04-30-07 Item 7B, Water Tower Lease Agreement

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additional five year terms unless the City or Minnesota Cellular withdrew from the contract at least 30 days before the beginning of a new five year term. There are five other provisions on page six of the original contract that would allow the City or tenant to withdraw from the contract. Unless prematurely terminated, this contract was set to continue to April 18, 2014. In the original contract, the monthly rent was set at $600 plus $25 for each additional microwave antenna with a maximum of two additional microwave antennas for a potential total monthly rent of $650. According to the contract, the monthly rent would increase at the beginning of each new five year interval (year 6, 11, 16, and 21). The rate of increase was tied to the consumer price index (CPI) with the general idea being that the monthly rent would be adjusted every five years to compensate for inflation over the previous five year period. For example, the rent would increase in year six depending on the change in the consumer price index (essentially the inflation rate) from years one through five. First Contract Amendment On April 26, 2002, the City approved the first amendment to the original contract. At some point between 1989 and 2002, the company's name changed to AT&T Wireless Services; however, the name change does not affect the status ofthe contract. The primary reason for the first contract amendment was to permit AT&T Wireless to install up to three additional cellular antennas on the water tower. With each new antenna, the rent would increase by $135.00. The first contract amendment also included a new provision that permitted the City to charge AT&T Wireless for any increased costs in maintenance for the water tower that could be attributed to the cellular equipment on the water tower. The method for increasing the rental rate, the provisions for termination, and the contract expiration date did not change with the first amendment. Proposed Second Contract Amendment The proposed second amendment includes four primary modifications related to: . Extending the contract, . Changing the termination provisions, . Changing the base rent and rate of increase, . Future expansions and equipment upgrades. The cellular antennas are now operated by Cingular Wireless, and Black Dot Wireless is acting on their behalf. First, the second amendment would extend the contract to May I, 2037, with the first five year term start on May I, 2007 (Black Dot has now indicated the new contract starting date may need to be pushed back). The lease would automatically renew for up to five additional five year terms unless the City opted out of the contract prior to the start of a new five year term. 2