FAQ: Coventry PEACE Inc. (CPC) Lease of the Coventry School Building

This post clarifies the current status of the Coventry PEACE Inc.’s (CPC) lease of the Coventry School Building, and answers public questions raised at the February 10, 2022, special Library Board of Trustees meeting.

Why were minutes of the December Board meetings not posted by the January 18 Board meeting date?
All library board minutes must be approved before being posted. This happened at the February 21 Board meeting and they were posted the next day.

Was the library aware of, and did it sanction, political campaign activities at the Coventry School Building?
The library does not have any policies or procedures pertaining to the activities conducted by CPC at the building outside of the lease with CPC that memorializes the terms of use and occupancy. The lease requires CPC to use the building for the sole purpose of operating a non-profit campus in furtherance of CPC’s tax-exempt purposes and mission to provide a sustainable, supportive and collaborative facility for organizations that offer artistic and educational opportunities and community services for residents of the Heights and Greater Cleveland, as stated in its December 6, 2019 Amended and Restated Articles of Incorporation, and such activities necessary or incidental to those uses.  The lease also requires CPC to follow all applicable federal, state, and local laws, ordinances, rules and regulations governing its use and occupancy.

Did the library sanction campaign activities by CPC’s sub-tenants of the building?
No.  The library does not have any policies or procedures pertaining to campaign activities conducted by the individuals or organizations occupying the building outside of the lease with CPC that memorializes the terms of its use and occupancy.

Is Heights Libraries kicking Coventry PEACE Inc. (CPC) and its sub-tenants out of the Coventry School Building? 
No. While the fixed term of the lease with CPC expired on December 31, 2021, CPC (along with its sub-tenants) is still a tenant in the building on a month-to-month basis under the terms of the current lease. This month-to-month arrangement with CPC will continue until the library identifies a new lease structure for the organizations occupying the building. The purpose of the RFP for facilities and lease management is to set up for that new lease structure and to provide for property management. No one is being asked to leave the building.

The Board’s vote not to extend the lease did not terminate the library’s relationship with CPC, or the underlying tenant organizations. CPC can and is encouraged to continue its community events, fundraisers, and mutual publicity for the individual sub-tenant organizations, who add a tremendous amount to the fabric of the Heights community. The library is committed to next steps that support CPC’s and the individual nonprofit organizations’ arts activities and continued residence at the Coventry School Building. The library hopes that adding stability to the project will allow everyone to continue to operate without uncertainty.

Why did the library decide not to extend the CPC lease long-term?  
The question before the Board was not whether the underlying nonprofit arts community’s use of the building should continue, but whether CPC had demonstrated the capacity and financial stability to be a responsible manager of the building that houses them. CPC’s initial 15-month lease term, starting in 2020, was designed to provide CPC with an opportunity to prepare for long-term management. The lease agreement signed by both organizations in October 2020 required that CPC meet several conditions by the end of 2021 in order to exercise an option to extend the lease for an additional 9-year term. These conditions and requirements in the lease were minimum standards that the library deemed necessary for CPC to successfully operate the building, and were the product of extensive discussions and negotiations with CPC.

Library staff and the Board of Trustees reviewed several rounds of submissions and documents from CPC regarding  CPC’s financials and financial projections. The content of these documents raised concerns about CPC’s ability to adequately manage the property for the length of a long-term lease. Those concerns stemmed from the following, which is not an exhaustive list, but provides a snapshot of the seriousness of the library’s concerns:

  • A substantial amount of fundraising and building improvements were anticipated to be sourced through grants. CPC’s reliance on grants and fundraising for 2022 was projected to greatly increase compared to 2021. Based on the fundraising plan and historical data, CPC’s projected growth seemed implausible.
  • CPC’s plans did not show involvement from, and provision for, professional consultants such as an attorney, accountant, or business advisors, and disregarded the financial recommendations provided by IFF, a nonprofit real estate company hired in 2020 to do an assessment of what CPC would need to do to successfully operate the building.
  • CPC’s projected utility costs seemed low compared to historical data and did not account for increases based on increased use and occupancy, or for increases after the building no longer qualifies for library/government discounted utility rates. In addition, CPC’s estimates did not show enough revenue to pay for a facility manager or anticipated repairs.

The Coventry School Building requires professional property and lease management services. The Board believes that it would have been irresponsible to extend the lease based on the information provided by CPC, and that doing so would run counter to the library’s obligation to the citizens of Cleveland Heights-University Heights to make the best use of library resources. CPC’s financials, financial projections, and proforma submissions did not demonstrate a financially viable plan for CPC’s vision of operating and maintaining the building in a manner that would achieve realistic independent economic sustainability.

Will CPC continue to manage the former Coventry School Building? 
No. The library has put out an RFP for a facilities and lease management company to take over management of the building, which will include finding new non-profit tenants for vacant spaces, collecting rent, and ensuring that the building is in good repair. In addition, the library has hired commercial real estate firm Allegro Real Estate Brokers and Advisors to complete a study of the property to help determine rent rates and the structure of any agreement with a property management company and future tenants.

Who will pay for the management company? 
Management costs will be paid for through the tenants’ rent payments. In addition to this monetary requirement, the stated objectives of the library in the property management agreement are:

  1. Maintain Federal Tax-Exempt Status of building, all tenants must be non-profit organizations registered with the state of Ohio and the IRS.
  2. Accurately track and account for expenses in a manner that will show the existence of a growing reserve for needed repairs and maintenance.
  3. Provide a business-like atmosphere in the neighborhood where the building is located and conform with all laws of the City of Cleveland Heights and the State of Ohio.

What is the timeline for future relationship with tenants of the building?
We anticipate that the hiring of a property management company will take place at the March 21 Regular Board meeting of the Library Board of Trustees. We anticipate that we will receive a report from Allegro Real Estate Study by April 10, which will be used to assist the library in determining new lease terms. We anticipate new leases will be provided to all interested organizations by the end of May.

What will happen to the PEACE Park? 
The Library owns the PEACE park and has plans to renovate and improve it with a new, safer, more accessible playground, more seating, and other improvements. It will remain open, free, and accessible to all. A capital campaign is scheduled to start in the spring.

 

 

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