Report Prepared by: Taylor Gates, Economic Development Associate
Title
SUBJECT: Approval of a Third Amendment to the Lease Agreement Between the City of Merced and NCWPCS MPS 29-Year Tower Holding, LLC. Allowing up to Two Additional Renewal Options for Use of the Transmission Tower Located on Top of the Ralph Shannon Parcade (1729 M Street), and Expanding the Lease Area by 160-Square-Feet to Accommodate a Backup Generator, with a Minimum Base Rent of $2,450 Per Month
REPORT IN BRIEF
Considers a third lease agreement amendment allows one additional five-year term and up to one additional two-year term for the use of the transmission tower and the addition of a backup generator located on the top floor of the Ralph Shannon Parcade. In 2020, the California Public Utilities Commission voted unanimously to require all cell towers to have 72 hours of backup power in emergency situations, including electricity shutoffs during fire seasons. The additional lease space of 160-square-feet to accommodate a backup generator will satisfy this requirement and provide additional rent revenue.
RECOMMENDATION
City Council - Adopt a motion approving the third amendment to the lease agreement between the City of Merced and NCWPCS MPS 29-Year Tower Holding, LLC and authorizing the City Manager or the Deputy City Manager to execute all the necessary documents.
Body
ALTERNATIVES
1. Approve as recommended by staff; or
2. Approve, subject to conditions as specified by the City Council; or
3. Deny the request; or,
4. Refer back to staff for reconsideration of specific items as requested by the Council; or
5. Defer action until a specified date
AUTHORITY
Charter of the City of Merced, Section 200
CITY COUNCIL PRIORITIES
As provided for in the City of Merced 2022-23 Adopted Budget
DISCUSSION
The transmission tower atop the Ralph Shannon Parcade has been in use and leased since 1996. Users have included Cellular 2000, Cingular, Clearwire, and AT&T. Due to acquisitions and mergers over the years, the holding company now working with the City of Merced for use of the transmission tower is NCWPCS MPS 29-Year Tower Holding, LLC.
The original Lease Agreement was executed in 1996, renewed in 2006, first amended in 2013, a second amendment was approved in 2020, and now a proposed third amendment to the lease agreement is before the City Council for consideration (Attachment 1).
Key Terms of the Third Amendment:
• Lease Options: Lessee will obtain the right to exercise option for one additional
five-year term and one two-year term.
• Revised Rent: Minimum base rent increased by $150.00, to cover the additional lease area and escalates annually based on
the Consumer Price Index (per First Amendment.)
• Expanded Area: The existing premises is expanded in size to 160-square-feet
The proposed third amendment to the lease agreement complies with the terms previously agreed to with the original lease. Leasing the transmission tower provides a steady source of income for the City.
IMPACT ON CITY RESOURCES
No appropriation of funds is needed.
ATTACHMENTS
1. Proposed Third Amendment to the Lease Agreement with NCWPCS MPS 29-Year Tower Holding, LLC
2. Memorandum of Third Amendment to Lease Agreement