Why is this a story?
May 25th, 2009 at 9:59 am by David FarrarI am puzzled as to why this is a story:
A Horowhenua farming couple are outraged that Telecom is paying them a pittance to lease land for a transmission tower.
Wendy and Mark Rolston say instead of the meagre $199.36 a year they are getting, they should be paid around $10,000.
Sites usually net landowners at least $5000 a year, telco experts say.
At first you do wonder about it.
The farm’s previous owner struck the lease on January 12, 1988 for just $150.
That edged its way up with inflation over the years to a princely $180.11 by late last year and the lease came up for renewal in January this year for a further 21-year term.
Okay so they brought the farm knowing what the lease was worth up until 2009.
Via David Shaw of DTZ property consultants in Wellington, Telecom initially extended an offer to increase payments from $180.11 to $3000.
“My client Telecom New Zealand is prepared to offer you a revised rental of $3000 plus GST per annum for the microwave site on your property at Arapaepae,” he offered the Rolstons on January 23.
The couple wrote back, rejecting that and seeking $10,000.
Shaw in turn wrote back last month withdrawing the $3000 offer because Telecom had decided to stick to the original $199.36.
Now here is what I don’t get. The 21 year lease has expired. This means they can now kick the transmitter off the farm in the absence of a new agreement. So just do so if you don’t think Telecom will pay you enough.
I can’t see what Telecom has done wrong here.
May 25th, 2009 at 10:03 am
I obviously don’t know the facts of the case, but I wouldn’t take this as a given.
Vote:May 25th, 2009 at 10:09 am
It’s not quite as simple as “kicking it off the property”. But no, it isn’t a story, it’s a manipulation of the media to assist in a business negotiation. I’d guess that the someone at the Herald knows this and is playing along. The owners obviously want the transmitter because of it’s potential associated income and are attempting to damage telecom’s internal perception of their public image in order to get negotiation back on track. Their track. The $10,000 track. Are either of the Rolston’s, or members of their immediate family, former union reps?
Vote:May 25th, 2009 at 10:12 am
I hope Telecom has already offered these greedy pricks’ neighbours $4,000 for a new lease.
Vote:May 25th, 2009 at 10:19 am
I think they were negotiating and Telecom negotiated in their usual arrogant manner.
Give them a reasonable counter offer with an invitation to get their hardware off you land if they don’t like.
Whats the issue? and use of the media is not an apropriate tool, just a common one and i have little is any sympathy for either party.
Vote:May 25th, 2009 at 10:20 am
What else are they going to do with the land? Feed a sheep part of the time? That’s got to be worth a hell of a lot less than $180 a year.
They were dumb to reject the $3000 which was, essentially, money for nothing.
Vote:May 25th, 2009 at 10:33 am
More dumb people.
Vote:If this is an indication of an average person’s negotiating skills and a media’s desperation to get a cheap and easy story to plug some gaps between advertising, then we’re stuffed.
May 25th, 2009 at 10:34 am
Without seeing the agreement itself, the article mentions that this is a renewal (not the end of the agreement). Often with older leases, such as those with 21-years terms, the rights of renewal can be infinite and the lessee (Telecom) just needs to give notice of this (that they want to extend for a further term of 21 years). However usually the rent is renewed at market rates at each of these milestones, so it would be unusual for the originating lessor to agree to continue annual rate increases of CPI even through future renewal terms. In any case, the couple in the article have learnt a valuable lesson. Of course they don’t blame themselves and say they wish they could afford an expensive lawyer. Actually some brains accompanied by some common sense is all they needed.
Vote:May 25th, 2009 at 10:49 am
Monday is often a slow news business day. I can see why they went to the Herald, but I cant see why the herald published it. FWIW I think they were insane not to take $3000 for ground rent on a 500 sq metre bit of land.
Vote:May 25th, 2009 at 11:01 am
If it’s not much of a story, why bother blogging the latest affirmation that yes, people are greedy? I’m more annoyed by the idiotic HSBC add that will fire off on rollover. And seeing as it covers most of the bloody header, you get that as soon as you try to get back to your menu.
Vote:May 25th, 2009 at 11:02 am
If I were the farmer, and unhappy with the lease rate offered, I’d just build a very high fence around the site in question. Deer-fencing or chicken-wire would make a pretty effective RF screen at those frequencies.
Then we could sit down and negotiate the cost of removing that fence
More than one way to skin a cat!
Vote:May 25th, 2009 at 11:04 am
Pascal, don’t you have a Flashbocker installed?
It’s a “must-have”!
I don’t mind watching ads (I don’t have an ad-blocker installed) because that’s a fair exchange of value but, when advertisers want to *assault* me with their distracting animations or commandeering of my browser then I say “no”.
Vote:May 25th, 2009 at 11:04 am
Well put Sean ^^
Vote:May 25th, 2009 at 11:05 am
There we go, THATS creative negotiation.
Vote:May 25th, 2009 at 11:19 am
I don’t think the landowners are greedy, they just want market rental for the tower. The artical does not cast Telecom in a good light, a story of the greedy mega corporation sticking it to the small guy by offering such a pittance. This is not good PR for Telecom who should be paying the $5,000.
Vote:May 25th, 2009 at 11:37 am
>I don’t think the landowners are greedy, they just want market rental for the tower.
Errr… The article said they rejected an offer of $3k because they wanted $10k, which is double the article’s assessment of market value.
This isn’t a bit of pricey inner city real estate. It’s a bit of grass in the middle of no where. They want the sort of rental you could expect for a smallish inner city apartment, but they don’t have to maintain or insure the structure. It really is money for nothing, but they wanted too much money for nothing.
Vote:May 25th, 2009 at 11:40 am
I think He-man must be an expert in valuing these types of property, hence his considered assessment of the FMV at $5000. Or else all the words in his post after “I dont think” are redundant.
Vote:May 25th, 2009 at 11:50 am
I support she males comment.
“I don’t think”.
Vote:May 25th, 2009 at 12:15 pm
surely the point of the story is “big bad corporation”. Doesn’t actually matter whether they are reasonable or have a contract. They are big therefore bad, end of story.
Vote:May 25th, 2009 at 12:48 pm
To be fair the lease is not really about the land ( which is a small area ), but primarily it’s about the access to that land where the transmitter sits & without knowing details of that access I’d be wary about commenting on what the lease should be valued at.
Vote:May 25th, 2009 at 12:51 pm
Vodafone put a tower on the neighbor’s place at the top of my hill about ten years ago. They put a very good road right thru his property which gives him excellent access that he didn’t have before. Vodafone pay him $7,000 per year.
The only problem I have with this arrangement is that the tower is 50 feet outside my property …. ie, on the wrong side of the fence.
Meridian are paying $7,000 per year, per wind turbine to anyone that is willing to lease them land.
Vote:May 25th, 2009 at 1:12 pm
I forgot to add that Meridian also put in very good access roads … they have to in order to build their 80 metre towers.
Also.
If you know that the going rate for having such things on your land is around about $7 grand a year, wouldn’t you ask about $10 grand to leave yourself a bit of negotiating room?
Just a thought … or am I being a tad silly?
Vote:May 25th, 2009 at 1:14 pm
The big bad corporation is trying to bully the small guy into accepting such a tiny payment of $190 per year. That is what the story is about. Like I said before, negative public relations for the mega corporation. Let them move their gear if they don’t like the deal.
Vote:May 25th, 2009 at 1:20 pm
aardvark – take a look at the photo of the tower!! The cost of a deer fence tall enough to obscure that baby would be significant.
I wonder if there is any obligation for the land owner to offer Telecom the opportunity of renewing the lease? Re-locating the tower if the lease expires would surely cost Telecom a lot more than $10,000 so I would have thought the farmers were in a pretty strong position to give Telecom a good shafting…
It looks like The Herald are trying to reach their weekly target of sensational stories with a “real New Zealanders GOOD, big corporate telco BAAAAD” story, and they know they are close but they can’t work out exactly how to paint Telecom the bad guy on this occasion…
Vote:May 25th, 2009 at 5:48 pm
Clearly no-one, including DPF, RTFA.
FTA “We did make an offer of what we considered to be reasonable market value ($3000) and that was turned down so according to the original terms of the lease the $199 rental continues”. So the lease clearly hasn’t expired.
Further, given that it’s a microwave tower, it’s serving increasingly less purpose, so the chance of getting no money for nothing, instead of money for nothing, is clearly increasing.
Vote:May 25th, 2009 at 6:56 pm
You can’t compare cellphone towers with microwave sites when discussing market rentals. Mobile towers help generate a lot more revenue than microwave sites. Hence landowers get paid a greater rental amount. That also goes for Meridian wind towers. Also, $7000 is not neccessarily the market price for cell towers. Rentals differ depending on location, availaibility of other suitable sites etc
Have had some experience in these matters, and my view is the landowners here should have accepted the $3000.
Vote:May 25th, 2009 at 8:01 pm
I have done a few of these in my former role, and I have paid more than $12k in some cases for strategic sites. Normally a good site has a few other attributes (easy access, lack of competitors to create interference or block competitors getting best sites!). In this case, If I were them (and depending on the lease terms), I’d simply invite Vodafone to share the site (Telecom hate not having exclusive use of a site). OR else i’d plant a tree in the line of the microwave dish, even install a wind turbine for pumping water to tank near top of hill. Many things can make the site unattractive or needing compensation to remove obstacles.
$199 isn’t worth the hassle of having Telecom use and abuse your property anytime they want. Market value is between $7k and $10k. And even with telecoms increased fibre, Microwave still provides N+1/N+2 options using disparate technologies so is still important in the overall network design (as much as I wanted to get rid of it!)
Vote:May 25th, 2009 at 9:40 pm
Going rate for a mobile mast in England (North) is £8k.
So the $8k marker makes sense.
On some land we had, there was a 10 year liscence for Vodafone to have access, and occupy a small trance of land.
We asked them to move it when all the concern about RF came into the Public Domain.
Which they did, and made good the hole that was left.
The speed of transfer gave me every reason to believe they were quite used to it.
Some ineer city schools are earning 30-40k GBP, much to the chagrin of concerned parents.
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