Christmas in July: Township Nets $2M Upfront in Restructured Lease Deal

SBA Communications will pay Lower Makefield township $2 million upfront under a restructured lease agreement, reported Bucks Local News. Under the agreement, the township will receive a lump sum payment of $2,020,000 from SBA and a 35-year lease on the site. Currently, the township receives annual lease payments in addition to a share of the revenue from the carriers that have co-located on the tower.

“What we’re getting here is 18 years worth of rental fees right up front today,” said Township Manager Terry Fedorchak. “There are pros and cons to that, but I would think that would be a very attractive play for us to make at this time.”  Fedorchak, a strong proponent of the deal, added “It’s guaranteed,” whereas the current lease arrangement is not.

The township first signed an agreement with SBA Communications in 1999, allowing the company to construct a cell tower on township-owned land, according to Bucks Local.  

The township received $115,882 last year in rental income from the tower, which is down from a high of $134,248 received in 2012. The cause for the lower revenue is due to numerous mergers in the telecommunications industry, according to Fedorchak.

The township did solicit proposals from other telecommunications companies during the evaluation period, according to the account. Cell Site offered $1,768,053 for a 50-year lease while Landmark Dividend offered $1,900,000 for a 70-year term and $1,825,000 for a 35-year term to be paid out over a three-year period.

Of the decision to enter into a restructured agreement with SBA, Fedorchak said, “I thought that appeared to be the best offer in terms of the dollar amount, but also just as important, was the term.” He also noted that most of these types of deals are structured in perpetuity.

July 9, 2018

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