STAFF REPORT CONSIDERATION AND APPROVAL OF THIRD LEASE AMENDMENT WITH CROWN CASTLE GT COMPANY LLC FOR CELLULAR TOWER FACILITY ON HILLCREST AVENUE

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1 STAFF REPORT TO: FROM: SUBJECT: HONORABLE MAYOR AND CITY COUNCIL MARTIN D. KOCZANOWICZ, CITY ATTORNEY CONSIDERATION AND APPROVAL OF THIRD LEASE AMENDMENT WITH CROWN CASTLE GT COMPANY LLC FOR CELLULAR TOWER FACILITY ON HILLCREST AVENUE BACKGROUND In 1994 the City entered into a Lease agreement with the predecessor of Crown Castle for a cellular tower facility on Hillcrest Avenue at the City's water tank property. The lease has been amended in 2000 and again in The last extension would have had the lease terminate in Crown Castle approached the City for another extension and, consistent with the direction given by Council to staff, a third amendment to the original lease was negotiated. DISCUSSION The current amendment approved in concept by the Council extends the lease until A one-time fee of $25,000 will paid to the City in consideration of a timely execution and an option to lease additional property (max. 500 sq. ft.) for an equipment cabinet which would provide a support facility for additional tenants on the existing tower. Under the terms of the Lease, the City receives 50% of the revenue of any new tenants co-locating on the tower. In addition, the rent adjustments were increased in the Amendment from 10% to 12.5% of existing Base Rent every five (5) years. The proposed Third Amendment to the Lease is attached for Council's review and approval. II reflects the negotiating direction received by staff from the Council. ALTERNATIVES The City Council has the following alternatives to consider: 1. Approve the Amendment and authorize the Mayor to execute it on behalf of the City. 2. Provide alternate direction to staff. APPROVI:D FOR FORWARDING k" CITY MANAGER Meeting Date: April Please Review for the Possibility of a Potential Conflict of Interest: ~None Identified by Staff 0 Bright o Shoals 0 Molnar o Nicolls o Peterson Agenda Item No. 2S

2 Staff Report - Third Amendment to Lease Agreement with Crown Castle Page 2 RECOMMENDED ACTION It is recommended that the City Council approve the Lease Amendment and authorize its execution by the Mayor on behalf of the City. FISCAL IMPACT Recommended action will have a positive fiscal impact on City's General Fund through the $25,000 one-time option payment and increase in rent payments. PUBLIC NOTIFICATION The agenda was posted in accordance with the Brown Act. ATTACHMMENTS 1. Draft Lease Amendment

3 Attachment 1 THIRD AMENDMENT TO LAND LEASE THIS THIRD AMENDMENT TO LAND LEASE (the "Third Amendment") is made effective this day of, 2012, by and between CITY OF GROVER BEACH, a California municipality (hereinafter referred to as "Landlord") and CROWN CASTLE GT COMPANY LLC, a Delaware limited liability company (hereinafter referred to as "Tenant"). RECITALS WHEREAS, Landlord and GTE Mobilnet of Santa Barbara Limited Partnership ("Original Tenant") entered into a Land Lease dated September 6, 1994, a memorandum of which was recorded on December 15, 1995 at Instrument No , in the Office of the San Luis Obispo County Recorder, Califqrnia (the "Original Lease") whereby Original Tenant leased certain real property, together with access and utility easements, located in San Luis Obispo County, California from Landlord (the "Premises"), all located within certain real propetty owned by Landlord ("Landlord's Property"); and WHEREAS, the Original Lease was amended by that cet1ain Amendment of Lease Agreement dated September 18, 2000 ("First Amendment"), and by that certain Second Amendment to Land Lease dated October 1, 2004 ("Second Amendment") (hereinafter the Original Lease and all subsequent amendments are collectively referred to as the "Lease"); and WHEREAS, Crown Castle GT Company LLC is currently the Tenant under the Lease as successor in interest to the Original Tenant; and WHEREAS, the Lease had an initial term that commenced on October I, 1994 and expired on September 30, J 999. The Lease provides for four extensions of five years each, the first three of which were exercised by Tenant. According to the Lease, the final extension expires on September 30, 2019; and WHEREAS, Landlord and Tenant desire to amend the Lease on the terms and conditions contained herein. I

4 NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are acknowledged, Landlord and Tenant agree as follows: 1. Recitals; Defined Terms. The parties acknowledge the accuracy of the foregoing recitals. Any capitalized terms not defined herein shall have the meanings ascribed to them in the Lease. 2. Premises. The Premises is more particularly described on Exhibit A attached hereto, and is shown on the site plan attached hereto as Exhibit B. Any conflicts between the description attached to this Third Amendment and those contained in the Original Lease or the First Amendment shall be resolved in favor ofthis Third Amendment. In the event the location of any or Tenant's or its subtenant's existing improvements, utilities, or access routes is not depicted on Exhibit B or described on Exhibit A, Tenant's leasehold rights and access and utility easements over such areas shall remain in full force and effect. 3. Terms. Section 2(A) of the Second Amendment, which deleted and replaced Section 3 of the Original Lease, is hereby deleted in its entirety and replaced with the following: 3.(a) Term. The initial term of this Lease shall be for a period of five years commencing on October I, 1994 ("Commencement Date") and expiring on September 30, 1999 (the "Initial Term"), unless sooner terminated as provided herein. 3.(b) Extended Terms. At the conclusion of the Initial Term, Tenant shall be entitled to nine extensions of five years each, with the final lease extension expiring on September 30, 2044 (each extension is referred to as an "Extended Term"), provided Tenant is not in default hereunder. The Initial Term and any Extended Term shall be collectively referred to as the "Lease Term". The Lease Term shall automatically be extended for each successive Extended Term unless Tenant notifies Landlord of its intention not to renew at least thirty days prior to the expiration of the then current five year term. The monthly rent for the Initial Term and any Extended Term shall be calculated as set forth in Section 4 below. Landlord and Tenant hereby acknowledge that Tenant has exercised the first three Extended Terms, leaving a balance of six Extended Terms. 4. Base Rent Adjustment. Commencing on the fourth Extended Term (October 1, 2014), and every five (5) years thereafter (each an "Adjustment Date"), the Base Rent shall increase by an amount equal to twelve and one half percent (12.5%) of the Base Rent in effect for the month immediately preceding the Adjustment Date. Such rent escalations shall replace 2

5 any rent escalations currently in the Lease, including the rent escalations set forth in Section 2(B) of the Second Amendment, which amended and replaced Section 4(c) of the Original Lease. 5. Expansion Option. As further consideration for Tenant entering into this Third Amendment, during the term of the Lease, Tenant shall have the irrevocable option ("Expansion Option") to lease up to a maximum of five hundred (500) square feet of real property adjacent to the existing Premises at a location to be mutually determined by Landlord and Tenant ("Additional Lease Area") on the same terms and conditions set f01ih in the Lease. Tenant may conduct any reasonable due diligence activities on the Additional Lease Area at any time after full execution of this Third Amendment. If Tenant elects to exercise the Expansion Option, after full execution of the Additional Lease Area Documents (as defined below), Tenant shall pay the same rent pel' square foot for the Additional Lease Area as the rent paid pel' square foot by Tenant for the existing Premises at the time of full execution of the Additional Lease Area Documents. The rent for the Additional Lease Area shall increase in the same manner as the rent increases for the existing Premises. Tenant may exercise the Expansion Option by providing written notice to Landlord at any time; provided, however, that following Tenant's delivery of notice to Landlord, Tenant may at any time prior to full execution of the Additional Lease Area Documents withdraw its election to exercise the Expansion Option if Tenant discovers or obtains any information of any nature regarding the Additional Lease Area which Tenant determines to be unfavorable in its sole discretion. Within 30 days after Tenant's exercise of the Expansion Option, Landlord agrees to execute and deliver an amendment to the Lease, a memorandum of lease and/or amendment, and any other documents necessary to grant and record Tenant's interest in the Additional Lease Area ("Additional Lease Area Documents"). In addition, within 30 days after Tenant's exercise of the Expansion Option, Landlord shall obtain and deliver any documentation necessary to remove, subordinate or satisfy any mortgages, deeds oftrust, liens or encumbrances affecting the Additional Lease Area to Tenant's satisfaction. 6. Consideration. In consideration for amending the Lease, and executing and delivering the signed Third Amendment to Tenant within ten (10) days of receipt of the executable documents, Tenant will pay Landlord Twenty-Five Thousand and Dollars ($25,000.00) ("Expedite Fee"). Landlord understands time is of the essence and if the signed Third Amendment is not delivered to Tenant within the foregoing to-day time period, Landlord will forfeit the Expedite Fee. Landlord fmiher agrees that if the Third Amendment is not fully Ilusiness Unit#:

6 executed for any reason, the Expedite Fee will be forfeited. The Expedite Fee is a one time payment and will be due and payable within sixty (60) days of full execution of this Third Amendment. 7. Representations. Warranties and Covenants of Landlord. Landlord represents, warrants and covenants to Tenant as follows: a) The Premises is owned by Landlord free and clear of any moltgage, deed of trust, lien, or right of any individual, entity or governmental authority arising under any option, right of first refusal, lease, license, easement or other instrument, except for the rights of Tenant arising under the Lease as amended hereby and the rights of utility providers under recorded easements.. b) Upon Tenant's request, Landlord agrees to discharge and cause to be released (or, if approved by Tenant, subordinated to Tenant's rights under the Lease as amended hereby) any mortgage, deed of trust, lien or other encumbrance that may now or hereafter exist against the Premises. c) Upon Tenant's request, Landlord agrees to cure any defect in Landlord's title to the Premises which in the reasonable opinion of Tenant has or may have an adverse effect on Tenant's use or possession of the Premises. d) Landlord agrees to execute such further documents and provide such further assurances as may be reasonably requested by Tenant to effect any release or cure referred to in this paragraph, to evidence the full intention of the parties, and to assure Tenant's use, possession and quiet enjoyment ofthe Premises under the Lease as amended hereby. 8. Notices. Tenant's notice address as amended in Section 4 of the First Amendment is further amended as follows: TENANT'S PRIMARY CONTACT Crown Castle GT Company LLC c/o Crown Castle USA Inc. E. Blake Hawk, General Counsel Attn: Legal Department - Real Estate 2000 Corporate Drive Canonsburg, PA IRS Form W-9. Landlord agrees to provide Tenant with a completed IRS Form W-9, or its equivalent, upon execution of this Third Amendment and at such other times as may be reasonably requested by Tenant. In the event the Landlord's Property is transferred, the 4

7 succeeding Landlord shall have a duty at the time of such transfer to provide Tenant with a completed IRS Form W -9, or its equivalent, and other related paper work to effect a transfer in the rent to the new Landlord. Landlord's failure to provide the IRS Form W-9 within thirty (30) days after Tenant's request shall be considered a default and Tenant may take any reasonable action necessary to comply with IRS regulations including, but not limited to, withholding applicable taxes from rent payments. 10. Letter Agreement. This Third Amendment supersedes that certain Letter Agreement by and between Landlord and Tenant dated February 13,2012, and in case of any conflict or inconsistency between the terms and conditions contained in the Letter Agreement and the terms and conditions contained in this Third Amendment, the terms and conditions in this Third Amendment shall control. II. Remainder of Lease Unaffected. In all other respects, the remainder of the Lease shall remain in full force and effect. Any portion of the Lease that is inconsistent with this Third Amendment is hereby amended to be consistent. [Signature pages follow] 5

8 Landlord and Tenant have caused this Third Amendment to be duly executed on the day and year first written above. LANDLORD: CITY OF GROVER BEACH, a California municipality.~~ ~~~~_... BY: Print Name: ~",~",,"' ;!!b,\l-",~,jil Title: ----"~... V,.-ii}"' [Tenant Execution Page Follows] 6

9 This Third Amendment is executed by Tenant as of the date first written above. TENANT: CROWN CASTLE GT COMPANY LLC, a Delaware limited liability company By: Print Name: Title: 7

10 EXHIBIT "A" (Legal Description of Premises) 8

11 EXHIBIT "B" (Site Plan) Ilusincss Unit#: