Leasing Rooftop Space or Other Common Areas to Telecommunications Vendors
Eliza Jane Manoff
Associations are always looking for ways to bring in more income to balance the reluctance of its members to pay more assessments. One method associations might consider is leasing rooftops or other common areas to telecommunications companies for placement of cell towers and equipment. Some associations have been able to reduce monthly assessments or acquire free services by entering into lease agreements with telecommunications companies. Here are some things to consider if your association is contemplating entering into such an agreement:
Do you have a desirable site? It is possible that your association’s buildings are not located in areas desirable to a telecommunications company. The companies take into account considerations like the distance from other nearby cell towers, the density of the neighborhood, zoning, height of the building, and available square footage. Some companies will approach your association, some will wait for property owners to approach them, and there are third party entities who try to match up available sites with companies who need them. Not all associations will be able to take advantage of this kind of lease agreement.
Is it worth the risk and potential inconvenience? Most of these lease agreements are not extremely lucrative. Some may bring in only a few hundred dollars a month while others may bring in several thousand dollars a month. Some agreements require the association to pay for the cost of relocating or taking down the equipment when maintenance of the property is needed and/or the cost of electricity required for the equipment. Many agreements give the company the exclusive right to lease the space, prohibiting the association from entering into lease agreements with other vendors. In addition, the telecommunications company will need regular access to the equipment to maintain it. The agreement may specify that the company has the right of access to the equipment 24 hours a day, 7 days a week. Consider the potential impact this might have on the residents.
Benefits other than money. Sometimes an association may allow a company to place telecommunications equipment on their building in exchange for services. The company may provide free internet, satellite services, or cell phone service to the residents. The company may install the wiring, modems, and other equipment free of charge.
The length of the agreement. Most telecommunications companies prefer to enter into long agreements, often 15 to 25 years, to maximize their return on their investment. They will sometimes limit the association’s ability to cancel or not renew the agreement when it expires, and may provide that subsequent renewals must also be for many years.
The aesthetic impact of the towers. The owners may have concerns about whether the cell phone equipment will negatively impact the appearance of the building or community. Some cell phone towers may be unsightly, but there
are ways to minimize this. Newer types of “towers” may resemble a small air conditioning unit, a flagpole, or even be built to resemble a tree or other inconspicuous structure. The association must make clear what its expectations are regarding the appearance of the equipment.
The “fear factor.” Some people may be afraid that the towers will give off harmful radiation, such as microwaves, radio waves or electromagnetic fields. Owners and residents may object to the placement of the towers based on these conditions.
Insurance and liability issues. Although the telecommunications company should be responsible for installation and maintenance of the equipment, the association must make sure it is adequately covered in the event of damage to the roof or other common areas.
Getting an agreement from your owners. It is important, as in all matters affecting community associations, to examine the governing documents and determine whether owner approval would be necessary for such a project, and how many owners would have to approve; but even if owner approval is not technically necessary under the governing documents, it’s good practice to notify owners and give them an opportunity for input. This minimizes the chances of trouble later if the owners decide they are not happy with the agreement.
All associations are unique. Before signing any contract, be sure to consult a lawyer to determine whether the terms of the contract are suitable for and beneficial to your community and in compliance with the governing documents.
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