals are regulatory in nature.  They confer a right, but not a proprietary right.

What the two new co-locatees were trying to do is obtain a development approval for each carrier.  They would then turn around and start adding to the monopole and the City couldn’t extract one more cent in rent.  That’s when Kreines & Kreines, Inc. gets called in and asked, “Where did we go wrong?”

All is not lost, however.  Kreines & Kreines, Inc. is now in the process of showing the City how it can still retrieve its lost income.

That’s about $1 million over the next 30 years.

Don’t let this happen to your local government.

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Kreines & Kreines, Inc.
58 Paseo Mirasol, Tiburon, CA 94920
Phone: (415) 435-9214
Fax: (415) 435-1522
e-mail: mail@planwireless.com