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An ordinance approving two lease agreements between the Metropolitan Government of Nashville and Davidson County and PNH Properties, LLC for use of space located at 120 Third Avenue North and 211 Commerce Street (Parcel Nos. 09306203700 and 09306203400) (Proposal No. 2025M-039AG-001).
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WHEREAS, The Metropolitan Government of Nashville and Davidson County (“Metro”) owns certain real property located at 120 Third Avenue North (Parcel No. 09306203700); and,
WHEREAS, PNH Properties, LLC (“PNH”) owns certain real property located at 211 Commerce Street (Parcel No. 09306203400); and,
WHEREAS, Metro and PNH have negotiated the lease agreements attached hereto and incorporated herein to authorize PNH to make improvements to the property located at 120 Third Avenue North (Parcel No. 09306203700) and to utilize the space as part of an adjacent hotel development in exchange for an agreement authorizing Metro’s of 2900 square feet of 211 Commerce Street (Parcel No. 09306203400) for use as a Fire Department facility; and,
WHEREAS, it is to the benefit of the citizens of The Metropolitan Government of Nashville and Davidson County that these agreements be approved.
NOW, THEREFORE, BE IT ENACTED BY THE COUNCIL OF THE METROPOLITAN GOVERNMENT OF NASHVILLE AND DAVIDSON COUNTY:
Section 1. That the Lease Agreements between The Metropolitan Government of Nashville and Davidson County and PNH Properties, LLLC attached hereto, are hereby approved and the Director of Public Property Administration, or his designee, is hereby authorized to execute the same.
Section 2. That any amendment to these lease agreements shall be approved by resolution of the Metropolitan Council receiving at least twenty-one (21) affirmative votes.
Section 3. This ordinance shall take effect from and after its final passage, the welfare of The Metropolitan Government of Nashville and Davidson County requiring it.
Agenda Analysis
Analysis
This ordinance, as amended, approves two lease agreements between the Metropolitan Government (“Metro”) and PNH Properties, LLC, (“PNH”) for the use of space located at 1210 Third Avenue North and 211 Commerce Street.
Metro currently owns property at 120 Third Avenue North, known generally as Commerce Center Park, and PNH owns adjoining property at 211 Commerce Street. These agreements would allow PNH to make improvements to the property at 120 Third Avenue North and use the space as part of an adjacent hotel development. In exchange, PNH would authorize Metro’s use of 2,900 square feet of 211 Commerce Street to use as a Nashville Fire Department (“NFD”) facility.
Any amendment to these lease agreements shall be approved by a Metropolitan Council resolution receiving at least 21 affirmative votes.
120 Third Avenue North lease
In the lease regarding the 120 Third Avenue North property, PNH would utilize approximately 997 square feet of the property for a gift shop inside the building, approximately 246 square feet for an elevator enclosure space, approximately 605 feet for an elevator vestibule, and 3,685 square feet for an outdoor event space. PNH would utilize approximately 5,505 square feet of outdoor plaza space as part of the agreement. PNH would pay for the design and construction of all improvements.
The term of the agreement would begin upon the lease’s filing with the Metropolitan Clerk and would continue for 30 years. PNH would have the option to extend the agreement for two additional 10-year terms. Consideration for the agreement would involve the execution of the 211 Commerce Street lease described below. PNH is entitled to all revenue generated on the property. PNH shall also be responsible for maintenance, utility costs, upkeep, and cleaning on the property, except for any use of the event space for a Metro event.
PNH would establish the hours of operation at the premises. PNH would also operate the outdoor plaza space and provide quarterly programming of activities to activate public use of the property. Alcoholic beverage sales shall be permitted if all state and local licenses for the sale of alcoholic beverages have been obtained.
The property space may be used by PNH or third parties permitted by PNH as an event space for private events. These private events shall be permitted consistent with the regulations of the Metropolitan Board of Parks and Recreation (“Metro Parks”). Metro shall be permitted to use the event space for public, non-revenue producing events. As amended, the park space shall be open to the public during its hours of operation except when the space is used for a private or Metro event.
In the event of default, the non-defaulting party may provide 30 days written notice to the other party to terminate the agreement. If the default is not cured within that time, the lease shall terminate. If Metro is responsible for a default, Metro shall pay PNH the lesser of: $2,000,000, or the documented reasonable cost of the improvements, minus any revenue received by PNH for any private events, multiplied by a fraction of the years remaining in the initial term over 30. Metro will not be liable for a termination payment if this agreement is terminated by Metro in connection with a default by PNH.
PNH shall provide an annual report to Metro Parks, which will provide information about the property construction and upgrades, and the maintenance expenditures, activities conducted, and utility payments made by PNH, and utility payments made. PNH may also make repairs to its improvements without prior approval of Metro Parks. Approval of improvements that are inconsistent with the Plans and valued at more than $15,000 per year (with an annual increase by 2%) requires prior written approval from the Director of Parks and Recreation.
PNH shall maintain policies of insurance, with Metro as an additional insured, for general liability, premises and operations liability, and automobile liability, each providing coverage for bodily injury and property damage with a limit of at least $2,000,000 per occurrence. PNH shall maintain insurance covering builders risk and property damage at full replacement value. If the improvements are damaged or destroyed by fire or other casualty, PNH shall, at its own expense, repair the damage out of the insurance proceeds. As amended, PNH and Metro would meet at five year intervals to determine if the agreement’s insurance limits should be adjusted. The same amendment added a force majure clause to the contract.
211 Commerce Street lease
In the lease regarding the 211 Commerce Street property, Metro would utilize approximately 2,900 for a NFD facility (“the facility”). Metro would have the right to use the facility as an office, locker room, and meeting space, for NFD personnel. PNH has agreed to pay for the design and construction of the facility.
The term of the agreement would begin upon the lease’s filing with the Metropolitan Clerk and would continue for 30 years. Metro would have the option to extend the agreement for two additional 10-year terms. Consideration for the agreement would involve the execution of the 120 Third Avenue North lease described above. PNH would also lease four parking spaces within the building’s adjacent parking garage to Metro as part of the lease agreement. Metro would agree to abide by the rules and regulations established by PNH regarding the property and parking garage.
Metro would agree to maintain the facility in clean and orderly condition at its own expense. Any repairs exceeding $15,000 require PNH’s prior written consent, with that amount increasing by 2% annually. Metro would agree to pay the taxes and insurance for the facility. PNH will carry insurance for the facility, including improvements, and general liability insurance and pay for repairs not caused by negligence or intentional acts. PNH would also retain a permanent pedestrian access easement through the facility to access a data and demarcation room.
Fiscal Note: Metro will lease from PNH Properties, LLC a portion of its property at 211 Commerce Street, totaling 2900 square feet of interior space in the garage, for the operation of the Fire Department station at no cost. PNH Properties, LLC will pay for improvements in the design and construction of the space. Metro will pay for utilities and taxes for the facility, including maintaining the property in clean and orderly condition. PNH Properties, LLC will pay for insurance and repairs not caused by negligence or intentional act. In consideration of the use of this space, PNH Properties, LLC will lease and pay for design and construction improvements to Metro’s property, adjacent to their property known as Commerce Center Park, totaling 5,533 square feet for a gift shop, elevator enclosure space, vestibule space and event space for their use.