Deputy City Manager
Lease agreements on city assets can provide a funding stream that benefits cities. Mankato (population 41,202) deployed this idea about 20 years ago, and it has resulted in revenues that we’ve used for many different communication infrastructure projects.
Mankato has agreements with four wireless carriers to enhance customer connectivity by leasing space on the city’s water towers, communication poles, civic center building, and streetlights.
The average lease agreement is $26,000 per year, and most are long-term—ranging up to 25 years. Most are structured with a five-year renewal period. Annual increases are typically up to 5 percent.
Last year, the City of Mankato ventured into an agreement with a local provider to extend service installation to all small cell equipment providers on seven of the city’s streetlight poles. Most local cell provider competitors followed this lead and have their own agreements, which increases their network capacity.
Small cell providers are connected by fiber optic cable to major cell towers. Costs for these agreements are around $12,500 for the initial contract, and annual streetlight lease fees of $1,400 per pole. The annual adjustment on this type of agreement is generally 2 percent.
Here are a few basics and lessons we’ve learned about communication infrastructure agreements:
Mankato is very happy with these arrangements. They bring in revenue for the city and provide better cellular cover-age for residents, while reducing the number of unattractive cell phone towers.
The City of Wanamingo (population 1,088) has three wireless Internet providers that rent space on the water tower. These arrangements were all made to facilitate residential and commercial needs for Internet service and choice in the community.
Resident and business needs
The City Council heard from citizens in 2014 about their need for a choice of Internet services. They were looking for service that could provide better speed and reliability. Residents needed this to enable them to work from home. Specific requests regarding telecommuting involved one vendor whose service is certified by Mayo Clinic of Rochester for its employees’ telecommuting needs. Access to such jobs is important for attracting and keeping residents. For an outstate community, those jobs can be the difference between growth and stagnation.
Additionally, businesses required higher Internet speeds and redundant service to compete in the global market. Wanamingo is home to a number of local, regional, and global businesses that rely on the Internet to accomplish a variety of tasks, from basic to complex. So they were interested in the ability to get service from more than one provider—that redundancy is critical in case of outages.
Providers seek city space
The Council was also approached by three providers about putting wireless Internet hardware on the city’s water tower. So the Council developed a policy that includes an application process and objectives such as maintaining aesthetics, maintaining and enhancing safety, verifying compatibility with pre-existing equipment, and examining current and future needs.
During the 60-day review process, councilmembers and staff look at the location of equipment, space needed, and requirements such as electricity, frequency equipment operates at, and potential future needs. The Council approved each of the space rental agreements after the reviews.
The Council negotiated compensation with the first provider and applied the same compensation rates to the two providers that followed. Consistency of compensation was important for the Council to advise providers of the set fees.
From each provider, the city receives $100 per month, plus free Internet service at six locations in the city (four city-owned buildings and two public places). This compensation has allowed the city to enhance its technology by creating a revenue source for upgrades and redundancy of Internet service at locations such as City Hall.
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