Report Prepared by: Christopher Jensen, Director, Parks & Community Services
Title
SUBJECT: Approval of a Proposed Ground License Agreement Between the City of Merced and New Cingular Wireless PCS, LLC, Use and Lease of Portion of City-Owned Property Located at 3400 Parsons Avenue, aka Rahilly Park, for Wireless Telecommunications Facility Purposes
REPORT IN BRIEF
Considers approving a proposed Ground License Agreement between the City of Merced and New Cingular Wireless PCS, LLC, in connection with Use and Lease of Portion of City-Owned Property Located 3400 Parsons Avenue, aka Rahilly Park, for Wireless Telecommunications Facility Purposes.
RECOMMENDATION
City Council – Adopt a motion:
A. Approving a Ground License Agreement between the City of Merced and New Cingular Wireless PCS, LLC for use of portion of city-owned property located at 3400 Parsons Avenue, aka Rahilly Park, for Wireless Telecommunications Facility Purposes; and,
B. Authorizing the City Manager to execute the agreement, in such form as approved by the City Attorney and as the City Manager shall deem appropriate, including amendments to the lease agreements, and all related documents required or appropriate in connection with completion of this lease transaction; and,
C. Approving an increase in revenue in the amount of $30,000 and appropriating the same in Fund 5000-Parks and Community Services Capital Fund; and,
D. Approving an increase in revenue in the amount of $27,000 (October-June) and appropriating the same based on Option for Use of Revenue as determined by Council.
Body
ALTERNATIVES
1. Approve as recommended by staff; or,
2. Approve, subject to other than recommended by staff (identify specific findings and/or conditions amended to be addressed in the motion); or,
3. Deny; or,
4. Refer to staff for consideration of specific items (specific items to be addressed in the motion); or,
5. Continue to a future meeting (date and time to be specified in the motion).
AUTHORITY
Charter of the City of Merced, Section 200.
CITY COUNCIL PRIORITIES
As provided for in the 2025-26 Adopted Budget.
DISCUSSION
Background
New Cingular Wireless PCS, LLC contacted the City of Merced in consideration of conditional use of a specific area of Rahilly Park for wireless telecommunication facility purposes. An application for conditional use of the park by New Cingular Wireless PCS, LLC was reviewed by the City Planning Commission through a public hearing. The Planning Commission voted to approve the proposed conditional use of the specific area of Rahilly Park. The decision by the Planning Commission was appealed and taken before City Council on July 21st, 2025. City Council voted to deny the appeal, authorizing use of specific space in the park for wireless telecommunications facility purposes.
Following the approved conditional use of the area, representatives from New Cingular Wireless PCS, LLC discussed possible terms and conditions of a proposed ground lease with City staff. Subsequent to negotiations, the following terms were included in the proposed ground lease for your consideration.
Proposed Lease Terms
The lease proposal that is before the City Council has come about as a result of negotiations between New Cingular Wireless PCS, LLC and the City of Merced, with the primary objective of creating a beneficial arrangement for both entities, while generating revenue for the City of Merced to address ongoing maintenance and capital improvements in community parks. The Lessee desires to lease the premises under the proposed lease terms (ATTACHMENT 1).
The following summarizes the proposed lease under the amendment:
• Tenant: New Cingular Wireless PCS, LLC
• Lease Term: Five (5) years, with renewal for four (4) additional five (5) year term(s)
• One Time Rahilly Park Capital Improvement Fee: Thirty Thousand and No/100 Dollars ($30,000.00)
• Lease Rate: Effective the first day following commencement of construction, rent shall be $3,000 per month. Upon commencement of each new year, the rent will increase Three Percent (3%) over the Rent paid during the previous year. The potential 25-year agreement would generate approximately $1,333,534 in new revenue.
Use of Revenue- Ongoing Park Maintenance, Operations, and Upgrades
The monetary value of the proposed lease would include $30,000 in immediate one-time capital improvement funding to be used at Rahilly Park. The City hosted a walking tour with neighbors and avid park users in Spring of 2025 to determine park priorities. Some of the concerns raised by residents at that convening have been addressed since that time. Those items include the replacement of broken sections of the playground as well as upgraded LED lighting in the park. In response to the additional suggestions made at the convening and the available $30,000 in one time funding from the proposed lease, it is staff’s recommendation that $20,000 be used to upgrade the Picnic Shelter in the park which would include new picnic tables, lighting, and paint at a probable cost of $20,000. The remaining $10,000 is suggested to be used for repairs to the asphalt walking path connected to the Black Rascal Creek Bike Path.
The lease would generate $3,000 per month in new revenue. The first month revenue is estimated to start collecting in October 2025, if approved. Staff are requesting Council’s consideration of three proposed models of revenue distribution if the lease is approved:
• Option 1- Dedicate monthly revenues solely to Rahilly Park maintenance, operations, and occasional park upgrades. Equates to $27,000 in the current fiscal year and $36,000 plus cumulative 3% increases annually in future years revenue to Rahilly Park
• Option 2- Split monthly revenues between Rahilly Park and the rest of the City’s Park system to address ongoing park maintenance, operations and occasional park upgrades.
o Equates to:
§ $7,200 in annual revenue to Rahilly Park Maintenance (20%)
§ $10,800 in annual Maintenance across Park System (30%)
§ $7,200 in annual Operations across Park System (20%)
§ $10,800 in annual revenue to upgrades across park system (30%) (approximate $36,000 upgrade every 5 years)
• Option 3- Dedicate monthly revenues to Parks and Community Services Capital Fund and determine how to distribute across the park system on an annual basis.
o Equates to approximately $36,000 in Park Capital funding to be distributed at Councils discretion annually.
IMPACT ON CITY RESOURCES
The City will derive one-time capital improvement funds of $30,000, $27,000 of new revenue in the first year, and a total of $1,333,534 in revenue over the potential 25-year term.
ATTACHMENTS
1. ATT Option and Land License Agreement
2. ATT Site plans Exhibit 1
3. ATT COI_City of Merced
4. Merced_ATT_Cell_Lease_Presentation