Condo Media - July 2014 - 30

COVER STORY
COLUMN NAME

Telecom Contracts

Leasing rooftop space for cell tower installations is hands down the least troublesome and most profitable option available
to community associations. "It's the only
option likely to generate a large amount
of revenue," says Kenneth Bloom, CPA,
a principal in the Massachusetts accounting firm Bloom Cohen Hayes LLC, who
provides accounting services primarily to
community associations.
Cell tower leasing arrangements are
also relatively trouble-free for community associations, says John Shaffer, an
associate in the Massachusetts law firm
Marcus, Errico, Emmer & Brooks, who
has negotiated many of these contracts.
"The telecom company does everything. All the association has to do is
collect the payments."
"Potentially, it is a very nice way for
a community association to enhance
revenue," agrees Hugh Shaffer, PCAM,
on-site manager at Harbor Towers in
downtown Boston. But not all communities are candidates for cell tower
installations, though. The buildings
have to be tall enough, they must have
sufficient roof space to accommodate
the equipment, and they have to be in
a location where telecom companies
need cell towers.
The community's rooftops also have
to be more desirable than those of other buildings in the same area; competition for these contracts, understandably, may be intense. Hugh Shaffer says
Harbor Towers has been approached
twice by telecom companies interested
in discussing a rooftop lease, but "for
whatever reasons, the contracts went to
other buildings."
Desirable as cell tower contracts may
be for associations, there isn't much
boards can do to attract them. "You
can't go out and get these deals," John
Shaffer notes. "They come to you."
And they don't always produce as many
dollar signs as boards anticipate. Your
negotiating position will obviously be
much stronger if your building is the
only viable option in the area, he says.
If there are several equally appealing
alternatives, telecom companies will
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Condo Media * July 2014

have no incentive to offer any of them
top dollar for a lease.
Cell tower contracts offer a relatively
rare combination: decent (if not always
exorbitant) revenue without any significant disadvantages for the association.
But owner approval, if it is required,
may not be assured because of concerns
that exposure to radio waves may increase cancer risks. Although scientists
have found no conclusive evidence of
such health risks, some people are still
uncomfortable living in close proximity
to cell towers.
Given those concerns, Hugh Shaffer
suggests that even if boards have the
authority to negotiate leasing agreements on their own, they should discuss the plan in an open meeting with
owners first and proceed only if most
approve.
"You have to consider whether the
revenue is worth the risk of alienating
a large portion of the community," he
cautions.
Boards also have to consider the risk
that the presence of cell towers might
discourage some prospective buyers
from purchasing units in the community. That may not be a reason in itself
for rejecting a contract, Hugh Shaffer
emphasizes, but it is a factor boards
should consider in assessing the pros
and cons of these transactions.

for this privilege.
Companies will also pay handsomely
to negotiate a new contract or renew an
expiring one allowing them to use the
existing "home wires" leading from a
cable box to owners' unit. Other companies could install their own wires, but
using the existing ones is obviously far
more cost-effective for them.
Pat Brawley, CMCA, AMS, PCAM,
an industry consultant whose firm
Central Management & Consulting
Services LLC advises community associations and management companies,
says one community received a substantial amount for negotiating a 10-year
home wire use agreement. But this was
a one-time payment, she says, not the
monthly revenue stream a cell tower
lease would generate.
Some management companies have
negotiated "bulk service" agreements
with cable providers, offering exclusive
home wire access to several communities to produce a much larger per-door
fee than smaller communities would
likely receive on their own.
Robert McBride, CMCA, AMS,
PCAM, president of The Dartmouth
Group Inc., AAMC, AMO, says his
company has successfully negotiated
per-door fees for some communities
this way.

Cable and Internet Service

Communities that employ maintenance
staff sometimes offer on-site handyman services for a fee to residents, who
appreciate the convenience, the attractive pricing (usually much less than they
would pay to hire handymen on their
own), and the security of having association maintenance personnel, whom
they know, work inside their units. But
boards that expect these operations to
generate significant income are likely to
be disappointed. "I've never seen them
priced to generate a profit," Bloom says.
Managing the services can also be
difficult. "You have to make sure to
keep the work within the skill set (of
the staff)," Hugh Shaffer says. "You
have to know when to say no," McBride agrees. That typically means

Associations may find communicationsrelated revenue options inside their
buildings as well as on their roofs in the
form of exclusive marketing agreements
with cable service providers.
Federal law requires associations to
grant access to any company that wants
to provide communications services to
residents. So, they can't negotiate the
exclusive service contracts that were
once common and could be quite lucrative for associations. However, boards
can give a selected company the exclusive right to promote its services in the
community by circulating advertising
material or holding informational meetings with owners, and many companies
are willing to pay a sizable per-door fee

Handyman Services

Condo Media - July 2014

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