Selling Water Tower Cell Sites

Water tanks serve as ubiquitous collocation structures with sale values akin to conventional cell towers. There are over a thousand water towers in the United States that have wireless equipment attached to them. Most of these water towers are publicly owned with the water utility leasing space to wireless carriers on the water tower. Additionally, many water tanks are former fire suppression towers which are no longer in use and have found new life as robust wireless communications structures where capacity is not in question. The industry calls these leases “tenant improvements” because they are an improvement of an existing structure owned by another party that is not a cell tower.

The primary reason carriers like water towers are that they may not be required to go through a significant zoning process to get approval for use of the water tower. Water tower landlords may charge more than typical tower owners for placement of equipment because, in most jurisdictions, placement of equipment on public water towers is permitted by right or is a path of least resistance. Because of this, it is not uncommon to see water towers with multiple wireless users. The zoning regulations will often require that applicants for new towers demonstrate why they can’t use existing structures like an existing water tower first. This creates a situation where many water towers are the only option for the placement of cell sites within a given area. It also increases the value of the individual leases and the water tower as a tradable asset which can be readily monetized.

However, because the income generated by the placement of equipment on the water tower is ancillary to the operation of the water system, most water utilities do not consider the water tower in a similar light as a cell tower. SteelTree Partners has assisted owners of water towers with selling the “cell tower” component of the water tower. Our clients are often surprised to learn that the “cell tower” component of their water tower has a significant value just like a cell tower.

Water utilities may have been approached in the past to sell their leases. These third party lease buyout firms purchase the lease revenue. They will also attempt to suggest that they will market the water tower to wireless carriers and share 50% of the rent. The problem with these types of proposals to a water utility is three-fold:

  1. because the water tower is often the only option for the carriers, there is no need to market it as carriers who need coverage in the area will be forced to use it. Thus, the utility keeps 50% of the revenue when it could have had 100%;
  2. by selling the leases, the utility often agrees to more onerous terms and obligations in the lease buyout agreement than it has in its existing lease agreements; and
  3. the offers by lease buyout companies are almost always less than what the utility could get if it were to sell the “cell tower” component of the water tower as an asset.

A water utility may not wish to sell its leases or the tower at all. However, if you are contemplating selling the water tower leases, also consider the sale of the “cell tower” component of the water tower. The purchase agreements for the “cell tower” component are no more onerous than the lease buyout agreements and can be structured to eliminate concerns over safety and access. The water utility would receive more money for the sale of the rights to operate the “cell tower” component of the water tower.

If you would like to find out more about possibly selling your water tower assets and the service we can provide whether you are a public utility of a private owner, please contact us. We offer a free verbal assessment of the value of the “cell tower” component of your water tower and have handled the sale of numerous water tower assets in the past at market clearing prices.