Cashing In: Is Political Pressure Mounting On Staff & Investment Commission?

   Today (Tuesday) the Investment Advisory Commission was scheduled to meet in a specially called meeting to reconsider selling 10 of the 22 cell antenna leases between the City and cell phone companies.  At the last minute the meeting was cancelled without notice, but it could be rescheduled on only a 24-hour posting to the public.

    Observers are questioning whether the broker for the proposed deal, Tony Ingegneri of ATS Communications, is partnering with a political consultant and any council members to create pressure on City Staff and the Commission to approve a deal.  The Staff recommendation currently opposes the sale (text below). 

    Josey Julian, City Treasury Manager, tells the Dispatch the complexities of the deal simply require more time to analyze.  Negotiations are continuing with the potential buyer, Communications Capital Group, to increase the offer or extend its deadline of October 6, she says. 

   In August the Commission gave ‘thumbs down’ to a similar plan to sell and monetize all long-term contracts with cell phone providers. The providers pay the city for land leases as locations for their cellular transmission antennas.

    The specially called meetings and alleged October 6 deadline are raising eyebrows because of the large amount of money involved and the proximity of the upcoming city council election campaigns.

    Staff was opposing the revised plan agendized for today’s cancelled meeting. City Treasurer Irwin Bornstein explained his recommendation against the updated proposal as follows:

In addition to financial analysis, there are a number of other considerations that should also be taken into account in determining whether to sell these leases. Such assets are not typically sold unless there is a specific need to raise cash. The lease revenue currently received is used to pay operating expenses of the City. The leases we would be selling are projected to generate between $100,000 and $300,000 per year (including both the City’s and ATS’s share of the lease revenues) over the next 30 years. Does the City wish to trade this operating revenue for funds to finance a capital project now? In our case, we are pursuing the sale of these leases to partially fund the Marguerite Tennis Center project. As noted in the August 15 IAC agenda report, the sale of the cell site leases to fund a capital project is the equivalent of borrowing money to finance it. Is the City willing to “issue bonds” to finance this project? Another consideration: the sale of the leases represents a “zero-sum game” in that the gain to one party in the transaction represents a loss to the other. The profit to be made by CCG in this transaction must come from revenues that would otherwise flow to the City.

    The plan will likely go the City Council regardless of the decision by the Investment Commission.  Councilman Frank Ury and ATS, the company brokering the proposed deal, have been the leading proponents for liquidating the assets.  ATS stands to earn a large commission, but Ury’s interest is unclear.