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HomeMy WebLinkAboutItem 5f.Lease amendment with SBA 2012 TC Assets, LLC for telecommunications facility lease at Laguna Lake Golf Course Item 5f Department: Administration Cost Center: 1001 For Agenda of: 3/3/2026 Placement: Consent Estimated Time: N/A FROM: Greg Hermann, Deputy City Manager Prepared By: Natalie Harnett, Policy and Project Manager SUBJECT: LEASE AMENDMENT WITH SBA 2012 TC ASSETS, LLC FOR TELECOMMUNICATIONS FACILITY LEASE AT LAGUNA LAKE GOLF COURSE RECOMMENDATION 1. Approve a Draft Resolution (Attachment A) authorizing the First Amendment to the Lease Agreement between the City of San Luis Obispo and SBA 2012 TC Assets, LLC, a Delaware limited liability company, to extend the lease for telecommunications facilities at Laguna Lake Golf Course for an additional 20 -year term. 2. Authorize the Finance Director to implement any necessary budget adjustments to reflect the amended lease terms and appropriate a $45,000 one-time payment from the lessee to the Laguna Lake Golf Course Maintenance Project (account 2000030). POLICY CONTEXT The City’s Financial Management Manual (Section 475-C) allows for long-term leases of City property on a case-by-case basis and provides guidance for leases that support significant City goals, plans, or policies and offer measurable community benefits. The policy emphasizes that the overarching principle is to pursue an approach that best achieves the City’s objectives given the circumstances. The original lease for this property was executed in accordance with all City policies and procedures. The recommendation follows Council direction from a Closed Session discussion regarding price and terms for the associated property and lease and is in alignment with the applicable guidance from the City’s Financial Management Manual. In addition, Council approval of the lease is required by Resolution No. 10052 (2009), which states that “no sale or lease of real property nor any sale of personal property of a value in excess of one thousand dollars ($1,000.00) nor any lease of personal property for a period exceeding three (3) years shall be authorized by the Council except by resolution passed by affirmative vote of three-fifths (3/5) of all members of the Council.” Page 551 of 618 Item 5f DISCUSSION Background The City of San Luis Obispo currently holds five cellular communication site leases executed between 2003 and 2017. These leases provide locations for wireless service infrastructure, including antennas, towers, and related transmitting equipment. A ground lease is the legal agreement that authorizes a wireless provider or tower co mpany to use City-owned land for these purposes in exchange for rent. In June 2004, the City Council approved a Memorandum of Understanding with Sprint PCS, Assets, LLC to lease a portion of Laguna Lake Golf Course for a telecommunications facility, pending planning approvals for their project. Project plans were subsequently approved and the City Council approved a lease agreement on February 1, 2005. The initial term was five years, with options to extend for three additional five-year terms, consistent with standard telecommunications leases that require long-term certainty for uninterrupted service. The original lease agreement is included as Attachment B. Sprint PCS was later acquired by TowerCo Acquisition LLC, which became a subsidiary of SBA 2012 TC Assets, LLC (“SBA”) in 2012. SBA has operated the tower since that time. The site currently hosts two cellular carriers, New Cingular Wireless (AT&T) and T - Mobile, which use the tower infrastructure to provide wireless service to the surrounding areas of the City. The tenant, now SBA, has exercised all three of the initial five-year renewal options, and the current lease expired in April 2025. SBA has expressed interest in further extending the lease and has remained proactive and responsive, including providing rent payment for 2025. No formal notice of lease termination has been issued, as the City was actively working through the logistics of the lease ext ension. The City Council met in closed session on November 18, 2025, to discuss the lease and provide direction for a potential lease extension. SBA has remained in good standing with the City and has cooperated in good faith. Although the original lease term expired in April 2025, the parties agreed to proceed by amendment rather than a new agreement because the majority of the existing terms remain acceptable and continue to govern the relationship. Staff therefore recommend approval of Attachment C, which amends the existing lease to add four successive five- year renewal options along with the following key changes: Section 3. Term: The amendment adds four (4) additional successive five-year Renewal Terms beyond the current term. Each Renewal Term will automatically extend unless the Lessee provides at least sixty (60) days’ written notice of its intent not to renew. The first additional Renewal Term will commence on April 20, 2025, following the expiration of the current term on April 19, 2025. Page 552 of 618 Item 5f Public Purpose Termination Provision: Under the original agreement, SBA held a unilateral right to terminate the lease for convenience with 60 days’ notice, while the City had no comparable option. This amendment adds a new termination right, providing the City greater flexibility should the Premises be required for public purposes. During any Renewal Term, the City may terminate the lease with two (2) years’ prior written notice. The parties will negotiate in good faith to identify a potential relocation site on City property; however, if a mutually acceptable relocation site cannot be reached, or if the Lessee is unwilling or unable to relocate, the lease will automatically terminate at the end of the two -year notice period. This provision establishes a clear off -ramp for the City and enhances long-term control of the property. Section 4. Rent: Effective retroactively to April 20, 2025, annual rent will increase from $48,346 to $58,000, escalated annually by Consumer Price Index (CPI) or 3 percent (3%), whichever is greater. Section 23. Assignment and Subletting: Section 23(E)(1) is deleted and replaced to provide the City with fifty percent (50%) revenue sharing from any new narrowband or broadband sublessees operating on the Premises. The provision excludes existing sublessees (New Cingular Wireless PCS and T -Mobile West) and any new carrier that enters a separate ground lease directly with the City. One-Time Payment: Upon full execution of the First Amendment, the Lessee will pay the City a one-time payment of $45,000. Standard Provisions: The amendment includes standard legal provisions affirming that the remainder of the lease remains in effect, California law governs, the City has authority to enter into the agreement, and the Lessee may update and record accurate property descriptions at its expense. Previous Council or Advisory Body Action On November 18, 2025, the City Council met in closed session pursuant to Government Code section 54956.8 to provide direction to its real property negotiators regarding the lease of telecommunications facilities at Laguna Lake Golf Course. The proposed Lease Amendment is the result of those negotiations and is now presented for Council consideration in open session. Public Engagement Notice of this agenda item was provided through the meeting's posted agenda. The public may submit comments in writing before the meeting or share their input during the public meeting. CONCURRENCE The Parks and Recreation department, IT and Finance were consulted at the onset of lease negotiations and concur with the recommendation. Page 553 of 618 Item 5f ENVIRONMENTAL REVIEW This action is not considered a “project” under the California Environmental Qual ity Act (CEQA) pursuant to CEQA Guidelines Section 15060(c)(3) because it involves an administrative activity that will not result in a direct or reasonably foreseeable indirect physical change in the environment. Additionally, the proposed lease amendment is categorically exempt from CEQA under CEQA Guidelines Section 15301 (Class 1 - Existing Facilities), which applies to the operation, permitting, and leasing of existing public or private facilities involving negligible or no expansion of existing use. The amendment would extend the term of an existing telecommunications lease at an established facility at Laguna Lake Golf Course and does not authorize any new construction or expansion of the existing use. FISCAL IMPACT Budgeted: Yes Budget Year: 2025-26 Funding Identified: Yes Fiscal Analysis: Funding Sources Total Budget Available Current Funding Request Remaining Balance Annual Ongoing Cost General Fund N/A N/A N/A N/A State Federal Fees Other: Total N/A N/A N/A N/A There is no direct fiscal impact associated with this request beyond staff time required for negotiation. Cell tower leases provide a source of passive revenue for the City. The increased rent will be backdated to April 2025 and reflects an approximate 20 percent year over year increase, resulting in an estimated additional $10,000 in annual revenue from what was originally budgeted. In addition, the City will receive a one-time payment of $45,000. Staff recommend allocating the $45,000 one-time payment to the Laguna Lake Golf Course Maintenance Project Account (2000030) to support maintenance costs and upcoming projects at the Laguna Lake Golf Course, where the lease is located. ALTERNATIVES Modify terms of the lease. Council could choose to change the proposed terms, in which case staff would return to SBA to determine if the revised terms are acceptable. Page 554 of 618 Item 5f Do not amend the lease. Under this alternative, the City could allow the lease to expire without renewal, which would mean terminating the existing agreement. The telecommunications infrastructure is already in place, and discontinuing the lease could disrupt services to the community. While the City could issue an RFP for a new tower operator, the process is uncertain, would require significant staff resources, and may not result in terms more favorable than those currently proposed. SBA has been a reliable tenant throughout the lease term. ATTACHMENTS A – Resolution Approving First Amendment to Lease Agreement B – 2005 Sprint PCS Lease Agreement C – First Amendment to Lease Agreement (Exhibit A to Resolution) Page 555 of 618 Page 556 of 618 R ______ RESOLUTION NO. _____ (2026 SERIES) A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS OBISPO, CALIFORNIA, APPROVING THE FIRST AMENDMENT WITH SBA 2012 TC ASSETS, LLC FOR TELECOMMUNICATIONS FACILITIES AT LAGUNA LAKE GOLF COURSE WHEREAS, the City entered into a lease agreement with Sprint PCS Assets, LLC on February 1, 2005, for an initial five-year term with options to extend for three additional five-year terms; and; and WHEREAS, Sprint PCS was later acquired by TowerCo Acquisition LLC, which became a subsidiary of SBA 2012 TC Assets, LLC (“SBA”) in 2012, and SBA has operated the telecommunications facility since that time; and WHEREAS, SBA has exercised all three initial five-year renewal options, and the current lease term expired in April 2025; and WHEREAS, in late 2020, SBA first expressed interest in further extending the lease, and while the lease has technically expired, SBA has remained proactive and responsive, including providing rent payment for 2025; and WHEREAS, the City Council met in closed session on November 18, 2025, to discuss options for the Laguna Lake Golf Course telecommunications site and determine negotiating parameters for the lease extension, and staff subsequently negotiated a lease amendment within the parameters established by Council; and WHEREAS, the Financial Management Manual (Section 475 -C) authorizes long- term leases of City property on a case-by-case basis when they support City goals, plans, or policies and provide measurable community benefits, and ; and NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo as follows: SECTION 1. The City Council has determined, based on the circumstances at the time, that approval of Lease Amendment is in the best interest of the City and ensures continued reliable telecommunications service to the community. SECTION 2. The City Council hereby approves the First Amendment to the Lease Agreement with SBA 2012 TC Assets, LLC, substantially in the form attached hereto as Exhibit A, and authorizes the City Manager or designee to execute the amendment and any related documents necessary to effectuate the lease extension. SECTION 3. The City Manager or designee is authorized to take all actions necessary to implement this Resolution, including recording the lease amendment and updating financial records to reflect rent and revenue-sharing provisions. Page 557 of 618 Resolution No. _____ (2026 Series) Page 2 R ______ SECTION 4. This Resolution shall take effect immediately upon adoption. Upon motion of Council Member ___________, seconded by Council Member ___________, and on the following roll call vote: AYES: NOES: ABSENT: The foregoing resolution was adopted this _____ day of _______________ 20 2X. ___________________________ Mayor Erica A. Stewart ATTEST: ______________________ Teresa Purrington City Clerk APPROVED AS TO FORM: ______________________ J. Christine Dietrick City Attorney IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of San Luis Obispo, California, on ______________________. ___________________________ Teresa Purrington City Clerk Page 558 of 618 Page 559 of 618 Page 560 of 618 Page 561 of 618 Page 562 of 618 Page 563 of 618 Page 564 of 618 Page 565 of 618 Page 566 of 618 Page 567 of 618 Page 568 of 618 Page 569 of 618 Page 570 of 618 Page 571 of 618 Page 572 of 618 Page 573 of 618 Page 574 of 618 Page 575 of 618 Page 576 of 618 Page 577 of 618 Page 578 of 618 Page 579 of 618 Page 580 of 618 Page 581 of 618 Page 582 of 618 Page 583 of 618 Page 584 of 618 00746132 - v2 1 CA45998-A/Laguna Lakes Prepared by: Tiffany Gonsalves After recording return to: Rita Drinkwater SBA Network Services, LLC 8051 Congress Avenue Boca Raton, FL 33487 Ph: 800-487-7483 ext. 7872 Parcel ID: 053-111-058 FIRST AMENDMENT TO TELECOMMUNICATIONS FACILITY LEASE AT LAGUNA LAKE GOLF COURSE THIS FIRST AMENDMENT TO TELECOMMUNICATIONS FACILITY LEASE AT LAGUNA LAKE GOLF COURSE (“First Amendment”) is executed this ______ day of _____________, 202___, and is effective April 20, 2025 (“Effective Date”) by and between CITY OF SAN LUIS OBISPO, a California municipal corporation, having an address at 990 Palm Street, San Luis Obispo, CA 93401 (“Lessor”) and SBA 2012 TC ASSETS, LLC, a Delaware limited liability company, having a principal office located at 8051 Congress Avenue, Boca Raton, FL 33487 (“Lessee”). WHEREAS, Lessor and Sprint PCS Assets, LLC, a Delaware limited liability company, entered into that certain Telecommunications Facility Lease At Laguna Lake Golf Course dated February 1, 2005, as evidenced by that certain Memorandum of Agreement dated August 17, 2009, and recorded August 25, 2009, as Doc. No. 2009047880 (hereinafter referred to as “Lease”) and assigned to Lessee, f/k/a TowerCo Assets LLC, a Delaware limited liability company, successor by merger to Tower Entity 4 LLC, a Delaware limited liability company, pursuant to that certain Assignment and Assumption of Lease dated September 23, 2008, and recorded January 27, 2009, as Doc. No.2009003794; said recordings of the Clerk/Recorder of San Luis Obispo County, California, for Lessee’s use of a portion of the real property (“Premises”), located at 11175 Los Osos Valley Road, San Luis Obispo, CA 93405 (hereinafter referred to as “Land”), being more particularly described in the attached Exhibit “A”; and WHEREAS, Lessor and Lessee desire and intend to amend and supplement the Lease as provided herein. Page 585 of 618 00746132 - v2 2 CA45998-A/Laguna Lakes NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby, acknowledged, the parties hereto covenant, agree, and bind themselves to the following modifications to the Lease: 1. Section 3. Term, of the Lease is hereby amended to include the following: In addition to the Renewal Terms as referenced in the Lease, the Lease is hereby amended to include four (4) additional successive Renewal Terms of five (5) years, each of which shall be deemed automatically extended unless Lessee notifies Lessor of its intention not to renew the Lease at least sixty (60) days prior to the commencement of the succeeding Renewal Term. The first additional Renewal Term shall commence on April 20, 2025, upon the expiration of the Renewal Term expiring on April 19, 2025. In the event Lessor determines in its reasonable discretion that the Premises are required for public purposes, during each Renewal Term Lessor may terminate this Lease upon providing two (2) years’ prior written notice. Following such notice, the parties shall negotiate in good faith to identify a potential relocation site within the Land. Should the parties fail to reach an agreement on a mutually acceptable site, or if Lessee is unable or unwilling to relocate, this Lease shall terminate automatically upon the expiration of the two-year notice period. 2. Section 4. Rent, of the Lease is hereby amended to include the following: A. Retroactively to April 20, 2025, Lessor's Annual Rent shall be increased to the total amount of Fifty-Eight Thousand and No/100 Dollars ($58,000.00). 3. Section 20. Notice, of the Lease is hereby amended as follows: LESSOR: City of San Luis Obispo 990 Palm Street San Luis Obispo, CA 93401 LESSEE: SBA 2012 TC Assets, LLC Attn: Site Administration 8051 Congress Avenue Boca Raton, FL 33487-1307 Re: CA45998-A/Laguna Lakes 4. Section 23. Assignment and Subletting, subsection E1, of the Lease is hereby deleted in its entirety and replaced with the following: Lessee shall pay to Lessor revenue share equal to fifty percent (50%) of all revenue derived from new narrowband or broadband sublessees using the Premises ("Revenue Share"). Notwithstanding the foregoing, Revenue Share shall not apply to (i) existing sublessees New Cingular Wireless PCS and T-Mobile West, or (ii) any new sublessee that enters a separate ground lease directly with the Lessor for its equipment. All Page 586 of 618 00746132 - v2 3 CA45998-A/Laguna Lakes Revenue Share contained herein shall be payable one month in arrears upon Lessee’s receipt of rental payment from the applicable sublessee. Provided further, that in the event any said new sublessee enters into a separate ground lease for equipment storage with Lessor, Revenue Share for such sublessee shall not apply. 5. Upon full execution of this First Amendment, Lessee shall pay to Lessor a one-time payment of Forty-Five Thousand and No/100 Dollars ($45,000.00). 6. Capitalized terms not defined in this First Amendment will have the meaning ascribed to such terms in the Lease. 7. This First Amendment will be governed by and construed and enforced in accordance with the laws of the state in which the Land is located without regard to principles of conflicts of law. 8. Except as specifically set forth in this First Amendment, the Lease is otherwise unmodified and remains in full force and effect and is hereby ratified and reaffirmed. In the event of any inconsistencies between the Lease and this First Amendment, the terms of this First Amendment shall take precedence. 9. Lessor acknowledges that the exhibits attached to the Lease may be incomplete or contain inaccuracies and, accordingly, Lessee may replace and substitute such exhibits at its cost and with written consent of Lessor, with an accurate survey and/or legal descriptions of the Premises and re-record this First Amendment with copy provided to Lessor. Following such re-recording, the descriptions contained therein shall serve as the descriptions for the same for all purposes under the Lease. 10. Lessor represents and warrants to Lessee that Lessor is the sole owner in fee simple title to the Land and Lessor’s interest under the Lease and that consent or approval of no other person is necessary for Lessor to enter into this First Amendment. 11. This First Amendment may be executed in one or more counterparts and by the different parties hereto in separate counterparts, each of which when executed shall be, deemed to be an original but all of which taken together shall constitute one, and the same First Amendment. 12. Lessee shall have the right to record this First Amendment. [The remainder of this page is intentionally left blank. Signatures to follow.] Page 587 of 618 00746132 - v2 4 CA45998-A/Laguna Lakes IN WITNESS WHEREOF, the parties have executed this First Amendment as of the day and year first above written. LESSOR: City of San Luis Obispo, a California municipal corporation By: ___________________________________ Print Name: _________________________ Title: __________________________________ A Notary Public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy or validity of that document. STATE OF CALIFORNIA ) COUNTY OF ) On _________________________, 202___, before me, ____________________________ personally appeared __________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. ____________________________________ Notary Public________________________ My Commission Expires _______________ (NOTARY SEAL) Page 588 of 618 00746132 - v2 5 CA45998-A/Laguna Lakes WITNESSES: LESSEE: SBA 2012 TC Assets, LLC, a Delaware limited liability company _______________________________________ By: ________________________________ Joshua Koenig, Executive Vice Print Name: __________________________ President and General Counsel _______________________________________ Print Name: __________________________ STATE OF FLORIDA COUNTY OF PALM BEACH The foregoing instrument was acknowledged before me by means of [X] physical presence or [ ] online notarization, this _____ day of _______________________, 202___, by Joshua Koenig, Executive Vice President and General Counsel of SBA 2012 TC Assets, LLC, a Delaware limited liability company, on behalf of said company, who is personally known to me and did not take an oath. ___________________________________ Notary Public ________________________ My Commission Expires _______________ (NOTARY SEAL) Page 589 of 618 00746132 - v2 6 CA45998-A/Laguna Lakes EXHIBIT “A” Legal description to be incorporated upon receipt of final survey. 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