published Tuesday, November 8th, 2011

Kimball eyes lease extension request for use of cell tower on city property

By Ryan Lewis, Correspondent

KIMBALL, Tenn. -- City administrators are in negotiations to extend a lease agreement for the use of a cell tower on city property.

The Kimball Board of Mayor and Aldermen recently received a request from SBA Communications in Boca Raton, Fla., to extend the current lease by 55 years.

SBA is an independent wireless communications infrastructure company that leases space on its towers to wireless carriers, officials said. Kimball leases the land on which the tower is built.

Kimball Attorney Billy Gouger said the current agreement has been in place for about 12 years and has 13 years left.

"The reason SBA Communications says they need an extension is some of their customers are reluctant to sign long-term contracts with them for fear that they won't have more than 13 years left at that site," he said. "In their opinion, it's hampering their ability to secure customers for their tower given that 13-year limitation."

The current contract includes a series of five-year renewals, which contain small percentage rent increases that are applied every time a renewal is approved.

Gouger said the rent started out at "just a few hundred dollars per month," but now the town brings in more than $660 per month from the lease.

Alderman Mark Payne said he'd like to see any extension require the lease costs to escalate annually rather than every five years.

Officials said they aren't sure the town legally can enter a lease term as long as 55 years.

"The rule is 40 years," Gouger said. "The way the statute is written, it's 40 years and/or the life of the product. If it's going to be there that long, that might be a way around that 40-year limitation."

Gouger said he thinks "the town is safer not having any [lease] in excess of 40 years."

"You risk it being an audit question or somebody challenging the action of the board somewhere down the road," he said.

Mayor David Jackson said SBA offered Kimball a $72,000 lump-sum rent payment several years ago, but the board determined it would be more profitable in the long run to continue receiving monthly payments.

SBA officials indicated the lump-sum lease payment option still is a possibility.

Kimball just wants to get the best deal it can before extending the terms, Jackson said.

After researching deals for other cell tower sites, Gouger said he is not sure if what Kimball is "being paid right now is in line with what the going rate is for new tower sites."

"I think that's something that ought to be looked at," he said.

Ryan Lewis is based in Marion County. Contact him at ryanlewis34@gmail.com.

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