Building Access and Speeding the Process with The Model Agreement
 
September 17, 2002
 
Eric Fishman - New York
James M. "Jim" Norman- Ft Lauderdale

Everyone involved in transactions relating to access to commercial buildings can benefit from using The Model Agreement in their negotiations.  Many property owners, managers and telecommunications service providers (TSPs) seeking to either serve tenants in the building or use the roof of the building, have already discovered the value of using this document or significant portions of it.  The document, formally named the Telecommunications License Agreement (Multi-Tenant Office Building), but more commonly called The Model Agreement, is the product of the efforts of the Real Access Alliance (the Alliance), and is available on the Alliance’s Web site, www.realaccess.org.

While some property owners and managers are using The Model Agreement or significant elements of The Model Agreement in the normal course of their dealings with building tenants and TSPs, there are others who remain unaware of the existence of The Model Agreement or are unfamiliar with its contents and its utility to accelerate and enhance the ability of TSPs to gain access to commercial buildings while permitting property owners to preserve their valuable asset.  In this article we will explore the context in which The Model Agreement was initially developed, explain certain key elements of The Model Agreement and mention certain market realities and how The Model Agreement is being used to address current issues and concerns.

Background

The Model Agreement responds to the need to have property owners, managers and TSPs have a common starting point for their dealings with each other in matters relating to access for telecommunications in multi-tenant office buildings.  With the myriad issues and competing priorities that arise in the negotiation of building access agreements, the theory was, and is, to narrow and more clearly define those issues and competing priorities through the development of a “model” agreement as the template to at least begin most building access discussions that are initiated by a tenant’s request that a particular TSP be permitted access to the building.  Since the development of The Model Agreement last year, our experience has been that some property owners also have been using either The Model Agreement or various elements of The Model Agreement in other situations such as when a TSP seeks to pre-provision a building unrelated to a tenant request for service, and when a cellular or similar provider seeks access to the roof for an antenna.  The Model Agreement was never intended to, and does not attempt to dictate where the parties in a transaction will ultimately end up at the conclusion of their negotiations, but it does provide the interested parties with a solid place to start. 

There were many forces at work and many supporting parties behind the development of The Model Agreement by the Real Access Alliance.  The mission of the Alliance is to encourage competition among telecommunications companies in the delivery of reliable, high-quality services to tenants, while protecting the private property rights of property owners.  The members of the Alliance are the Building Owners and Managers Association International, Institute of Real Estate Management, International Council of Shopping Centers, Manufactured Housing Institute, National Apartment Association, National Association of Home Builders, National Association of Industrial and Office Properties, National Association of Real Estate Investment Trusts, National Association of Realtors, National Multi Housing Council, and Real Estate Roundtable.  The 11 organizations that comprise the key members of the Alliance represent the interests of more than 1 million individual and corporate members of the various organizations.  Each of the key members of the Alliance played an active role in the development of The Model Agreement.

A unique aspect of The Model Agreement, and one of its chief merits, is that it is a product of intense and constructive collaboration between the real estate and telecommunications industries.  In working toward the final draft, the Alliance actively solicited comment from all sectors of the telecommunications industry, and incorporated numerous proposed revisions.  Those TSPs who were motivated to play an active role in shaping the document were welcomed into the process, and indeed influenced the tone and tenor of the document.  For example, although property owners typically insist on many decisions being made in the owner’s “sole and absolute” discretion, The Model Agreement was reshaped in response to comments by some of the TSPs to remove that language in favor of a standard of reasonableness or being “commercially reasonable.”  This was no small feat and is representative of the collaborative effort that resulted in The Model Agreement.

Structure and Use of The Model Agreement

While the initial mandate for the development of The Model Agreement was for use in response to a tenant request for service, The Model Agreement is structured for use in diverse circumstances relating to commercial office buildings.  The first 2 ½ pages are the transaction-specific terms and conditions.  These pages contain the essential deal points of special interest to the parties such as commencement date, term, renewal provisions and financial conditions.  Next are the general terms and conditions.  These span approximately 23 pages, and address the body of the relationship of the parties.  Next are the various exhibits and schedules.  There are 14 exhibits and four schedules.  Not every exhibit or schedule will be important in every relationship.  The parties can use those that apply and are welcome to use others based upon their unique transaction and circumstances.  Certain exhibits will always be a useful part of any access agreement because they identify and define the equipment, the location of the equipment and the services to be provided.  Nonetheless, The Model Agreement does not prescribe how parties should negotiate or document their agreement.

The Model Agreement is not intended to dictate where parties, negotiating at arm’s length, will end up.  There are blanks in the document for the parties to decide all periods of time for performance and all economic terms and conditions of their relationship.  For example, the parties may decide whether the license fee, if any, will be a fixed, monthly amount or tied to a profit-sharing formula or some combination of the two.  Similarly, the parties may decide if there will be annual increases in the license fee or other increases upon extension or renewal of the term.  The Model Agreement anticipates that certain building owners, property managers or TSPs might have their own unique “special provisions” or crucial issues.  These can be addressed in the first few pages of The Model Agreement, which are the transaction-specific terms and conditions, or by an exhibit or schedule attached to The Model Agreement.  Either way, The Model Agreement provides a common point of beginning for the dialogue, and in that way can make the entire negotiation process faster and more keenly focused on open issues.

Key Elements and Key Concerns

Fill in the Blanks and Behave Reasonably. The Model Agreement is designed with blanks to be completed by the parties in the course of their negotiations.  These include not only more obvious items, such as the effective date and commencement date, but also the exhibits that will identify the equipment, equipment room space, rooftop space and communications spaces and pathways.  Taking it even one step further, The Model Agreement leaves it to the parties to complete the notice periods, cure periods and all time deadlines.  In completing the blanks, the parties are encouraged to apply the standard that permeates The Model Agreement, that of “reasonableness” or a “commercially reasonable” standard.  There are very few instances in which a discretionary act is qualified by other than a reasonableness standard.                  

Strive for Parity. The Model Agreement may be used in different ways by different property owners and managers as best fits their business plan and method of operating.  One of the chief goals of The Model Agreement is some degree of parity among the various types of carriers (wireless/wireline; incumbent/competitive carriers) and the way in which they may gain access.  The focus here is on service to tenants.  Those using The Model Agreement may have a better chance to gain faster access into a building, and achieve more efficient arrangements for equipment installation, maintenance and repair.  For example, under Sections 8(c) and 9, building entry by the TSP during normal business hours requires no prior notice, but does require compliance with the normal security procedures of the building.  Entry to cure an outage or disruption in the delivery of the provider’s services to building tenants also requires no prior notice.

It is an important reminder to everyone that the building entry and security compliance aspects of The Model Agreement were drafted prior to the events of September 11, 2001.  Recent experiences indicate that property owners and managers who have modified the procedures for daily and after-hours access to their buildings will modify the access provisions of any agreement with TSPs and any other vendor who comes to the building.  For example, while access to the roof is considered essential for a licensee with an antenna or dish on the roof, it is unlikely that owners of commercial buildings in major urban settings will permit access to the roof except during normal business hours and with prior notice.  Any roof access outside of normal business hours, if permitted at all, is likely to also require prior notice so that a building engineer or other representative of the owner can be present, and the party seeking the access will pay for all of the building owner’s additional expenses, such as the building engineer’s overtime charges. 

With so many roofs now “locked down” there are different considerations of what are “commercially reasonable” requirements for building and roof entry.  The provisions of The Model Agreement are a good starting point for these issues. The very fact that The Model Agreement raises these types of matters can assist those using The Model Agreement to make certain that the issues are raised and discussed by the parties and not inadvertently overlooked.                

Customer Relationships. The Model Agreement limits owner involvement in the relationship between the TSP and its tenant customers.  In the early stages of the development of this issue, building owners seemed eager to play a significant role in the dealings between the providers and their customers (the owner’s tenants).  During the drafting process, however, this view shifted, and the final document reflects a more limited role.  Among owners, there remains some concern that providers might sign tenants to service agreements that have a term longer than the provider’s access agreement with the property owner, or that providers might solicit tenants as the provider who has been “endorsed” or “recommended” by the owner.  Nevertheless, most property owners are prepared to deal with the TSPs solely as to their access into the building, and deal with their tenants through their respective leases to clarify what the owner will and will not do for its tenants.  Since The Model Agreement should be used in response to an access request by a provider supported by a tenant demand, the owner should be able to focus on the question of access, while the tenant protects its own interests.

Recent experiences have demonstrated that The Model Agreement can be a powerful tool in raising issues relating to building tenants and vendors serving the TSPs.  For example, TSP bankruptcies and discontinuation of service have left tenants without service, left building owners with mechanic’s liens filed against their property, and left unanswered questions about how to deal with abandoned property.  These issues, and many others like them, are raised in The Model Agreement.      

What the Future Holds

The Model Agreement is intended to be the vehicle that grants providers access to buildings and services to tenants faster and more easily.  This goal can be realized as The Model Agreement is more frequently used by property owners, managers and service providers.  Like anything else that is intended to be a form or “model,” it should also be used to raise issues and questions that will need to be resolved in the context of the particular transaction by or among the specific parties.  The business and operational environment changes constantly.  By anticipating and identifying the issues in the relationship of the parties, The Model Agreement provides a framework to accommodate change.  Those who make the effort to use The Model Agreement should be amply rewarded as they can quickly focus on their limited issues, and bypass the lengthy negotiation process that access arrangements often entail.  This type of expedited service can serve all interested parties well.         

For more information, contact Jim Norman or Eric Fishman, toll free, at 888-688-8500, or via e-mail at jim.norman@hklaw.com and efishman@hklaw.com, respectively.  Eric Fishman is one of the primary drafters of The Model Agreement and writes and speaks frequently on the subject of building access.  The Model Agreement and related materials is available from Holland & Knight LLP on CD ROM. 

*Roger Platt is Senior Vice President and Counsel of the Real Estate Roundtable.  Mr. Platt helped coordinate and advise the Real Access Alliance with respect to the development of The Model Agreement.  Mr. Platt can be reached at 202-639-8400 or via e-mail at rplatt@rer.org.