Short on funds for government services? Many government entities have suffered low tax revenues in 2020 due to the unprecedented financial impact of the COVID-19 pandemic. Sales taxes typically amount to about one-fourth of annual state and local tax revenues. However, due to the pandemic, social distancing and business closures have resulted in declines in consumer spending at certain establishments, such as restaurants, hotels, and many others. These types of businesses are usually taxed more heavily, so state and local governments may be experiencing particularly steep declines in 2020 and beyond.
As a result of these significant tax revenue losses, government entities may find it more difficult to meet vital community needs, such as elementary, secondary, and higher education, law enforcement and corrections, and trash pickup. Since state and local governments generally strive to balance their annual operating budgets, they may find it difficult to borrow money to finance deficits, resulting in dire financial need this year and the future.
Government entities occasionally lease portions of their properties and assets to wireless and communications companies to make extra money for annual operating expenses. In exchange for an agreed-upon fee and time period, telecommunications providers and cell tower companies set up towers on government land or buildings to provide dependable wireless connectivity to commercial and residential customers in the surrounding areas.
One efficient way for cities, counties, and municipal corporations to start immediately funding essential community needs is by selling the cash streams from wireless leases they already have in place on governmental properties and structures, while still owning the sites the leases are on. Third parties may even offer and pay multiples of the lease revenues to provide the much-needed upfront cash, which is money that can immediately be put back into the community for services and assets such as health and hospitals, highways and roads, and public welfare.
In fact, city council members and commissioners can allocate the money however they see fit and are permitted. There are no rules and restrictions from the buyers on what government entities can do with revenue generated from wireless lease buyouts. In addition to, or in lieu of, funding essential community needs, the money made from selling the revenue streams from wireless leases can be put toward non-critical projects and endeavors. These may include things like the construction of a public auditorium, extending a central city bike path, or establishing a free virtual concert series.
Another major advantage of wireless lease revenue buyouts is that they can help government entities reduce their accounting for multiple streams of revenues, especially if the municipality has numerous wireless leases that are income producing. Additionally, the same third party businesses that buy the lease revenue may also offer lease management and marketing services. Should the governmental entity engage in such an arrangement it can release the municipality or other entity from the burden of managing leased towers and infrastructures or coordinating lease logistics with telecommunications companies and personnel. As well the management and/or marketing company may find other carriers as potential lessees thus generating even more revenue.
Keep in mind that third-party companies can buy lease revenue streams on any government property and municipally owned sites. These may include parks, annexed land, water towers, and tops of commercial buildings. Additionally, more than one lease may be sold at one time, which creates even bigger possibilities for generating revenue for both essential community needs and non-essential public projects.