Response to BL2026-1436: The PENCIL Lease Deserves More Scrutiny

This discussion topic was requested by Council Member Zulfat Suara in response to a CouncilConnect post regarding BL2026-1436 approving the pencil lease.

From CM Suara:

Colleagues, thank you for this robust and thoughtful conversation, and thank you Councilmember Johnston for the detailed analysis. Transparency and oversight are essential, and I appreciate the seriousness of the concerns raised. However, there is important context missing from the discussion that I believe is necessary for making an informed decision.

First, PENCIL is not simply a “worthy organization.” Its sole mission is to support MNPS. Every dollar it raises, every program it operates, and every resource it provides is directed exclusively to Metro Nashville Public Schools. This is not a nonprofit with a broad or unrelated mission — it exists for MNPS and MNPS alone. That distinction matters when evaluating this lease. Here is a link to PENCIL’s website- for the organization mission which is also included in their annual form 990

Second, focusing only on the rent Metro will not collect is misleading. For every $350,000 in annual rent, MNPS receives roughly $3 million in direct support from PENCIL. Historically, PENCIL was able to provide this level of investment because a private entity donated the building they occupied. If PENCIL loses access to a facility, that $3 million in annual support disappears. In that context, the lease is not a loss — it is a net positive for MNPS and for taxpayers. PENCIL is providing funding and services that Metro would otherwise need to provide at a much higher cost. You can find this information also in PENCIL’s annual form 990

Third, the Lillard building has been vacant for years. PENCIL is rehabilitating a deteriorating public asset and putting it back into productive use for the benefit of our schools and our children. It is common for donors or mission‑aligned partners to request long‑term leases when they are investing significant capital into public property. This arrangement is consistent with that practice.

Fourth, long‑term leases are not unusual for Metro. In the last six months, this body approved a 99‑year lease with TPAC — a 35‑year initial term with two renewals totaling 95 years. The Fallon lease for East Bank development is also 99 years. While those are land leases rather than building leases, the principle is the same: when an entity invests substantial resources into public property, long‑term stability is required. Metro’s own property standards allow leases up to 50 years, and leases longer than five years are not prohibited. Here is a copy of the TPAC lease agreement - https://nashville.legistar.com/View.ashx?M=F&ID=14988772&GUID=D714C3C4-D54C-4533-A802-214C3D4882F6 and here is Metro property standards- https://www.nashville.gov/sites/default/files/2026-06/Public-Property-Administration.pdf

Fifth, there is accountability built into this lease — even if it does not run through the Council. MNPS retains the authority to decline any renewal. Section 3, Article 5 of the lease makes this explicit: if PENCIL requests an extension, MNPS has a 90‑day window to exercise its right to terminate the lease at the end of the current term. In other words, renewals are not automatic. MNPS must affirmatively choose to continue the relationship, and if MNPS elects to terminate, it must compensate PENCIL only for the fair market value of capital repairs not already credited. This structure ensures MNPS maintains control and oversight throughout the life of the agreement. - Link to contract- https://nashville.legistar.com/View.ashx?M=F&ID=15569479&GUID=3CB56BA4-4880-4ACF-AA32-213FFFDF1BFD

My support for this agreement is rooted entirely in PENCIL’s mission. This is not an ordinary lessee. PENCIL exists to support MNPS, and supporting PENCIL directly supports our schools. That context should be part of our evaluation.

I am not opposed to an annual report to council/MNPS so that councilmembers will not have to go through their website to look at the company's annual report to see how much they raised and spent in support of MNPS

This is not anti‑transparency. It is an acknowledgment that the agreement provides meaningful value to Metro and MNPS. I am comfortable with the lease term based on the benefits to our schools, the precedent of other long‑term leases, the accountability mechanisms within the agreement, and the fact that PENCIL’s work directly replaces costs Metro would otherwise bear.