After all the battling with its Tenleytown neighbors, it looks as though Cates restaurant has reached an agreement with them. Since September 1988, owners Elliot Epstein and Ben Hiatt have seen the liquor license for their jazz club held up by a neighborhood group concerned about late-night revelers and parking problems. The club's owners made concessions to alleviate concerns of the neighborhood protesters, discontinuing midnight shows and adding parking spaces. They now expect to get the license within the next 10 days and are planning a grand opening in the fall.

The restaurant has been open only for brunch, and at Sunday's there was yet another sighting around town of former hostage Robert Polhill, who was celebrating his 56th birthday. A jazz enthusiast, Polhill said he spent hours lecturing his fellow hostages on jazz history to pass the time and to keep his mind active during his 34-month captivity. Sunday's performance by jazz vocalist Lisa Rich and her quartet marked the first time since his release that he was able to hear live jazz.

Out and About It isn't every day that passengers at Baltimore-Washington International Airport see stars such as Gene Hackman and Mikhail Baryshnikov. The two actors were there shooting scenes for a film with the working title "Patriots," described as the first post-Berlin Wall spy thriller. It is about a spy swap that goes wrong. Hackman and Baryshnikov are expected to be here shooting scenes at McPherson Square today and from the roof of the Hay-Adams Hotel tomorrow. Crews will also be filming at the Hagerstown Correctional Facility ...

Hospital Report: The hospital update on superstar Michael Jackson raises more questions than it answers. Mark Zatzkis, the cardiologist treating Jackson at St. John's Hospital in Santa Monica, Calif., reported in a statement that "yesterday a temporary setback in his condition delayed some scheduled testing which has been rescheduled and will hopefully be completed today." There was no explanation of the "temporary setback" nor any response to questions about it, but Jackson's publicist, Bob Jones, later said the singer had a recurrence of the chest pains that led to his hospitalization. Jones also said Jackson had been under a great deal of stress, stemming in part from the deaths of his grandmother and of friend Sammy Davis Jr., and pressure to finish an album that is eight months overdue. Zatzkis described Jackson's condition as stable and said he is resting comfortably ...

It was quite a day at lunch yesterday at the Old Ebbitt Grill. Marilyn Quayle was at one table with Sheila Tate, once Nancy Reagan's press secretary, and several others working on the upcoming "Race for the Cure" fund-raising campaign for breast cancer detection. At another was "L.A. Law" star Richard Dysart, and at a quiet table, huddled with a couple of lawyers, was high-flying savings and loan operator Charles Keating ...

It probably shouldn't have been, but it was a bit disconcerting to learn that ethereal Norwegian actress Liv Ullmann has become a grandmother. Her daughter, Linn, gave birth to a son Saturday in Oslo. Everybody probably has to become a grandparent sometime or another, but Ullmann doesn't look like one at the age of 51 ...