Cities bet on cell towers as revenue source

Scrambling to shore up budgets battered by recession, job losses and foreclosures, Atlanta and several of its neighbors are casting their gazes to the heavens for help.

Specifically, to cell towers.

Plans to construct new towers -- and reap millions of dollars in rent -- have been floated recently in cities or school systems in Cobb, DeKalb and Fulton counties, and in some cases spurring vociferous objections from some residents. In one of the most wired areas in the country, the appetite for cell towers is growing.

Growing, too, is local government's need for new revenue sources. Leases for cell towers can earn local government more than $1 million annually, with the potential for more. The money isn't nearly enough to replace revenue lost to the recession. But an extra million dollars could, for example, pay for a dozen police officers in the City of Atlanta.

"It's all about the money, on both sides," John Lavelle, Atlanta's director of real estate portfolio, said of cell tower rent negotiations between the city and telecoms. The hope is to "get the best deal for citizens."

In this cell phone-saturated region, cell towers -- poles and steel lattices stretching more than a hundred feet into the air, occasionally disguised as Georgia pines -- have become a taxpayer issue.

Across the country, monthly payments to property owners can range from each tower can fall between $750 to $4,000 per month, said Andrew Schrage, a former hedge fund portfolio analyst focusing on the telecom industry.

Many property owners "really don't understand the value of the site," said Hugh Odom, a real estate and telecom attorney who represented AT&T for more than 1o years and now negotiates with telecoms on behalf of landowners. "These leases people hold are some of the least optimized assets they have."

Property owners routinely make the mistake of treating cell tower leases like typical real estate transactions, said Odom, president of Nashville-based Vertical Consultants. As a result, perhaps 90 percent of the owners are underpaid, he said.

In Atlanta, Mayor Kasim Reed's administration recently mulled ways to wring more money from the city's cell towers through more favorable contracts with the telecommunications companies that use them to blast signals throughout the city. A number of leases are set to expire by the end of next year.

Atlanta faces a $20 million cut in its budget next fiscal year. It reaps just over $1 million a year in rent from 41 leases spread across 21 towers and structures.Most of the leases run for 20 years.

There are great disparities between the amounts of cash municipalities make from cell tower locations. Gwinnett, Georgia's second most populous county, earns $160,000 annually from a collection of leases. Cobb -- with about 117,000 fewer people than Gwinnett -- earns much more, pulling in about $1.14 million.


The Atlanta area is one of the most wired in the country, according to Forbes. The magazine ranked the region No. 2 in the nation in 2010, ahead of competitors such as Seattle.

Residents around the metro area rely on the cell phone coverage and fast connectivity the towers can bring. The irony: nobody, it seems, wants a cell tower in their backyard.

"I get it," said State Rep. Karla Drenner (D-Avondale Estates), who is helping spearhead a non-binding July referendum aimed at cell towers at DeKalb County elementary, middle and high schools. "I have two cell phones and an iPad, and I want them to work."

In DeKalb County, Cobb County, East Atlanta and the northern stretches of Fulton County, proposal or construction of new towers has stirred angry opposition from parents worried about radiation and property owners fretting over a perceived threat to property values. 
The idea that cash-strapped municipalities need the money hasn't dampened the opposition.

T-Mobile and the North Fulton city of Johns Creek ended up in court after the city claimed that the company's application for a cell tower carried the wrong property owner's signature. Hundreds of residents protested the application.

Parents protested last year when Cobb County school board voted to approve towers at schools.

In July 2011, the DeKalb County school board approved the construction of towers at nine school sites, which are to go up later this year. The towers are expected to yield nearly $7.2 million for the school district over the 30-year leases.

Walter Woods, spokesman for DeKalb County Schools, said there are no plans to add additional towers beyond the nine locations already approved. That hasn't ended the controversy.

"I'm ready to knock on doors to talk about what a bad idea this is," said Drenner.


But if local governments want to wring more money of these arrangement, they must be aware of the growing competition.

In the future, much smaller antennas that could be placed on buildings or utility poles may reduce the need for cell phone towers, Schrage said. Femtocells, mini cell towers that can be installed in homes or businesses, could have a similar effect, he said. They have been installed by the tens of thousands.

But in recent years at least, the rivers of data has correlated with more demand for cell towers. So has a 2009 Federal Communications Commission "shot clock" rule that requires cities and counties to act quickly on tower proposals.

"As consumers and businesses demand more from wireless technology, they depend on a robust wireless network comprised of cell towers, critical infrastructure now and for the future," said AT&T spokeswoman Stephanie Walker. "Local governments play a critical role in ensuring their constituents have access to the latest wireless technology."

The specter of tower proliferation on private property remains a powerful threat for Atlanta's elected officials. That's despite assurances from property owner advocates such as Odom that telecoms would prefer not to incur the inconvenience and cost -- potentially hundreds of thousands of dollars -- to decommission a site and move from a city-owned lot to private property.

Atlanta City Councilman Howard Shook said telecoms might simply build new towers on private property if doing business with the city became too irksome.

"Things can always get worse," Shook said. "Boy -- if a couple of these (towers) start going up, we will hear it from our constituents."

Staff writer Patrick Fox contributed to this article.

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