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Lawsuit: Water district ‘strong-arming’ cell companies with rent hike

11/06/2015 6:00 AM |

Riverhead Water District

Cellular companies leasing space on the town’s water towers have filed federal lawsuits claiming the Riverhead Water District is trying to “strong-arm” them into paying more by not allowing workers onto the properties to repair equipment until they agree to the new terms.

MetroPCS, a wireless service provider that has rented space at the water tower on Route 58 since 2011, claims the water district attempted to raise its rates after the company merged with T-Mobile, according to court documents filed Wednesday.

When MetroPCS failed to sign the new agreement, the company claims it was no longer allowed onto the town’s property to upgrade its own equipment even though the current lease grants the company unlimited access, according to the lawsuit.

“The lease expressly grants Metro the right to replace and upgrade its equipment, but the Riverhead Water District refused to give access because it believes it can strong-arm Metro and force Metro to renegotiate the lease to the Riverhead Water District’s advantage,” the complaint states.

T-Mobile, which rents water tower spaces on Pulaski Street and Lewin Hills, has also filed a lawsuit and makes similar allegations.

After the two cellular companies merged in 2013, MetroPCS started replacing its antennas with ones that could transmit T-Mobile’s network. However, according to the MetroPCS lawsuit, the Riverhead Water District hasn’t allowed that work to take place.

In addition, MetroPCS claims the water district wants to shorten its current lease term and charge substantially more rent as a condition to allowing the necessary replacement work to proceed.

Currently, MetroPCS has a five-year lease with the option for five additional five-year extensions, according to the lawsuit, and the company has been paying the town about $41,500 annually.

Bench Strength Partners, a Garden City consulting firm the Town Board hired last year, has proposed revising that lease term to 10 years with only one five-year renewal and adding a $78,000 per year license fee, which would increase each year by 3 percent or the Consumer Price Index increase, whichever is more, the lawsuit states.

As for T-Mobile, the cellular company has been paying about $43,800 annually to lease space at the Pulaski Street water tower and nearly $44,100 for space at the Lewin Hills water tower, according to the complaint.

Bench Strength Partners has proposed increasing the license fees to $82,600 annually at the Pulaski Street water tower and up to $86,400 for the Lewin Hills water tower, with the same annual increase of  3 percent or the Consumer Price Index increase, whichever is greater, according to the lawsuit.

In addition, Bench Strength Partners has proposed requiring a water district employee on-site during upgrade work and that employee is to be reimbursed $150 per hour by the cellular company.

The town’s 2014 budget anticipated $655,000 in revenue from leases on the water district towers and the Town Board hired Bench Strength Partners last year to find out if the town was appropriately charging cellular companies leasing space on town-owned land.

Under that agreement, the consultant earns a percentage of additional revenue the towns receives. For example, if the town receives between 20 and 30 percent more than the anticipated $655,000 from water tower leases, then Bench Strength Partners would receive 15 percent of that additional revenue.

Bench Strength Partners could receive up 30 percent depending on how much the town makes in additional revenue.

Councilwoman Jodi Giglio proposed hiring Bench Strength Partners last year and said at the time that every time a cell company upgrades its equipment on a town facility, it is supposed to notify the town, and the town, according to its contracts, should be paid more.

“We’re not getting our fair share of the fees,” Ms. Giglio said at a January 2014 Town Board work session. “Every time they make an amendment, they are supposed to report to the town and the town is supposed to get increased fees.”

When contacted by a reporter about the cellular companies’ recent lawsuits, Ms. Giglio made similar comments.

“If the town is owed money, then [the cellular companies] should pay,” she said. “We have to protect the ratepayers.”

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Photo: Riverhead Water District’s water tower on Pulaski Street in Riverhead. (Credit: News-Review, file)

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