|From Community Association Insider; here in Florida, a vote of the members is required, FYI.|
Issue Date: April 2009, Posted On: 3/26/2009
Avoid Pitfalls When Leasing Condo Roof Space to Wireless Providers
In these challenging economic times, some condo associations are stretched to think of new ways to offset dwindling assessments. One potentially lucrative option is to lease rooftop space for antenna installation. The proliferation of cell phones, broadband, paging, wireless Web, and related technologies has driven the demand for wireless companies to increase their coverage areas and data transmission capacities.
Wireless providers require towers and other elevated spaces to install the equipment needed to serve their subscribers. Although independent structures have been built to house the necessary transmission equipment, many high-traffic areas simply do not have sufficient unoccupied land to build on. Therefore, installing mini-towers and inconspicuous transmission equipment on top of existing buildings has become an increasingly popular alternative.
Of course, the viability and value to wireless companies largely depends on the location of your buildings. Condominium buildings located near a high-traffic area will usually generate the most revenue. And usually, wireless companies will approach your association about leasing rooftop space after they have conducted surveys to determine where a need exists for additional transmission sites and the most advantageous locations for equipment placement are determined.
Many associations are at a disadvantage against the wireless companies because they may not be familiar with rooftop leases and the typical contractual sticking points involved. Although a cell phone service provider's offer to lease a portion of your building's rooftop may seem like easy money, if an association agrees to the provisions in a standard rooftop lease without carefully analyzing each clause in the agreement, an association will probably regret the decision, says real estate attorney Mark Morfopoulous.
We will review the main clauses in a standard rooftop lease agreement and make suggestions for negotiating lease language that is more association-friendly than the industry's boilerplate.
Location and Installation of Antennas and Equipment
Standard rooftop lease agreements begin by broadly describing the location of the cell phone service provider's equipment, often referred to as Equipment Space, Antenna Space, and Cabling Space. This general language does not go far enough to protect owners. Therefore, when negotiating the Location and Installation clause, you should:
Make all installations subject to your prior approval. First, you should make sure that the location, type, weight, and size of all antennas, equipment, and shelters comprising the wireless company's facilities installed at any time during the lease term must be approved by the association prior to their installation.
Guard against damage. The installation of antennas, no matter where they're located on the roof, could damage the roof or other structural elements of the building. To protect your building, at a minimum, make sure that the cell phone service provider has adequate insurance to cover the risk in the event damage occurs.
Get detailed list of equipment. Today, the size and weight of the antenna(s) may be satisfactory. Tomorrow, however, the wireless company could install new antennas that are twice the size and weight of those originally installed. This may not be what you intended when you signed the lease. A larger antenna could be unsightly and block site line views. If new or additional antennas weigh more, they may cause damage to your building.
Maintaining and Repairing Company's Facilities
Although a wireless company should have the right to maintain and repair its facilities at a site, an association should have the right to approve the replacement or upgrading of any of the company's equipment in the event the equipment is not “substantially equivalent to” the equipment being replaced or upgraded.
Make company maintain roof, building integrity. With respect to the installation area, the company should agree to maintain the waterproof integrity of the building and the roof. In addition, a wireless company should not make any improvements or alterations to the site except as specifically authorized and approved by you.
Wireless Company's Entry onto Site
Standard rooftop leases give the company “24/7” access to their equipment. Although the cell phone service provider may have a legitimate interest in having round-the-clock access to its facilities, there are valid security reasons why an association would want to control such access.
Require notice. It is appropriate to require the company to give you 24 hours' advance notice of its need to access the roof, except in the case of emergencies in which instance, the company should call the association manager to give notice of its intent to enter the site.
Permits, Approvals, Authorizations
Standard rooftop leases state that before doing any work relating to the attachment of the antenna or the installation of any equipment, the company will obtain any and all governmental permits or approvals that may be required and provide you with copies of them.
Get expert's safety report, too. While obtaining governmental permits and approvals is a basic requirement for any radio antenna deal, a wireless company should also be able to deliver, at its sole expense, a report from a licensed engineering firm stating that the their plans do not pose any safety concerns to the building and the members. This report should attest that the site can safely accommodate the company's equipment.
A safety and engineering report can be used not only to satisfy you that the equipment is safe, but also to show the members in your building that you have performed the proper due diligence to ensure that the building is safe for all.
Make wireless company comply with report recommendations. In the event such reports call for modifications to the site to safely accommodate the company's equipment, the wireless company should be responsible for making such modifications at its sole expense before equipment is installed.
Get right to hire independent reviewer. In addition, an association should have the right to hire an independent engineering consulting firm specializing in the construction and maintenance of radio antenna equipment and/or radio frequency electromagnetic fields emissions to review: (1) the engineering report and safety report; and (2) the wireless company's work plan, as it may be revised from time to time, all at the wireless company's sole cost and expense.
Relocation of Facility
This provision is one of the most highly negotiated sections in a rooftop agreement. An association should at any time be able to require the company to remove or modify its equipment or relocate it to another area designated by you, if the equipment:
Spell out shut-off/restart terms. You should request that the company agree that it must immediately shut off the equipment upon notification of any damage or interference, and may restart modified or relocated equipment to test for any damage or interference only with your permission, which should not be unreasonably withheld.
Agree to compromise. On the other hand, the company will argue that it intends to invest a substantial amount of money to install its equipment. Relocation of its antennas not only can be a huge expense, but may also render the site far less effective or even useless for its intended purpose. Further, if the wireless company is forced to shut off its equipment or render it inoperative for any period of time, that would affect its ability to provide cell phone service to its customers.
Therefore, a compromise may be to:
Assignment and Sublet
Standard rooftop agreements usually state that the wireless company “shall not assign this Lease or sublet, mortgage, or hypothecate this Lease or the Premises without the Association's written consent, which may not be unreasonably withheld, delayed, or conditioned.”
Be aware that many cell phone service providers will attempt to co-locate with other cell providers at one site and reap huge profits that the association will not participate in—unless the lease requires the wireless company to pay the association a portion of those profits.
Inserting a profit-sharing formula into this provision could be an answer to this problem, but there are other issues to think of as well: Will the new subleasor install equipment that will interfere with the facilities of others at the building? Are the additional frequencies safe? Will the new equipment damage the building, be an eyesore, or block site lines? These are some of the matters you should consider when negotiating a standard assignment and sublet clause.
Mark Morfopoulos, Esq.: Meislik & Meislik; 66 Park St., Montclair, NJ 07042;http://www. meislik.com.