Councilors have approved a request by a company to extend a lease for 23 years on a cell tower on Kendall Pond Road.
Crown Castle is currently leasing the site on Kendall Pond Road from the town and recently approached Derry and requested a lease extension, Town Administrator David Caron said.
“The town leased the site to Ominpoint Communications: as is commonplace in that industry, ownership has changed several times, with all subsequent owners required to fulfill the terms of the original site lease,” Caron said in a staff report.
It is not unusual for cellular providers to seek stability in their coverage areas and seek long-term leases, according to officials. Crown Castle currently owns two towers on Kendall Pond Road immediately adjacent to one another.
“There is also a cell tower on the other side of 93 directly opposite this one owned by the same company,” Caron said.
Over the years, most of the cellular antennas have been located on the second facility, which is not leased by the town, Caron said.
“Therefore the economics given that fact and the fact that there has been a continual consolidation of cellular providers the economics on this facility is not great,” Caron said in introducing the item. “So our best opportunity for success is to provide some assurance to the owner of the cell tower that they have a lease there for a longer period of time.”
The tower is currently occupied by one major carrier. A second carrier is scheduled to vacate the site in October 2019, following the purchase of site by the major carrier, Caron said in the staff report.
“We have reviewed the economics of the site and recommend extending the lease until 2042, Caron wrote.
Staff and counsel reviewed the current lease, in context of both market rates and characteristics unique to the site, Caron wrote. They also particularly considered that a second tower is immediately adjacent to the tower, he said.
“Due to this site’s characteristics, the economics are relatively modest, but appropriate given the circumstances,” Caron said.
The town currently receives $1,332.82 per month from the site owner. In addition, it also receives $334.46 per month from one co-locator until October 2019. And the rent is also increased by changes in the Consumer Price Index, and the town receives 25 percent of rent from sub-tenants, Caron wrote.
Staff recommended that the lease on the site be extended until 2042. And in exchange, the base rent on the site will increase by 3 percent per year; Derry will receive 40 percent of the rent received from future subtenants, and the Town will receive 40 percent of the rent received from sub-tenants. In addition, the town will receive a one-time payment of $17,000, payable within 60 days after execution of the lease agreement, Caron wrote.
During a brief question-and-answer session, it was confirmed that the rent will increase by three percent every year throughout the lease.
With no further comments or questions, councilors then voted 7-0 to approve the plan.