LEASE HIGH OR SAY GOODBYE – Vertical real estate firms find collaborating with state agencies or municipalities to expedite cell tower siting approvals advantageous in many states. However, such partnerships can be challenging in California due to the state’s high standardized lease rates set by the Department of General Services (DGS). These rates often exceed typical market rates, sometimes doubling or tripling the annual lease costs compared to individually negotiated agreements. This lack of flexibility can strain relationships between tower companies and public entities, making negotiations more complex.
The City of Fullerton, California, has signed a significant lease agreement with Phoenix Tower International to construct a monopine cellular tower at 2470 West Pioneer Avenue. The deal, valued at approximately $893,000 over the initial ten-year period, will generate an annual revenue of $74,450.98 for the city’s general fund, with a four percent escalation rate applied yearly.
The city is leveraging the California Department of General Services’ (DGS) telecom rate guidelines — establishing rental benchmarks based on equipment size, number of antennas, and location density — to standardize negotiations and ensure public lands are not undervalued.
This proposed tower falls into the DGS’s highest rental classification: a “macrocell” system in an urbanized setting, housing nine or more antennas and occupying up to 2,500 square feet. That puts the Fullerton site on par with California’s top-tier state telecom leases, even though it is municipally owned.
The new 60-foot tower, an extension of an existing 40-foot structure designed to resemble a tree to blend with the surrounding environment, will significantly enhance local wireless service capabilities.
The structure will be constructed as part of a collaborative effort with AT&T as a subtenant, allowing for on-site multiple cell antennas and radio systems. The lease stipulates that the tower design must minimize visual impact, located near existing city-owned water tanks and infrastructure.
This agreement not only improves telecommunications infrastructure for residents but also provides a steady revenue stream for city services. The projected income from this lease will be vital for funding various city projects over the coming years. The lease is set for an initial five-year term with an automatic renewal option for an additional five years, promising continued benefits for the City of Fullerton, explained City Manager Eric J. Levitt, who recommended approving the project. The agreement goes before the city council today.
California bleeds towercos with higher than normal lease rates
California remains the only U.S. state that mandates standardized lease rates for wireless infrastructure on state-owned land, and those rates are typically far higher than negotiated elsewhere on state or municipal property. While a few other states have created rate schedules for select agencies or land divisions, most nationwide municipalities and public entities rely on appraisals or individually negotiated agreements.
Others, like Florida, have opted for more streamlined solutions by entering into statewide master lease agreements with companies like Vertical Bridge to avoid piecemeal negotiations.
Cell Trees, Inc. is providing the rebranching of the monopole. The construction drawings for the extension are available here.