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ARDEN HILLS SPECIAL CITY COUNCIL WORK SESSION – NOVEMBER 23, 2020 2 renegotiation of the current lease at the North Water Tower. AT&T requests the following changes to the terms of the lease agreement: 1. Decrease from 2021 lease rate of $49,499 (2020 rate plus 4%) to an annual rate of $38,400.00 2. Decrease from current 4 percent annual adjustment to a 12.5 percent adjustment every five year’s commencing January 1, 2026. 3. Extension of lease from current sunset of December 31, 2044 to December 31, 2045. 4. Addition of new Permitted Use provision as outlined in the letter. Public Works Director/City Engineer Blomstrom explained staff conducted a lease rate comparison with the cities of Roseville, Shoreview and New Brighton for cell tenant leases on water tower facilities, as provided in Attachment B. Lease rates generally range from $28,549 to $44,400 per year, with annual lease rate adjustments from 1.5 to 5 percent. AT&T has made substantial investments in their equipment at the North Water Tower over the past three years, which may result in challenges for them to terminate the lease and relocate to other facilities. However, AT&T claims there is a possibility they would consider relocation based on the terms and conditions of the existing site lease agreement. Staff commented further on the lease agreement and requested feedback from the Council on how to proceed. Councilmember Scott questioned if all of the other antenna vendors have ground equipment. Public Works Director/City Engineer Blomstrom stated AT&T was the one vendor with a ground generator. Councilmember Holden inquired if there were any problems with the generator if this was a liability to the City. Public Works Director/City Engineer Blomstrom reported the liability was with AT&T and not the City of Arden Hills. Councilmember Holden stated she could support a small decrease to the lease contract, but not the decrease proposed by AT&T. Mayor Grant commented he could support the City’s rental rate coming down slightly as well, after reviewing the rates being charged by neighboring communities. Councilmember Holden suggested the City consider moving forward with the rental rate proposed by AT&T with a 2.5% increase annually. She reported this would keep Arden Hills in the ballpark when compared to neighboring communities. Councilmember Scott proposed the rental rate be set at $40,000 per year with a 2.5% increase annually. Councilmember McClung stated he was not excited about renegotiating a lease in the middle of the term. He recommended the lease be negotiated with the lease term was up.