TowerPoint Proposal – English

Congregational Vote THIS WEEK on the TOWERPOINT Proposal

WHEN:  through Sunday, July 5 at 11:59 PM

WHAT:  Should St. Mark’s sell the lease on the Verizon cell tower to TOWERPOINT for a term of  99-years in return for a cash settlement of $375,000?    Choose:  YES or NO

St. Marks Congregation Discussion: 
TowerPoint Proposal Information  for Acquisition of Verizon Lease (update May 31, 2020)

History and Current Status:  Since 2000 St. Marks has provided an Easement to Verizon to operate a Telecommunications tower (as well as generator and related equipment) on our Church premises. 

• The amount of rent has increased during those years. The current amount has been $1,705 per month ($20,460 annually) and is scheduled to increase this summer to $1,855 per month ($22,260 annually).

• Towerpoint (one of the larger tower acquisition companies in the U.S). has submitted an offer to acquire the Verizon lease associated with this easement. The primary terms and conditions are set forth in the following section:

Important terms and conditions  to consider: 

1. Towerpoint is offering a lump sum payment of $375,000.
   • The amount for a lump sum payment is based in large part on the current and anticipated revenues in the foreseeable future. 

2. The duration of this agreement would be for 99 years. Could also be for: 
   • 50 year term ($350,000 payment) or 
   • 30 year term.($300,000 payment) 

3. Realistically, however, the useful life of this arrangement will be a shorter span. Some analysts suggest closer to 8-12 years (estimate); although could be shorter. Projection: Beyond that timeframe, the telecommunication architecture will quite possibly change with the  current arrangement becoming outdated. This could result in a “decommissioning” of the Verizon lease and the removal of all equipment from St. Mark’s property. 

4. Regardless of the useful duration of this lease (short period or longer term) St. Mark’s keeps the full lump sum amount paid by TowerPoint. They assume the entire financial risk for the antenna tower becoming antiquated/outdated should the telecommunication technology/landscape change.   

5. In addition to the lump sum payment, St. Marks would receive 60% of any additional revenue generated by TowerPoint with additional Telecommunication companies they may market (TowerPoint would retain the remaining 40%). 

6. Should TowerPoint market any additional Telecomm companies (e.g., ATT, T-Mobile, et.al) TowerPoint has the right to an additional 250 square foot easement (maximum) on the Church property adjacent to the existing Verizon generator and tree antenna (monotree).

7. Should this be needed, St. Mark’s would require any new generator or related equipment be built on the slope adjacent to the current Verizon equipment (not otherwise useful space). 
8. This would not encroach onto the handicapped parking or trash bin area on the upper parking level; nor onto the parking spaces on the second parking level. 

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7. St. Marks would have significant authority in determining if these additional arrangements would be acceptable (approval/veto authority).
8. Unlikely this additional lease would involve a second antenna tree (monotree). 
9. St. Mark’s has maximum flexibility and discretion to independently contract with another Telecommunications company to build and lease an additional telecommunications tower. 
   • With this additional easement agreement St. Marks would receive 100% of the revenue.
   • With any such additional agreement this could remain as a monthly income flow or could also be ultimately sold with a lump sum payment. 
10. Towerpoint is a highly ethical and solvent company and one of the largest companies in the U.S. for acquiring tower leases. 
    • More than 4,000 such lease acquisitions with more than $1 billion in payments. 
    • Is an “End Buyer” and not a middle man broker company.
    • Have researched their company and they are highly regarded with an excellent reputation for being honest and ethical. Dealt with many churches/faith based entities.
11. There will be no tax liability associated with this TowerPoint transaction. 

• By utilizing the proceeds for St. Mark’s general fund (e.g. mortgage retirement and capital repair fund) there will be no Federal nor State tax liability. 

Next steps if St. Marks is interested in pursuing this:

• Would require Council and Congregational approval. 

• Receive and review their Letter of Intent (LOI). This would be an “Option” and as such: 

St. Marks could not engage in negotiations with other Lease Acquisition companies. Also, terms of the acquisition are confidential and not disclosed to others without their written consent. TowerPoint would expect we would proceed forward with this agreement in good faith. 

• Dick Bolin could augment their LOI via an addendum and insert terms and conditions important to St. Marks. 

• Signed LOI would allow TowerPoint to obtain:
  • copies of Verizon lease agreements and amendments,  
  • proof of rent payments, 
  • access to existing mortgage information, 
  • access to some basic organizational documents.
  • TowerPoint would fully expect St. Marks would then consummate this agreement with the final, comprehensive agreement to allow Towerpoint to acquire St. Marks Verizon Lease.   

• Upon signing the Letter of Intent would work on finalizing all the details in the final Lease Acquisition and Easement Agreement. Dick Bolin has volunteered to review the 14 Section final agreement and negotiate and “red-line” any supplemental “fine-print” provisions which need to be modified or removed to ensure this agreement is fair to St. Marks.  

10. Transaction would be completed approximately 90 days following Congregational approval. 

Attorney and Member, Dick Bolin’s Additional Evaluation after talking to 3 other Tower Acquisition Companies. (updated June 25, 2020)

Dear Sheri and Council, 

I believe I have completed an expeditious and hopefully meaningful evaluation of three different Tower acquisition companies. I have been in contact with:

1) TowerPoint (been in ongoing and serious discussion for 4 months). Then this week also with: 

2) Unison  Site Management  (discussion with President: Harrison Theros); and 

3) Airwaves Advisor Inc.   (discussion with President: Nicholas Foster). 

I will strive to provide my conclusions succinctly and clearly. 

1) TowerPoint is the better business deal.  All three are fairly comparable in terms of price, lease duration, and related terms and conditions. However, the terms are somewhat better with TowerPoint. For example, the lease duration term for the other two companies tends to be an additional five years for approximately the same price. I will also explain later why I feel the 99-year term is best for St. Marks. 

2) TowerPoint has their west coast (2^nd) headquarters in San Diego which is ideal.  Unison is based in Denver, CO. While Airwaves Advisor is in southern CA (Carlsbad) it is a much smaller company even though it also possesses a very good business rating and reputation. 

3) Based on some animated negotiation the past few months, the terms and conditions are more favorable with TowerPoint than are currently the case with the other two Companies. For example, we have negotiated a reduction from 5 (five) years to 3 (three) years for the time in which St. Marks may unilaterally terminate the Easement Agreement should Verizon vacate the property and TowerPoint cannot replace them. 

4) Over the past four months we have developed a solid business relationship with TowerPoint. This will translate into a more expeditious completion of this agreement. With the other two companies to some extent it will be “back to the drawing board” to secure more favorable terms and conditions. 

5) I would rate Unison Site Management as the second preferred choice. It is also a very large company, well established and highly rated. Their President is a wealth of knowledge. While Airwaves Advisors Inc. has been in business for 14 years, it is not as robust financially.

6) After much reflection, I would heartily recommend and endorse the 99-year lease duration option. This is after considering seriously the 50-year lease. My conclusions are the result of having serious discussion with these three executives as well as other technical experts. My reasoning is very straight forward: 

• We would be leaving an additional $25,000 on the table and the net effect and outcome will be exactly the same.  50 or 100 years are both considered “forever” options by the industry.
• There is approximately a 95% probability that the physical antenna and generator will be gone in the next 25 years. (could even be considerably sooner). 
• 5G is not a “friend” of these larger antennas.  Experts are anticipating that 5G antennas will lease for about $270/month, rather than the current $2,000+ monthly rent for our large antenna. 
• Telecommunication technology is advancing at an exponential rate (doubling every 18 months).  Everything will be different in 25 years; not to mention 50 years.
• Satellite technology and Loon technology by Google, as well as many other innovative technologies, will dramatically change the Telecommunication landscape. 

I hope this information is helpful, 

Dick Bolin   

Download and print Dick’s letter HERE

TowerPoint Proposal Q & A

May 31, 2020 Zoom Meeting – 17 people present
Poll Results at end of meeting:

A.         Does this proposal look like it could be a good deal for St. Mark’s?            

                        15 – YES (8 households)                      2 – Need more information

B.   This question is simply a TEST to see the level of consensus that exists among the congregation at this moment in time.  It is NOT a formal congregational vote.  At this moment, would you vote to approve this proposal if it went to a congregational vote?

                        15 – YES (8 households)                      2 – Need more information

Questions:

1.  How long is the Verizon lease? 

      a.   Originally a 5-year lease however automatically renewable for up to four additional 5-year periods by providing St Marks a 90 day notification of renewal in advance prior to the lease term end date. Following the total five 5-year terms this can continue in 1 year renewals unless St Marks provides written notice 90 days prior to the term date.    

      b.   However, Verizon can cancel at any time essentially with a 30-day notice (actually immediately).  This arrangement where Verizon can cancel essentially immediately while St Marks cannot is not a favorable condition for St Marks.

      c.   The monthly rent is based on the Consumer Price Index.  The original lease was for          $1,000/ month.  20 years later it is now $1,705/month.

2.   What liability does St. Mark’s have if the tower collapses, causes cancer or any other catastrophic outcome?

      a.  Our attorney, Dick Bolin, has indicated extremely minimal liability. All three entities would possess general liability insurance. Verizon would be primarily liable and TowerPoint would be secondarily liable. St Marks would be thirdly liable (tertiary) and would also retain liability insurance as would any other land owner. For all practical considerations and purposes, St. Marks  would be safe in this regard. Also as a practical matter, even with such a rare occurrence, any litigation (e.g. class action) would focus on the “deeper pocket” defendants (Verizon first and foremost and then TowerPoint).  While any entity or individual can theoretically be the subject to a lawsuit, the possibility of any such adverse consequences for St. Marks would be extremely unlikely.  

3.   What is TowerPoint’s business plan for sub-leasing the tower?

      a.   Up to now, Towerpoint has spoken in generalities. They will strive to do this within the next couple of years. However, their plans are somewhat vague.

      b.  Dick will push a little for best and worst case scenarios of future income potential for St. Mark’s from sub-leases.

4.   What would be done with the proceeds from the sale of the Tower?

      a.  Pay off the current $285,185 mortgage on the building, saving the congregation the       $4,339/month mortgage payment.   This loan matures May 1, 2026.  By paying off the     loan now, it would save St. Mark’s approximately $34,000 in interest.

      b.   The Council will work on creating a more detailed plan for the balance of the income,      which will be presented before the Congregational Vote on June 28.  At the moment, it will involve setting aside money for resurfacing the parking lot and any other important,            unfunded capital improvements.

5.   Is Dick Bolin an attorney?

      a.   Dick Bolin is an attorney and graduated from Univ. of San Diego (USD) Law School in 1978.  His       expertise is Corporate Law, and he supervised numerous attorneys for Mutual of Omaha during his career.   

      b.   Dick is Myrna Bolin’s son and currently retired.  He is volunteering to help St. Mark’s in    researching several legal concerns and we are blessed to have him in our St. Mark’s family!!

6.   Can we still collect rent during the 90 days it takes to close the sale of the lease?

      a.   Essentially yes. However, the current offer is more complicated in the terms and timing of this. It indicates St. Marks would actually be able to keep the rents for even two months following closing but reduce (prorate) the purchase price based on these two months of anticipated rent. This is typically described as a redirection period.  TowerPoint prefers to use the “redirection period” approach due to the lagging effect (e.g. St Marks would still be sent the rent checks payable to St. Marks for a couple of months after closing).  Since the net financial result is the same we should probably just go with this approach which works best for TowerPoint.  We would just need to ensure there is also a proration for this closing any time other than the first of the month.

7.   If we agree to sell the Verizon lease to TowerPoint, what will happen if the congregation sells the property at some point in the future?

      a.   The Verizon lease and TowerPoint ownership of that lease will be in a covenant that will run with the land upon sale.

8.   Why would TowerPoint be interested in a 99 year (forever) agreement?

      a.   Originally, we believe that TowerPoint is most interested in making money from sub-       leases on the tower over the next 8-12 years to recoup their cost of buying the lease and generating additional revenue for TowerPoint (which means 60% of any of that revenue would go to St. Mark’s.)

      b.   A 99-year lease would be a way for TowerPoint to ensure their control over one of the    highest points in western Chula Vista—a critical location for future wireless     communication or other related uses as technology changes.

9.   Assuming a second Telecomm company was marketed by TowerPoint (and then  Verizon later terminated the lease on St Mark’s property or went out of business with the pre-existing  arrangement): Would St Marks still receive the 60% share for the second agreement or could this be reduced?

      a.   We would get our 60% again only after TowerPoint has recovered the minimum   monthly lease.   This is further delineated in the contract sale documents in Section 5 (“Mimimum Scheduled Rent”).  Typically this situation with a reduced income could continue for five (5) years at which point, St. Marks could unilaterally terminate this Lease Acquisition agreement. However, Dick is in the processing of negotiating and reducing the maximum period to three (3) years and after which, St Marks could terminate this agreement (and still retain the lump sum payment at closing).   

10. What will the power output be for the Tower? 

Verizon operates their spectrum typically within these two RF bands.

CDMA = 800 MHz (mega hertz) and PCS=1900 MHz

Is it likely to be at harmful levels? Short answer is no. An excerpt from the article below is:

“Public exposure to radio waves from cell phone tower antennas is slight for several reasons. The power levels are relatively low, the antennas are mounted high above ground level, and the signals are transmitted intermittently, rather than constantly.” Also, “Radiofrequency emissions from antennas used for cellular and PCS [personal communications service] transmissions result in exposure levels on the ground that are typically thousands of times below safety limits.”

See the comprehensive article below for more information. https://www.cancer.org/cancer/cancer-causes/radiation-exposure/cellular-phone-towers.html

11.  What expenses will St. Mark’s need to assume in the sale of the lease?

      a.   St Marks would pay for its own legal fees (should be none with this transaction). St Marks would pay for the transfer/stamp tax and recording fees. Also any income tax from the transaction (should be none as a tax exempt organization and used as anticipated).

      b.   TowerPoint would pay for their legal expenses. Also standard closing costs, title insurance policy, and due diligence costs (e.g., verifying accuracy of records provided to them). St Marks would negotiate to insert a clause indicating any other unforeseen transaction expenses would be borne by TowerPoint. 

ZOOM MEETINGS

This is a recording of the TowerPoint Q&A Zoom Meeting held on May 31st at 4pm which was open to the congregation.

This is the recording of the Third Meeting about the TowerPoint Proposal, on June 14th at 4pm and was open to the congregation. The second meeting was in Spanish on June 7th at 4pm and is available on the TowerPoint Spanish language page.