Title
RESOLUTION NO. 2014-029 OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ESTABLISHING A MASTER LICENSE AGREEMENT WITH VERIZON WIRELESS, LLC, A DELAWARE LIMITED LIABILITY COMPANY, FOR THE INSTALLATION AND OPERATION OF AS MANY AS 25 WIRELESS TELECOMMUNICATIONS FACILITIES OR SUBSTANTIALLY SIMILAR FACILITIES ON CITY-OWNED AND CONTROLLED PROPERTY, SUBJECT TO ALL NECESSARY APPROVALS, FOR A PERIOD OF 5 YEARS WITH AN OPTION TO RENEW FOR AS MANY AS FOUR ADDITIONAL 5-YEAR TERMS AND AUTHORIZING THE MAYOR TO EXECUTE THE AGREEMENT
Recommended Action
RECOMMENDED ACTION: Council adopt resolution.
Body
SUMMARY
The Public Works Department is submitting a Master Communications Site License Agreement (MLA) for the City Council's review and consideration. Adoption of the proposed resolution would establish a MLA between the City and Verizon Wireless (VW) LLC, a Delaware limited liability company, dba Verizon Wireless ("Verizon Wireless"), for the installation of as many as 25 wireless telephone facilities (WTF) on property owned or controlled by the City. The proposed MLA includes mutually beneficial and agreed upon terms that are consistent with those provided to other wireless carriers including, but not limited to: establishing a five-year term with up to four additional five-year options that are subject to the City's review and approval, additional rent reduction incentive for a smaller site option.
ENVIRONMENTAL REVIEW
The Development Services Director has reviewed the proposed activity, approval of an MLA, for compliance with the California Environmental Quality Act (CEQA) and has determined that the activity is not a "Project" as defined under Section 15378 of the State CEQA Guidelines; therefore, pursuant to Section 15060 (c)(3) of the State CEQA Guidelines the activity is not subject to CEQA. Although environmental review is not necessary at this time, each individual wireless telecommunication facility will have environmental review once the projects are further defined and a CEQA determination will be completed prior to installation of any new facilities.
BOARD/COMMISSION RECOMMENDATION
Not applicable.
DISCUSSION
The City Council approved Resolution 18601 on March 18, 1997, conceptually approving the marketing of City properties for use by telecommunications companies. On September 16, 1999, the City Council approved Master License Agreements (MLA) with AT&T and Cox PCS, Assets, LLC, for installation and operation of as many as 50 wireless communication sites on property owned or controlled by the City. The City also approved an MLA with Pacific Bell Wireless, LLC for as many as 25 sites in November 2002, with Cricket for as many as 35 sites in February 2006, with the New Cingular (AT&T) for as many as 25 sites in July 2007 and T-Mobile for 25 sites in December 2007. In 1998, when the City began negotiations, City Council directed staff to negotiate rates that would provide wireless carriers an incentive to come to Chula Vista. It was City Council's desire to see Chula Vista commercial and residential consumers have the opportunity to be early adopters of the technology and benefit from the competition of multiple carriers. Staff reached out to the industry, held workshops and invited them to the City to structure "master" agreements that would provide prompt entry at below-market rates. Fifteen years later, now that the latest telecommunication technology is readily available to Chula Vista consumers, City Council requested that staff balance the goals of ensuring that the City continues to attract state of the art, competitive service options for consumers with market rate lease payments for City sites. City Council also requested that staff emphasize co-location, stealth installations and other methods or reducing visual impacts.
Additionally, over a relatively short period of time, the technology has evolved from a unique business tool, used by a few people, primarily in commercial areas, to a common business and household convenience used almost everywhere by almost everyone. That has put tremendous demand on sites in predominantly residential areas with few site options. The increase in sites to cover the varied topography of a growing city increases exponentially by: 1) the limitations that each site can carry during peak periods, 2) the increased intensity of bandwidth use for items such as video, internet and music uses versus the original voice functions, and 3) the desire to accommodate more carriers with the expectation of fostering greater consumer choice, competition for price and service quality. The public demand for these services continues to grow and all of these issues place a greater demand on sites, particularly in residential neighborhoods. Federal and state law does not allow cities to deny permits based on health or solely on aesthetics issues. City staff has worked with industry for many years on a "Master License Agreement" approach to reduce the pressure on siting these facilities in less appropriate areas.
The MLAs provide the City with an opportunity to work cooperatively with the carriers to expedite their projects, provide the coverage needed to meet public demand, provide incentives to pursue sites that have the least impact to residents and meet the aesthetic and safety goals of the community, while capturing revenue that helps the City fund public services at no additional cost to the ratepayer. Above all, the wireless industry values rapid deployment, and works with the City to accommodate the community's objectives based predominantly on our ability to demonstrate a record of timely zoning and construction approvals that support that goal. The City Attorney's Office, Finance, Development Services and Risk Management have provided critical assistance to Public Works in developing and securing the MLA terms needed to protect the public interest while meeting the objectives of the communications industry.
Master License Agreement: The MLA allows Verizon Wireless to install as many as 25 total WTF's on property owned and/or controlled by the City and to operate within the scope of this MLA for a period of five years. The MLA allows for as many as four additional five-year terms, each with the written request of Verizon Wireless and the subsequent written approval of the City Manager. Prior to the renewal of each five-year term, the annual license fee is subject to renegotiation to ensure that the City is receiving market value for its facilities. Verizon Wireless has completed that negotiation on what staff considers to be mutually beneficial terms. Verizon Wireless annual license fees vary based on the number of cabinets and antennae at each WTF site and the footprint of the site. The annual fee for each WTF site that includes as many as 7 equipment cabinets and 12 antennas would be adjusted as follows:
|
Macro Site Annual Fee* |
Cabinets Only Annual Fee |
Antennae Only Annual Fee |
Options Annual Fee** |
2014 |
$30,000.00 |
$18,000.00 |
$12,000.00 |
$4,944.00 |
2015 |
$30,900.00 |
$18,540.00 |
$12,360.00 |
$5,092.32 |
2016 |
$31,827.00 |
$19,096.20 |
$12,730.80 |
$5,245.09 |
2017 |
$32,781.81 |
$19,669.09 |
$13,112.72 |
$5,402.44 |
2018 |
$33,765.26 |
$20,259.16 |
$13,506.11 |
$5,564.52 |
2019 |
$34,778.22 |
$20,866.93 |
$13,911.29 |
$5,731.45 |
2020 |
$35,821.57 |
$21,492.94 |
$14,328.63 |
$5,903.39 |
2021 |
$36,896.22 |
$22,137.73 |
$14,758.49 |
$6,080.50 |
2022 |
$38,003.10 |
$22,801.86 |
$15,201.24 |
$6,262.91 |
2023 |
$39,143.20 |
$23,485.92 |
$15,657.28 |
$6,450.80 |
* Maximum 10'x20' area standard enclosure or a15'x30' area non-standard where a backup generator is included in enclosure footprint and site conditions allow the additional size
**Approximately 3'x3'x3' or 27 cubic feet cabinet and up to (3) three standard antennae.
In some instances, Verizon Wireless will require a site for antennas or cabinets only. Staff has also included a rent option for a smaller site configuration that other carriers have requested in the past and expect to use frequently. The annual license fee for those facilities will be less than a full site as identified in the table above. The MLA would also continue to include a clause that reduces these rates by as much as 40% with Verizon Wireless and other contractors if they propose projects that underground the cabinets and pedestals or take other similar measures to reduce the impacts to land use. Council approved a similar clause in the 2006 Cricket and Sprint and the 2007 New Cingular and T-Mobile MLA's.
Verizon Wireless is required to comply with all local, state and federal applicable laws. The Schedule of Premises (SOP) shall be administratively approved for each site and contain specific conditions that must be satisfied and maintained in order to use the wireless facility. The Schedule of Premises will be submitted to the Public Works Department and circulated to all other appropriate departments. Verizon Wireless shall continue to pay the appropriate full staff costs for processing each submittal. All of Verizon Wireless's construction, installation, maintenance and removal of the WTF facilities will be at their sole responsibility and cost. If Verizon Wireless causes any damage to the public right of way or City property, they are required to repair it promptly at their sole cost. Verizon Wireless will not be allowed to activate their site until the City signs off on final construction. The original MLA, the Schedule of Premises for each site and City Municipal Code provide for a number of risk mitigation measures for the City including: indemnity; insurance requirements; limitation on remedies available to Verizon Wireless in the event of a City breach; and reservation of the City's emergency and police powers.
Impacts on City Property: The installation will vary depending on the site Verizon Wireless needs. As mentioned, all installations will be required to receive all applicable permits and Verizon Wireless will work closely with Development Services and Public Works to assure that they do not interfere with City operations or facility maintenance. The three primary types of installations are building mounted, ground mounted and light standard mounts. Building mounted installations generally involve mounting antennas on the facade or on the roof of the building, in addition to accommodating equipment cabinets on the ground or on the roof. Ground mounted applications involve construction of a "monopole" or more stealth applications where the monopole is camouflaged as an artificial pine, broadleaf or palm tree, flagpoles or complimentary structures such as clock towers or facility signs. In this case the cabinets are generally mounted on a concrete slab adjacent to the antenna structure. The largest size cabinet systems with a backup generator use an area of approximately 15 by 30 feet. Both applications will require some trenching and cabling. The installations will require maintenance and administration on a limited basis. All proposed facilities would be required to secure all necessary land use, building and engineering permits. Staff will encourage Verizon Wireless to take advantage of reductions in monthly site payments by undergrounding the cabinets and other structures whenever possible.
Financial Benefits: Verizon Wireless will be compensating the City for use of each site by paying an annual license fee to the City General Fund for each system installed. Verizon Wireless annual license fee for a typical site that includes both antennas and cabinets is approximately $30,000. The MLA authorizes as many as 25 WTF facilities by Verizon Wireless. The annual fee increases by 3% a year beginning January 2014, and is subject to renegotiation prior to the renewal of each five-year term to ensure the City is receiving market rate rent.
Staff will also work with Verizon Wireless and other carriers to implement basic facility improvements or enhancements at each site to help them compliment the facilities' function when the construction and demolition or site programming warrant it. For example, it is common for WTF equipment shelters to provide extra storage for Recreation or the Library, a pad for water fountains, vending machines or other amenities not currently available in that part of the facility. It is also common for light standards to be replaced or upgraded when antennae are added. These improvements are typically in addition to the lease payments. With the addition of a Verizon Wireless MLA, the City now has an estimated 70% of the regional mobile communications business under an MLA agreement that contains terms that the City believes are important to protecting the public interest PW will be working with the City Attorney and Finance Department to actively engage the remaining major carrier(s) in MLA discussions over the next few months.
DECISION-MAKER CONFLICT
Staff has reviewed the decision contemplated by this action and has determined that it is not site specific and consequently, the 500-foot rule found in California Code of Regulations section 18704.2(a)(1) is not applicable to this decision. Staff is not independently aware, nor has staff been informed by any City Councilmember, of any other fact that may constitute a basis for a decision maker conflict of interest in this matter.
LINK TO STRATEGIC GOALS
The City's Strategic Plan has five major goals: Operational Excellence, Economic Vitality, Healthy Community, Strong and Secure Neighborhoods and a Connected Community. This project supports the Economic Vitality goal as it seeks to increase City revenue and wireless telecommunications facilities.
CURRENT YEAR FISCAL IMPACT
Verizon Wireless will increase the annual fee paid to the City for all future sites by 3%. Since none of these sites will be completed in the current fiscal year, no revenue increase is projected for Fiscal Year 2013/2014. However, staff believes there will ultimately be four (4) sites operational at the end of December 2014 with potential revenue of $120,000 annually.
ONGOING FISCAL IMPACT
If Verizon Wireless were to execute all the remaining full sites (approximately 19) it could generate up to approximately $570,000 in additional revenue per year and will be subject to the annual 3% increase in January of each year.