Shakespeare Theatre doth protest Lansburgh rent increase

Litigate on!

Judge John Ramsey Johnson declined to dismiss the dispute between the Shakespeare Theatre Company and its Lansburgh building landlords Friday in D.C. Superior Court.

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The 2012 Tony Award-winning theater is contesting a proposed rent increase — and potential eviction from its longtime home — from $70,000 to $480,000 annually, a rate hike that Johnson suggested was “not gentle.”

Friday’s proceeding was often acrimonious, with each side ascribing nefarious motives to the other. The STC’s lawyers wondered aloud whether Lansburgh Theatre Inc. — the nonprofit “supporting” organization that the STC says isn’t very supportive anymore — is now trying to commercialize the theater space.

Lawyers for the LTI and for Graham Gund, the designer-developer and owner of the Lansburgh, claimed that the STC is using income from the Lansburgh to support the theater’s operations in its larger venue two blocks away, Sidney Harman Hall. They also charge the Shakespeare troupe with being unwilling to undertake millions of dollars worth of needed repairs, a nuanced issue that, like everything else, was contested Friday.

The theater company’s tenancy in the Lansburgh dates to the Pennsylvania Avenue Development Corp.’s redevelopment of the Penn Quarter neighborhood in the 1970s and 1980s. As part of the deal acquiring the building, Gund’s development company donated $1 million over 14 years ($70,000 a year) to support the theater’s upkeep. The STC’s rent during that period was $1 a year.

At issue is whether the agreements are still binding. The original covenant recently expired, having covered 20 years. The LTI’s articles of incorporation, however, state that the affiliation is “perpetual.” The LTI, incorporated as what the tax code calls a “supporting organization,” was created solely to support its designated “charity,” the nonprofit theater company. The D.C. Office of the Attorney General has filed an amicus brief on behalf of the STC.

The LTI’s lawyers say that the relationship is terminated because the lease expired when negotiations recently broke down. The STC counters that Kenneth Krozy — one of the three people on the LTI board — should be regarded as a “disqualified person” because of his relationship with Gund, the Lansburgh’s owner. Krozy has been managing the redevelopment of the apartment building above the theater, which has been regarded as one of downtown’s finer addresses since opening.

The Lansburgh side now must provide more financial information, and Johnson wants to know more about the original agreement. On the other side, the STC lawyers have been ordered to turn over 150 pages of e-mail correspondence with the Attorney General’s Office.

The preliminary injunction hearing, sought by the STC so it can continue to occupy the Lansburgh, is scheduled for Dec. 10-11.