Cell Tower Lease Buyouts

Offers to “buy out” cell tower leases for up to 50 years (and in some cases in perpetuity) pose unusual legal, financial, and technical risks that the property owner and its regular attorneys may not be aware of. This OnDemand Webinar will help guide property owners and their attorneys in identifying, evaluating and responding to these deals and their inherent risks, which include possible Federal preemption, preventing the landowner from developing or expanding the use of the “parent” site, ensuring that promised sums are paid and contract honored (and the company evicted if they are not), allowing only appropriate use of the property, and insurance and bankruptcy protections. These risks are exacerbated by threats by cell companies to abandon current sites that are subject to these “buyout” deals, questions as to the financial solvency of the buyout company, the likelihood that the property owner can do better on its own, and the very long term (50 years to perpetuity) of the proposed buyout.

Governmental units face all of the issues above, plus fundamental questions of municipal authority, compliance with municipal finance/procurement statutes, and risks of property reverters. This program will also address the issue of “rent chiselers” who threaten that the cell company will abandon the lease (allegedly due an excess of cell towers in the area) if a rent vacation or permanent rent reduction are not granted. This practice poses different risks and legal issues which will be addressed in detail.

Learning Objectives
•You will be able to recognize major business risks and benefits.
•You will be able to review Dillon’s Rule or property specific restrictions.
•You will be able to discuss crafting the documents to address preceding issues.
•You will be able to explain rent chiseling demands.

Authors

Agenda

Buyout Offer Basics

• Types of Buyout Offers - Buyout of Current Term Plus Future; Option to Grant Easement in the Future
• Financial Underpinnings-- Current Revenues, Revenues From Lease Renewal, Revenues From Future Tenants, Buyout Company Share

Major Business Risks and Benefits

• Cash up Front, Third-Party Takes Over Management of Site
• Cost of Third-Party Participation vs. Property Owner Leasing Property Itself
• Financial Strength of Buyout Company, Ability to Comply With Offer, 50+ Years Term
• Cell Phone Company Terminating, Not Renewing Buyout Sites
• Buyout Terms Preventing, Impairing Property Owner's Future Development and Redevelopment, Use of Parent Parcel

Legal Risks

• Federal Government Intervention, Possible Preemption
• Ability to Evict Buyout Company for Non-Payment
• Recourse of Buyout Company's Tenant Exceeds the Leasehold Authority
• Appropriate Uses of Property
• Bankruptcy Protections
• Insurance, Indemnity Provisions Adequate for 50+ Years
• Reverter If Buyout Easement Is Terminated

Government Landholder Issues

• Lack of Authority - Dillon's Rule or Property Specific Restrictions, Reverters
• Municipal Finance, Bond Issue Risks
• Procurement, Waste Issues

Drafting Issues

• Crafting the Documents to Address Preceding Issues
• Reimbursement of Property Owner Legal Fees
• Guarantee From Parent of Buyout Company

Rent Chiseling Demands - When the Current Wireless Lessee Demands a Rent Reduction or Rent Vacation

• When and Why to Expect Them
• How to Evaluate the Veracity of the Facts and Demands
• How to Respond to Such Offers and Demands

Additional Formats