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An ordinance approving a lease agreement by and between the Metropolitan Government of Nashville and Davidson County acting by and through the Metropolitan Nashville Board of Public Education, and PENCIL Foundation (Proposal No. 2026M-004AG-001).
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WHEREAS, the Metropolitan Government of Nashville and Davidson County (“Metro”), acting by and through the Metropolitan Nashville Board of Public Education (“MNPS”), and PENCIL Foundation desire to enter into an agreement to lease a portion of the real property located at 3200 Kings Lane, Nashville, TN 37218 (the "Building") for use in furtherance of PENCIL Foundation’s nonprofit mission, community-focused initiatives, and ongoing support of Metropolitan Nashville Public Schools; and,
WHEREAS, Metro wishes to lease the Premises noted in the lease to PENCIL Foundation.
NOW, THEREFORE, BE IT ENACTED BY THE COUNCIL OF THE METROPOLITAN GOVERNMENT OF NASHVILLE AND DAVIDSON COUNTY:
Section 1. The lease agreement between The Metropolitan Government of Nashville and Davidson County and PENCIL Foundation, which is attached hereto and incorporated by reference, is hereby approved and the Director of Schools and the Department of Public Property are authorized to execute the lease on behalf of the Metropolitan Government.
Section 2. Any amendment, change, or extension to the lease shall be approved by ordinance of the Metropolitan Council receiving twenty-one affirmative votes.
Section 3. That the Director of Schools shall have authority to approve any and all renovation and/or improvement projects presented by and for PENCIL Foundation.
Section 4. This ordinance shall take effect from and after its adoption, the welfare of The Metropolitan Government of Nashville and Davidson County requiring it.
Agenda Analysis
Analysis
This ordinance approves a lease agreement between the Metropolitan Board of Public Education (“MNPS”) and PENCIL Foundation (“PENCIL”) for use of part of the property at 3200 Kings Lane, also known as the former Lillard Elementary School, to be used in support of PENCIL’s nonprofit mission and community-focused initiatives. The property includes approximately 35,733 square feet of the building and a portion of 11.5 acres of the grounds.
This lease would allow PENCIL to provide ongoing support of MNPS, which may encompass MNPS programming and services, administrative offices, volunteer coordination, meetings, training, special events, warehouse and storage operations, and community engagement activities.
The term of the lease is effective July 1, 2027, and ends on June 30, 2037. MNPS would grant to PENCIL three separate options to extend the contract by 10 years. Before each option takes effect, MNPS has 30 days to terminate the lease and pay to PENCIL the fair market value of any capital repairs for which PENCIL was not credited.
MNPS will lease the property to PENCIL with the following annual rate:
• 7/1/2027 - 6/30/2028: $324,302.00
• 7/1/2028 - 6/30/2029: $ 334,031.06
• 7/1/2029 - 6/30/2030: $ 344,051.99
• 7/1/2030 - 6/30/2031: $ 354,373.55
• 7/1/2031 - 6/30/2032: $ 365,004.75
• 7/1/2032 - 6/30/2033: $ 375,954.90
• 7/1/2033 - 6/30/2034: $ 387,233.55
• 7/1/2034 - 6/30/2035: $ 398,850.55
However, PENCIL may provide goods and services directly in support of MNPS, which may be applied to 100 percent of the rental rate. These goods and services include the distribution of school supplies, the recruiting of volunteer hours, and fiscal sponsorship of grants to/for MNPS schools or initiatives. PENCIL may also receive a rental credit for capital improvements for which the non-profit makes to the property, including any design, engineering, architectural, or other “soft” costs and expenses. This may be applied to 100 percent of the rental rate.
MNPS is responsible for capital repairs on the property. MNPS is also responsible for grounds maintenance, refuse collection, and utilities.
PENCIL is responsible for custodial services, low voltage services, preventative maintenance, routine maintenance and repairs, tenant improvements, ADA compliance, and building, fire, and zoning codes and regulations. Further, any tenant improvements made by PENCIL during the lease term are subject to approval by MNPS and will revert to MNPS ownership as an integral part of the property upon termination of the lease.
Upon termination of the lease, the property will revert to MNPS. MNPS may terminate the lease for default, bankruptcy, lack of funding, condemnation, or for any reason with 120 days notice.
PENCIL shall maintain general liability insurance with a respective limit of at least $2,000,000 for each occurrence. PENCIL will also maintain worker’s compensation and employer’s liability insurance with a respective limit of at least $1,000,000 for each occurrence. PENCIL must also maintain property insurance for full replacement of tenant improvements. PENCIL would indemnify and hold MNPS harmless for any liabilities, damages, or claims against MNPS.
An appraisal report is attached to the ordinance. Any amendment to this lease may be approved by resolution receiving twenty-one votes of the Metropolitan Council.
Fiscal Note: Metropolitan Nashville Public Schools (“MNPS”) will receive the initial annual lease fee of $324,302 from the PENCIL Foundation. The lease fee will increase annually by three percent (3%) after each successive 12-month period. The PENCIL Foundation will be responsible for the utilities, maintenance and repair of the premises.