4 May 2018 — 1720 mdt
About the annual payment for cell tower
proposed for the roof of Flathead High School
School District 5’s cell tower page reports the annual payment to the district will be “…$20,400, to be paid to KPS, in equal monthly installments on the first day of the month, in advance.” The initial contract would be for five years, with the cell tower company's having the option to renew four times for a possible 25 years.
But the proposed contract with the school district says the annual payment is $16,800, increasing at the rate of two percent a year.
4. RENTAL. (a). Rental payments shall begin on the Commencement Date and be due at a total annual rental of $16,800.00, to be paid in equal monthly installments on the first day of the month…
(c) The annual rental for the second (2nd) year of the initial term and for each year thereafter, including any and all extension terms, shall be increased to an amount equal to 102% of the annual rental payable with respect to the immediately preceding year.
The first year’s rent would be $16,800, but the 25th year’s rent would be $27,022.
The two percent annual increase appears to approximate the current rate of inflation. But it makes no allowance for a higher rate of inflation in the future. SD5 would be wise to insist on two percent a year or the rate of inflation as defined by the Consumer Price Index, whichever is higher.
At the moment, the district needs to resolve the discrepancy between the the district’s annual rent figure of $20,400 and the proposed contract’s figure of $16,800.
The district also needs to present an economic analysis of the project. At a minimum, a present net value for the contract should be calculated using a range of discount rates. Using a discount rate of three percent, I calculated a PNV of $363,315 over 25 years. At a discount rate of two percent, the PNV increases to $411,765. Those numbers should be rounded to the nearest thousand. Moreover, the actual PNV will be a bit lower after the district’s contract management costs are subtracted from the string of rents.
The contract, incidentally, is mostly boilerplate, heavily biased toward the cell tower company’s interests, and should be considered nothing more than a starting point for negotiation. SD5 has plenty of leverage in the situation, and should not be afraid to use it to get an agreement that meets the district’s needs and concerns.
The deadline for public comment on the project now is 11 June. Links are on the district’s cell tower page.