Leasing and licensing council land and buildings. Ins, outs and special considerations with telcos

The Local Government Act (“LGA”) sets out the various parameters within which councils have the right to lease or licence community land and buildings to other parties. The purpose of the lease or licence must be in accordance with the plan of management and the core objectives for the categorisation of the land (sections 36A to 36N LGA). The purpose must also be one which falls within the prescriptive and definitive list set out in section 46(1) LGA – including the provision of public utilities, public roads, recreation, events, and facilities that promote physical, cultural, social and intellectual welfare (eg. clubs, daycare centres, art centres).

The LGA also has provisions that increase transparency and competitiveness as the term of the proposed lease gets longer, noting that:

• if community land is to be leased for more than five years (including options) to anything other than a non-profit organisation, the lease may only be granted by tender, and may only be granted after public notice and exhibition of the proposal, notice to owners/ occupiers of adjoining land and surrounding owner/occupiers for whom the subject land is likely to be a primary focus. A 28 day submission period follows, and Minister’s consent will be required if an objection is received.

• if community land is to be leased for more than 21 years (including options), the Minister for Local Government must approve and there must be special circumstances to justify the long term.

• the term of lease or licence may not exceed 30 years (including any option to renew).

The Telecommunications Act 1997 (Cth) (“Act”) grants telco carriers specific rights and powers designed to enable them to deliver their network services with confidence over time, including in relation to council-owned land.

Those include the right to inspect the land, remove trees and vegetation, install and maintain facilities, and alter the position of other utilities such as water, gas mains and electricity cables, provided that the carrier complies with the notice and other requirements set out in the Act (which is often why they prefer to enter into a lease).

The far-reaching nature of these rights can place councils in a delicate position when negotiating with telcos. That does not mean, however, that councils’ hands are tied. When negotiating a lease with a carrier, we believe councils should adopt a commercial approach and be aware of the following provisions:

• try to limit the breadth of the permitted use, particularly by avoiding references to use of the ‘Land’ generally (keep to a particularly defined premises)

• avoid broad clauses which grant a licence to use the ‘Land’ generally (keep to a defined route for access, cables, etc. the location of which requires council’s consent)

• ensure that make good requirements include the whole of the premises/land used by the telco, including under the surface, back to the condition it was in when the carrier first took occupation (not the commencement date)

• carefully check the wording of the assignment clause, as the carrier will usually want the ability to assign without consent in certain circumstances

• carefully check any clauses which restrict council from granting rights of occupation to subsequent occupiers (eg. occupiers who may operate telecommunications equipment or cause interference to the telco’s premises) and resist any requirement to obtain the telco’s consent to such deals/rights of termination

• carefully check any clauses which require council to support the telco’s application for permits or approvals, which is particularly problematic for councils as consent authority. A ‘no fetter’ clause should be included.

• check for clauses which permit the telco to terminate early (eg. where service levels drop or interference emerges). Such clauses should allow for an objective assessment, and not be left entirely to the telco’s opinion.

• carriers will often make a contribution to council’s legal costs relating to the preparation, negotiation, execution and registration of any leasing documentation, capped at a certain amount.

Most importantly, avoid clauses where council waives the requirement for the usual notice that the telco must provide under Schedule 3 of the Act before exercising its statutory rights. At the very least, such clause should specify that it does not survive the expiry or earlier termination of the lease.

Below we have included a few specific solutions to questions we have encountered when discussing these matters with councils – if you have any other queries, don’t hesitate to get in touch.

Q: Regarding the clause in the Telecommunications Act allowing the provider access to adjoining land for guy anchors and access – should this be under licence or are they allowed in the Telecommunications Act?

A: The definition of ‘facility’ under the Telecommunications Act is broad, and would incorporate guy anchors. Therefore, a carrier would be able to exercise its Schedule 3 rights to inspect, install and maintain such a facility provided it complies with other requirements set out in the Act.

If negotiating a lease with a carrier, the land to which the guy anchors are attached should form part of the leased premises. A licence over a defined part of the surrounding land could also be granted for access/maintenance.

Q: Infinite nature of statutory rights means infinite access right is logical. But doesn’t this pose a problem under community tenure legislation?

A: For the term of the lease, the carrier’s occupation of council land must be in accordance with the
parameters set out in the Local Government Act (including the time limits on length of term).

Once that lease has expired or has been terminated, the carrier no longer occupies the land pursuant to the lease. If the carrier insists on continuing to occupy the premises, the carrier must comply with its obligations under the Telecommunications Act and the carrier will be occupying council’s land pursuant to its Schedule 3 powers (rather than under a lease which may fall foul of the time limits set out in the LGA).

Q: If a Council Plan of Management doesn’t specifically refer to telco use, and telcos have a statutory right to locate their facilities wherever needed, isn’t there an insoluble problem?

A: Council’s use of community land must be in accordance with the Plan of Management and the
parameters for each category of community land set out in sections 36 to 36N of the Local Government Act. However, section 46(1)(a) generally permits grant of a lease, licence or other estate for the provision of public utilities.

If a carrier exercises its rights in relation to council land, that is out of council’s control and council
would therefore not fall foul of the LGA provisions.

Section 47D of the Local Government Act does state “the exclusive occupation or exclusive use by any person of community land otherwise than in accordance with a lease, licence or estate to which section 47 or 47A applies … is prohibited”. But it is likely this relates to occupation or use granted by council, as opposed to occupation or use obtained by the carrier’s exercise of powers under the Telecommunications Act.

Q: What are our options if a carrier offers a rent that is way too low for renewal?

A: This is a matter for commercial negotiations between the parties. Council could obtain a market rent valuation from a suitably qualified valuer to support its position.

If negotiations break down, council could consider giving the carrier notice that the lease has expired, terminating any holding over period and requiring the carrier to vacate and make good in accordance
with the terms of the lease.

However, this could see the carrier invoke its statutory Schedule 3 rights to maintain its facility. If the lease contains a provision waiving council’s right to receive notices under Schedule 3 of the
Telecommunications Act, and that clause does not expire when the lease expires, the carrier could exercise those rights without notifying council (and council would lose the opportunity to object
under the Telecommunications Act).

If the carrier relies on its statutory rights, it would only be obliged to pay compensation to council if section 42, Schedule 3 (compensation for financial loss or damage suffered by council) or section 62, Schedule 3 (compensation if it could be said the land had been acquired) apply. That amount may be agreed between the parties or determined by a court.

If agreement on the amount is not reached, council could be forced to commence proceedings to either enforce the lease (requiring vacate and make good) or have an amount of compensation determined (assuming council is, in fact, entitled to compensation). In some circumstances, councils may also make a complaint to the Telecommunications Ombudsman, which offers a dispute resolution service.

If you have any questions regarding this article, please contact Andrew Grima or Melissa Potter.

Author: Kristie Carlile

Contributing partner: Craig Munter

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