TELECOMMUNICATIONS TOWERS ON PRIVATE LAND

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1 FACT SHEET TELEPHONE I WEBSITE TELECOMMUNICATIONS TOWERS ON PRIVATE LAND BACKGROUND The Rural Broadband Initiative envisages substantially improved broadband access for people in rural locations. This enhanced broadband network will require the acquisition of rights from private landowners to erect towers on their land, and protect it. The gaining of those rights, and associated compensation, will generally be achieved by way of a combination of lease and easement agreements between the landowner and the broadband provider / telecommunications company. If you have been approached by a broadband provider/telecommunications company seeking to erect a tower on your land this fact sheet can be of assistance to you. FEDERATED FARMERS OF NEW ZEALAND S POSITION ON RURAL BROADBAND Federated Farmers of New Zealand is a supporter of the Rural Broadband Initiative, and is working hard to get the best deal for rural areas. The Federation has developed sound knowledge of easement provisions and how they affect landowners, principally through advising landowners that are negotiating easements for public infrastructure such as electricity lines and gas pipelines. EASEMENT AND LEASE In most instances, the land rights allowing the construction of infrastructure on private land is secured by way of easement agreement. This is in recognition of the permanent tenure on the land of gas pipelines, electricity lines and other long-term infrastructure. This situation is however different with the construction and siting of cellphone / wireless towers on private land. As these towers can service a large area wirelessly, the siting of the tower is a lot more flexible. Standard practice for cellphone / wireless towers is for the property rights to be secured through a combination of lease and easement agreements. This usually happens where the tower and an area at the base of the tower are secured by lease, while the fibre cable and electricity line that connect the tower to both the telecommunications and electricity networks are secured by easement agreement. Where easements are negotiated they will generally be tied to the life of the lease, rather than exist in perpetuity as with other long-term infrastructure. The purpose of this fact sheet is to provide independent advice to assist landowners in their lease negotiations with telecommunications companies. A separate fact sheet has been developed to assist landowners in their easement negotiations with telecommunications companies. Members can obtain a copy of this fact sheet by calling Fact Sheet Telecommunications Towers on Private Land Page 1

2 CONSTRUCTION It is important that the landowner find out from the company just how the company intends to construct the tower and associated structures on their land. This could have quite significant effects that need to be considered as part of the lease negotiations. Construction will in most cases involve the laying of concrete for the tower s foundation, the erecting of the tower, the connection of an electricity line to the tower, and the laying of ducting for fibre-optic cable by way of mole-plough, directional drill or trench. This means that construction could lead to disruption to the land over a period of weeks. LEASE GUIDANCE Below are a range of suggestions as to provisions that Federated Farmers considers beneficial in a lease agreement that balances the rights and obligations of the landowner and the company. The lease negotiation and associated rental are a business matter between the landowner and the broadband provider / telecommunications company. The lease agreement provisions below are suggested as guidance and a starting point for landowners in their negotiations, and are not intended as a comprehensive legal agreement. 1) Term The purpose of this section is to describe the length of time the lease will run. Many leases include provisions that enable rights of renewal or allow mid-period reviews. The effort required to construct the tower and associated structures on the land mean the company will be looking to negotiate a lease as close to the legal maximum of 35 years as possible. There are two issues to consider when discussing the length of time the lease will seek. The first is that the lease would cover an extended period that would constrain any future development plans you may have for the land. Understanding the effect leasing a portion of your land to the company might have on future land-use options is important. Being clear about the effects will help with discussions over optimal siting on your land in a way that minimises the extent to which farm management will be affected. The second is that the longer the lease period, the more likely the company will be to agree to more landowner-friendly conditions. The risk with flexible infrastructure like cellphone / wireless towers is that they are not constrained in where they can be effectively located in the same way as fixed lines. This flexibility means the tower could be situated in a part of the land that minimises problems with its on-going use by the landowner. This flexibility also means that the company could very well decide to instead site the tower on neighbouring properties where the term is too short or the lease has too many onerous conditions on the company. Federated Farmers recommends that you be mindful of what is important for you to get out of the lease arrangement, but that pushing too hard could risk the project moving elsewhere. 2) Permitted Use The purpose of this section is to describe just what it is the company is seeking to undertake on the area of land that will be covered by the lease. More specifically, this section functions as the part of the agreement where the rights of the company are described and it is made clear just what they would be allowed to do on the leased area. In most situations, this will include general terms around the right to construct, maintain and otherwise operate telecommunications infrastructure. In the situation of cellphone /wireless towers, it may go further to describe rights to connect the leased area to associated structures like electricity lines and fibre cables. This is fairly standard and reasonable given the company s intended use of the leased area. Fact Sheet Telecommunications Towers on Private Land Page 2

3 Although these rights are likely to be fairly standard, it would help to discuss with the company just exactly what they intend to do while on the land. There may be aspects to your farming operation that you d rather the company stayed far away from or otherwise avoided affecting. The key here is to be clear what the company reasonably needs to do to avoid a situation where you need to be compensated for damage. 4) Access to the Premises The purpose of this section is to describe the general rights of the landowner to the leased area and of the tenant to access the land so as to reach the leased area. This section may go further to describe the times of day and days in the week when access rights would apply under the lease agreement. The company could be looking to access the leased area across your land on a number of occasions both during and after the tower has been constructed. Although the company will likely take a pragmatic approach to the timing of access, it may help for the lease agreement to include additional provisions for reasons of minimising the impact of access across your land. It might help to include a requirement on the company to provide notice reasonably prior to entering the land. The amount of notice that would be required can be discussed with the company. Ten working days is standard for most infrastructure projects, but a more pragmatic arrangement can be sought with the company. Access to the leased area may not always be possible for reasons of animal welfare, stock and crop disturbance, high fire risk or even biosecurity risk. In these situations, the landowner may need to prevent access for limited periods during the year. An additional provision that enabled the landowner to impose conditions on access during these periods would be helpful. The lease may state that where there is an outage for reasons of an emergency or under storm conditions, that the company will be able to access the telecommunications infrastructure 24 hours a day, seven days a week. This is not intended to see the landowner having to actively work on the infrastructure, but to instead enable the company to access the fault and otherwise assist where reasonable and necessary. This obligation would only apply where there was a risk to human health or property, or as the result of an adverse event like a storm, so the circumstances would be severe as would the need for telecommunications to be reinstated. It would be reasonable for the landowner to argue that this provision does not imply any liability on the landowner for costs arising from the outage. Another matter to raise with the company is that of the company identifying a liaison between the company and the landowner. Employees of a number of different companies could be involved in the construction and on-going operation of the tower and associated structures on the leased area. This will be exacerbated if other companies are allowed to add their equipment to the tower. Having a single contact point to manage your relationship with the lessee will minimise the number of people you have to deal with, and provide certainty over who to approach where issues may arise around access across your land. 5) Liability and Indemnity The purpose of this section is to clarify how liability will be dealt with between the landowner and the company where there is damage to the land or the tower. Standard provisions usually mean the company indemnifies the landowner against damage to the land. The company may also seek to indemnify the landowner in circumstances where the agreement has been breached, there has been wilful damage, or a third party has claimed for damages. Fact Sheet Telecommunications Towers on Private Land Page 3

4 There are no cases of which Federated Farmers is aware, where the landowner has been liable for the knock-on costs to the consumers of services delivered through infrastructure (for example electricity users and in this case businesses and residences using the telecommunications network), in the event of an outage arising from a landowner s breach of the agreement or wilful damage. Such liability does however still potentially exist and there should be a limitation placed upon it. It would be worth the landowner arguing for the inclusion of a cap on the liability they bear under this easement. This is something Federated Farmers has secured from its negotiations with Transpower over the siting of transmission lines across private land. The company should be asked to tie the cap to breaches of lease provisions, any damage to a third party, or otherwise required by law. The cap should be set at a level agreed by both parties, and the premiums for public liability insurance to that level should be paid by the company additional to the monthly rental to the landowner under the lease. 6) Assignment and Co-location The purpose of this section is to describe the company s right to assign some or all of its rights to another company. In practice, this would be required to allow other companies to install their gear on the tower that you are being approached for the rights to allow built. Competition is an important element of any market. The government has taken steps to open up line networks to companies other than Telecom, so that those other companies can more easily compete in the marketplace. The end result is hoped to be one of improved services and of prices to the consumer being reduced or at least held back from increases that might otherwise occur. This section is an extension of that desire to see the costs of companies participating in the telecommunications market reduce, as this section allows for, say, Telecom, Vodafone and 2degrees to provide services from the same tower. An important consideration with respect to co-location is that of ensuring the range of people you need to deal with is kept to an absolute minimum. As the company is seeking rights under the lease, it is wholly appropriate that they provide a single contact point to act on their behalf and on behalf of any other companies that co-locate on the leased area. 7) Warranties and Covenants The purpose of this section is to describe the landowner s obligations to the company. In most instances there will be provisions preventing the landowner from interfering with the company s use of the leased area or ability to operate the tower. These conditions are reasonable for the company to seek so they are able to exercise the property rights they are purchasing in the lease. Different lease and easement agreements will be negotiated for the construction of a tower and associated structures. It is common for the more onerous conditions to have primacy where multiple agreements are negotiated. It is therefore important to ensure any terms and conditions agreed in the lease are consistent with those negotiated in easements for the fibre cable and electricity line, and vice versa. 8) Default and Termination The purpose of this section is to describe what will happen where either party decides to terminate the agreement for reasons of breaching the lease agreement or the company s failure to pay rent. Standard provisions would state the conditions that would need to be met by either the landowner or the company before the lease agreement could be terminated. Fact Sheet Telecommunications Towers on Private Land Page 4

5 An important consideration worth raising with the company is what dispute resolution process there should be to resolve instances where there has been a breach of lease conditions. Including in the lease agreement a provision that would see the matter referred to a registered mediator with at least ten years experience would help minimise the risk of situations where the lease needed to be terminated. Such a mechanism would also provide a sure and certain means for you to resolve any concerns or issues you may have with the company and their obligations under the lease agreement. 9) Miscellaneous provisions The purpose of this section is to cover off the lesser aspects of the lease agreement that do not easily fall under separate sections of their own. Although they may appear minor, some of the aspects covered off in this section could have significance to the landowner. One such aspect would be a merger clause that states the lease or another agreement would supersede all other agreements negotiated for the leased area. This is fairly standard for legal agreements, but raises issues where both lease and easement agreements are negotiated for the construction of the tower and associated structures. It would be important to discuss with the company just how this would work as it would affect the weight that terms and conditions in either agreement would hold. CONTACT Federated Farmers of New Zealand fact sheets are produced for our members by the Federation as a quick and easy reference guide to general information on topics of interest. If you wish to reproduce the information please ensure that you provide appropriate acknowledgement of the Federation as the source. To either seek further advise on information on the material contained in this fact sheet or to order a contract or agreement ring The information contained within these fact sheets should not be relied upon in lieu of legal advice. If you require specialised legal advice, please contact Federated Farmers team of employment lawyers and OSH specialists. Fact Sheet Telecommunications Towers on Private Land Page 5