Ever wondered about those strange-looking silver clusters of hi-tech-looking gear you've seen sprouting from city roofs? Maybe you should. They are wireless cell phone antennas - and they can make money for your co-op or condo.
That's right. Your co-op can become part of the wireless revolution, leasing roof space to such companies as AT&T, Sprint, Verizon, and others so that they can deliver calls to their customers' cell phones. It's good, steady income for those buildings whose roofs meet the needs of the wireless companies, typically contributing a minimum of $1,500 a month to their coffers.
Some buildings in particularly prime locations can house several antennas at once, which means big revenue for leasing out a small parcel of roof real estate. "It's a good way to earn some extra income," says Brian McCarthy, former board president at Skyview, a 1,304-unit Riverdale co-op that has leased roof space to Nextel.
If your building is looking to increase revenue, making a deal with a wireless provider to install an antenna might be a good way to bring in some extra cash. But there are a number of considerations to keep in mind. Since the wireless companies are only interested in locations that can help patch a hole in their service network, your roof might not even be an attractive site. The money earned from the agreements is considered "bad" income in terms of the Internal Revenue Service's so-called "80/20" tax rule for a co-op (to keep its tax status, 80 percent of its operating income must come from shareholders).
The leases themselves are long-term, since the wireless companies seek to recoup their substantial investments in the rooftop sites, so co-ops need to make sure the agreements are airtight before entering into them. (Also, some shareholders might be especially concerned about potential health risks caused by radio frequency waves generated by the antennas on the roof, even though there has been no definitive research proving such a connection.)
The industry has slowed down slightly in the last few years, although wireless companies say there are still opportunities out there. "Each time you add customers you need to add capacity," says Michael Bonhomme, manager of network real estate for the New York metropolitan area for Verizon Wireless. "You can't have those busy signals. We're constantly looking for sites. It's ever-present. It's ongoing."
Network engineers determine the weak spots in a provider's coverage map, and then consultants or agents are dispatched to make deals with building owners whose roofs might help patch the service hole. "We have a team of real estate professionals that go out in that area," says Jim Myers, assistant vice president for site development at Sprint. "They start knocking on doors, literally, and seeing if the landlords would be interested."
Co-ops and building managers who want to offer their rooftops for consideration should contact the "site development" departments of the wireless companies. Even if there is no immediate need, most companies will keep your address in a database of potential sites.
If your roof does make an attractive site, here's what's involved in setting it up. A rooftop wireless installation is referred to as a cell station, PCS station, cell site, or base station. The setups include antennas and electronic equipment. Typically, the wireless companies need to install several panel-shaped antennas (ranging from four- to six-feet tall) on top of the roof, as well as a ten-by-twenty-foot shed that houses the transmitters and assorted radio equipment that power the signal broadcast (this shed could also be set up in a basement room). Coaxial cables are installed to connect the antennas and the broadcast equipment.
The gear is very expensive and an important part of the wireless service network. Therefore, the wireless companies usually seek long-term leases for their rooftop installations, ranging anywhere from 10 to 25 years. Nearly all the companies demand 24/7 access to the equipment in case something goes down or needs to be serviced. Installation of all the equipment usually takes about one month, with managers reporting nothing particularly noisy or unwieldy about the process.
There is no standard lease agreement regarding this type of installation. All the details are negotiated between the wireless companies and the buildings, including the price paid. Is there any way to know if your building is worth a premium to a wireless company?
"Pricing is a function of location, it really is a function of the density of users," notes Sprint's Myers. "If you've got a [building] that's situated along a major highway or next to a major shopping mall where people congregate, those tend to be more valuable."
Attorneys and managing agents who have worked on wireless antenna agreements say that while the leases tend to be pretty straightforward, there are some sticky points to look out for. Attorney Steve Goldman, a partner at Brown Raysman Milstein Felder & Steiner, says the boards should insist on non-exclusive agreements that could prevent them from entering into agreements with other wireless providers (although representatives from the wireless companies say this is not an industry practice).
Goldman also suggests that the leases should not hamstring your building financially. "You certainly want to make sure that the agreements are subordinate to your financing," he says. "You don't want them to be self-renewing without notice. You want to be able to get rid of them or make a decision whether or not you want them."
Insist on an escalation clause in the lease agreement that allows for the amount of money paid to the building to increase over time. Vito Mangini, a senior account manager with Tudor Realty Services, has set up wireless leases that are revisited every five years for the length of the lease. The board has 60 days to notify the wireless company if it doesn't want to renew the lease after every five-year period, with the rent going up three percent at every five-year interval.
Make sure that the installation doesn't interfere with the roof or jeopardize the warranty. The wireless company's contractors should take the proper steps necessary to protect the roof during the construction. Property manager Tal Eyal of Cooper Square Realty says that any cables running from the antennas to the transmitters should be elevated a few inches above the roof floor so as not to interfere with the drainage system.
If your building is landmarked or located in a historic district, then the Landmarks Preservation Commission must approve the antenna installation. Typically, the wireless company is responsible for getting the necessary approval and permits.
So why have some boards, even those approached by the wireless companies, turned down the offers? The main concerns are potential health risks stemming from the radio frequency (RF) waves emitted by the antennas and broadcast equipment. These RF waves are used to transmit the signals from the antennas to the individual cell phones in the area; it's essentially the same principle as radio and television broadcasting, only the antennas and installations are much smaller.
Ever since cell phones became widely used in the mid-1990s, there have been concerns and rumors that the devices can cause cancer and brain tumors. But almost all the research and studies on the topic have failed to demonstrate any adverse health effects from the use of the phones. While prolonged exposure to high levels of RF waves can be dangerous, both the cell phones and the wireless antennas emit only low levels of RF waves. The Federal Drug Administration and the Federal Communications Commission regulate the amount of RF energy that the phones and base stations can emit.
While there are no definitive long-term studies to prove cell phones and antennas are either completely safe or constitute a health risk, all the evidence indicates that they are not a danger. Dan Collins, chief technical officer at Pinnacle Telecom Group, says that the antennas are safe. His firm is often hired by the wireless companies to make reports about the projected RF levels from a potential site, and has spoken to concerned co-op boards in the past.
"Is there a health risk from the normal operation for you [if you are] in the vicinity? The answer is no," he says. "Typically, the exposure levels from RF leakage from electronic appliances at home are higher than that from radio antennas."
Still, some boards are skeptical of these claims and have voted to turn down the offers. Managers say it depends on the nature of the building and the shareholders. Some are more conservative, others are more willing to believe the studies and take the word of the wireless companies.
"They didn't want to be exposed to the possibility of environmental risk," says Eyal, describing one East Village board that turned down the offer. "It was a substantial amount of money that would definitely eliminate assessments or increases on the maintenance for the specific year. They decided they didn't need the income."
If your building goes ahead with a cell phone agreement, make sure that you notify your accountant so your co-op doesn't run into problems with 80/20 issues. If that is a concern, there may be ways to satisfy your building's needs. Eyal suggests that the wireless company could help pay some of the costs of a capital project instead of paying the co-op directly, for example.
Wireless roof antennas can be a good way to generate income with relatively little hassle. But as with any lease agreement, especially a long-term one, make sure that your board attorney reviews it. A recent New York Times article detailed the plight of a Connecticut order of nuns that had planned to sell some land in order to save its historic 40-room mansion, only to have the plans blocked by Omnipoint, which had signed a contract to build a wireless antenna on the property a few years before. But if everything does check out, then that unused roof can suddenly start making money for your co-op, courtesy of a few million New Yorkers and their love of talking.