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HomeMy WebLinkAbout7. C5 First Amend Cedar Commission Memorandum REPORT TO: Honorable Mayor and City Commission FROM: Brian Heaston, Project Engineer Craig Woolard, Director of Public Works SUBJECT: Authorize the City Manager to sign a First Amendment to License Agreement for the Use of City of Property by MTPCS Inc with Cedar TowerCo, LLC. MEETING DATE: December 15, 2014 AGENDA ITEM TYPE: Consent RECOMMENDATION: Authorize the City Manager to sign a First Amendment to License Agreement for the Use of City of Property by MTPCS Inc with Cedar TowerCo, LLC. BACKGROUND: The City of Bozeman licenses use of the hilltop tank property on Kenyon Drive for multiple private entities to operate cellular phone network equipment. An existing license agreement (attached) is in place with MTPCS, Inc which allows for tank-mounted antennas and ground-based network equipment (cellular assets) at the hilltop tank site. The cellular assets licensed for use by MTPCS (dba Cellular One) have been acquired by Cedar TowerCo, LLC, a Sprint subsidiary. The license agreement has been assigned accordingly from MTPCS to CedarTowerCo, LLC (licensee). In consideration of the required annual rental payment the City receives from the licensee thirty (30) cellular phones each with 300 minutes of monthly airtime. The agreed value of the phones/minutes is $10,800 which is applied toward the annual rent amount. Sprint currently does not operate a cellular network in Montana as it is presently building its network assets in the region in order to provide future service to Montana. In light of this situation, Sprint has an agreement in place with AT&T which allows for AT&T’s operation of Sprint’s cellular assets at hilltop tank. On August 31, 2014, control of the cellular network was transferred from MTPCS to AT&T through Sprint’s operational agreement. It is no longer efficient, nor necessary, for the City to receive phones/minutes from the licensee in consideration of rent reduction as the City has an existing enterprise agreement in place with Verizon which provides for cellular services for the entire City of Bozeman organization. The City remains in possession of the thirty phones received from the licensee. These phones have been ‘ported’ to the Verizon network and fall under the City’s enterprise contract with Verizon and operate on the Verizon network. No further phone/minute services will be provided by the licensee now or in the future. The attached ‘First Amendment’ to the license agreement eliminates the consideration given to phones/minutes. The City will receive its required rental amounts in cash moving forward upon the amendment being executed by Cedar TowerCo, LLC. It is recommended that the City Commission authorize the City Manager to sign the First Amendment. 33 UNRESOLVED ISSUES: Cedar TowerCo requested additional language in Section 7 of the current license agreement that would provide for an ‘indeterminate’ number of renewals terms. The City Attorney has reviewed their proposal and indicated he does not support the proposed addition. As such, it is not in the license agreement before you. Essentially, the City does not believe this is an appropriate amendment to make to the License Agreement and it is unduly broad, nor is it germane to the central issue of the First Amendment: elimination of rent reduction for services no longer received. This renewal issue has not been resolved with the CedarTower Co; thus, they may choose to not sign the First Amendment. Should this occur, CedarTower Co would be in violation of Part 1 of the License Agreement as they are not providing phones/minutes to the City as prescribed. ALTERNATIVES: As suggested by the City Commission. FISCAL EFFECTS: By executing the First Amendment, and upon Cedar TowerCo execution, annual rent payments due under the license agreement will increase $10,800 annually as in-kind consideration of phones/minutes will no longer occur. Full cash rental amounts required of the original license agreement will be provided by the licensee moving forward. Monthly plan expenses for the 30 phones that have been ported to Verizon will increase the monthly Verizon contract amount commensurately. Attachments: First Amendment to License Agreement Original License Agreement Report compiled on: December 5, 2014 34 Site Name: Bozeman Water Tank Site ID #: SP67XC054 FIRST AMENDMENT TO LICENSE AGREEMENT FOR THE USE OF CITY PROPERTY This First Amendment to License Agreement for the Use of City Property (“First Amendment”) is entered into as of the latter of the signature dates set forth below, by and between the City of Bozeman, with its principal offices located at 121 N. Rouse Ave, Bozeman, MT 59715 (“City”), and Cedar TowerCo, LLC, a Delaware limited liability company, whose address is 6391 Sprint Parkway, Overland Park, Kansas 66251-2020 (“Tenant”). City and Tenant are sometimes collectively referred to herein as the “Parties.” BACKGROUND A. City and MTPCS, Inc. (“MTPCS”) entered into that certain License Agreement for the Use of City Property dated October 21, 2005 (“Agreement”) for the right to use a portion of the water tank and appurtenant property located at Kenyon Drive in the City of Bozeman. B. Tenant has succeeded to the interest of MTPCS under the Agreement, all in accordance with the permitted rights under Paragraph 3 of the Agreement. C. The Parties acknowledge that the City, as partial consideration for the Agreement, received a certain number of cellular phones and plan minutes (“Phones and Minutes”) from MTPCS that Tenant will no longer be able to provide, and the Parties mutually agree to adjust the Rent, as set forth herein, as adequate compensation for the Phones and Minutes. D. The Parties desire to modify certain terms and conditions of the Agreement, all in accordance with the terms and conditions set forth below. For good and valuable consideration, the receipt and sufficiency of which are acknowledged, City and Tenant hereby agree as follows: AGREEMENT 1. Rent. Effective September 1, 2014, the second paragraph of Section 1, Rent, of the Agreement is hereby deleted in its entirety, and Tenant shall no longer be under any obligation to provide Phones and Minutes to City. City acknowledges that Tenant has already paid the sum of $17,939.95 for the 2014 annual period. Tenant shall further remit the additional sum of $2,700.00 to the City as consideration for the Phones and Minutes that will no longer be provided to the City for the period from September 1, 2014 through December 31, 2014. The City acknowledges and agrees that Tenant shall not owe any additional rent or consideration for the 2014 annual period. Beginning January 1, 2015, the annual fee payable under the Agreement shall be $29,889.55. The Rent shall continue to escalate in accordance with the terms set forth in Section 1 of the Agreement. 2. General Terms and Conditions. a. All capitalized terms used in this First Amendment shall, unless otherwise defined herein, have the same meaning given to them in the Agreement. b. This First Amendment may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Any electronic or facsimile signature shall be considered to have the same binding effect as the delivery of a hard copy original signature. c. Each of the Parties represents and warrants that it has the right, power, legal capacity and authority to enter into and perform its respective obligations under this First Amendment. 35 2 3. No Other Changes. Except as expressly set forth in this First Amendment, the Agreement is otherwise unmodified, and the remaining terms and conditions of the Agreement shall remain in full force and effect and are fully incorporated herein. In the event of any inconsistency between this First Amendment and the Agreement, the terms of this First Amendment shall control. IN WITNESS WHEREOF, the parties execute this First Amendment on the date(s) stated below. City: Tenant: City of Bozeman Cedar TowerCo, LLC By: By: Name: Chris Kukulski Name: Title: City Manager Title: Date: _____________________________ Date: _________________________________ (Date must be completed) (Date must be completed) 36 37 38 39 40 41 42