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� <br />EN HILLS <br />MEMORANDUM <br />DATE: June 1, 2�11 <br />TO: Hanarable Mayor and City Councilmembers <br />FROM: Jill Hut.�nacher, Community Development Direcior'��' <br />SUBJECT: Zayo Site Lease Agreement <br />Back�round <br />T-Mobile currently leases space from the City to operaie an equipment building at the Cummings <br />1'ark (Fernwood) water tower. T-Mobile curren�ly pays an annual lease rate of $19,096 for the <br />300-sq�are-foot equipment b�ilding and antenna space on the water tower. Zayo Group, LLC is <br />working with T-�Mobile to upgrade their T1 Iine with fiber-optic connections. The technologica.I <br />upgrade is related to the 4G capacity that most wireless providers are building. <br />Although the fiber-optic �quipment could be installed within the T-Mobile building, Zayo Group <br />hopes to seli services to additianal vvireless provid�rs and has requested a Iease of twelve square <br />�eet outside of the exist�ng T-Mobile bi.ulding to accomYnodate an �quiprnent cabinei. Zayo <br />Group has not requested any space on the water iower. The ner�v equipment is entirely �ard- <br />wired and does not include any wireless components. <br />Zayo Group is upgrading facilities throughout the metropoiitan area. Zayo Group suggested a <br />lease rate that was proportianal a� a square foot basis to the T-Mobile lease. Siaff contacted <br />several cities to inquire about �ease rates. Many cities are char�ging no or minimal rents for the <br />Zayo upgrades. Of the cities contacted, tk�e highest lease rate vvas five thousand dollars annually. <br />Given that there is a precedent for that lease rate, and given the limited space at the Cuzxan�ings <br />Pa�rk water tower praperty, staff negptiate� an initial lease rate of five thousand dollars azazxua�ly <br />for the twelve square feet xequested by Zaya Group. <br />Site Lease A�reeinent <br />Following are key terms of the Site Lease Agreemen� <br />+ The initia� annual rent is �ve thousand dollars, with annual adjustments of three percezat. <br />• The lease term be�ins on the earlier of tk�e date Zayo Grou�p commences installaiion of <br />the equipment, or six monihs after the date that the Site Lease Agreement is approved. <br />• Tk�e �ease term is five years. Zayo Group may exter�d the lease �ox f ve five-year terms. <br />City oftlyden Hills <br />City Council Meeting of June I, aor r <br />Page 1 of 2 <br />