Times are tough for consumers and businesses alike and the wireless industry is no exception. For several years the Town of Berryville has leased space on and around the elevated water tank on Tom Whitacre Circle to Triton PCS Property Company, LLC for antennas that AT&T uses for wireless phone service. Now AT&T is seeking a lower lease rate citing financial strains. The current lease allows AT&T to locate 3 antennas on the top of the tower and an accessory equipment building on the ground. The 4 year, 11 month lease generates a monthly payment to the Town that has reached $2,111.29. The current term of the lease includes a 3% escalation fee applied to the rent annually and expires at the end of September this year. AT&T sees this as an opportunity to renegotiate the lease and implement a rent reduction program.
Black Dot Wireles, LLC, a wireless lease management and services company has been retained by AT&T to implement a “Lease Optimization Program.” AT&T is citing economic hardship as a reason for the town to extend a 5-year rent reduction for the space. In a letter dated 4/8/2010, Mike Haley, lease consultant for At&T wrote, “In these tough economic times, AT&T is actively reviewing its portfolio of sites to determine ways to make its network more efficient and economical. Specifically, AT&T is requesting a 60-month rent reduction for the site located at 201 Tom Whitacre Circle Berryville, Va, 22611.”
The terms would reduce the rent for five years and then restablish the rent to its current rate in the sixth year. The new lease also does away with the language limiting the number of antennas that can be installed on the tower. As an enticement AT&T is floating out “Rent Guaratee Periods” some of which extend out 36 months. When coupled with automatic renewals this could guarantee the lease income for up to 360 months.
Black Dot has presented the town with three options that reduce the rent and extend the terms. To ensure that the council had a clear understanding of the proposal Town Manger Keith Dalton initiated a conference call between Mike Haley and the Council during open session. Mr Haley thoroughly explained the reasons and scenarios to the council, and closed without any questions from council members. The proposed options are shown in the table below:
|Rent Schedule and Rent Guarantees||Current||Option #1||Option #2||Option #3|
|Base Rent (months 1-60)||$2,111.29||$1,847.90||$1,910||$22,920|
|Base Rent (beginning month 61)||$2,174.63||$2,174.63||$2,174.63||$26,095.56|
|Base Rent Frequency||Monthly||Monthly||Monthly||Annual|
Guarantee Period (months)
After the Call Mayor Wilson Kirby was quite clear, “We’ve considered this but I feel like we should not take a back step in this.” Councilman Allen McWilliam agreed with mayor.
Keith Dalton pointed out that, ” The only real meat on the bone is the merit of the rent guarantees.”
After some discussion the council decided not to refuse the proposal at this time but to continue discussions with Black Dot to see if there is some real benefit to the proposed lease. Mayor Kirby tasked the Town Manger with continuing the dialog and closed by saying, “Bottom line is let’s keep this case open.”