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6.3.B. - Page 1 REPORT To the Honorable Mayor and City Council From the City Manager July 11, 2011 SUBJECT First Amendment to the Lease Agreement with New Cingular Wireless PCS, LLC. RECOMMENDATION Approve, by resolution, the first amendment to the lease with New Cingular Wireless PCS, LLC (New Cingular) to provide a third extended term of five years commencing on July 29, 2011 and expiring on July 28, 2016. BACKGROUND On June 10, 1996, the City Council adopted resolution number 12786 approving the lease agreement and bidding documents for land consisting of a portion of the Emerald Lakes Hills Water Tank property for a communication site and authorizing a call for bids. Bay Area Cellular Telephone Company, a California general partnership doing business as Cellular One, was awarded the bid. On July 29, 1996 the City Council adopted resolution number 12827 and entered into a lease agreement with Bay Area Cellular Telephone Company to lease a portion of the Emerald Lake Hills Water Tank property for operation of a communication site. Bay Area Cellular Telephone Company later merged with New Cingular who became the successor in interest. The term of the initial lease was for five years with an option to renew for two successive optional extension terms of five years each. New Cingular opted to renew the lease for those two successive extension terms with a final expiration date of July 28, 2011. Staff recommends that the City Council approve this first amended lease agreement to provide a third term of five years with New Cingular with rent at $30,000 annually (an increase of 11.3 %), commencing on July 29, 2011. ALTERNATIVES The City Council may elect not to enter into this agreement, but in doing so will cause the general fund to forego $30,000 per year in rental income. FISCAL IMPACT Leasing this communication site has a positive financial impact on an on -going basis for next five years.