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Skate Art Music Festival

People attend the Bay's annual Skate Art Music Festival in September 2016 in the Railyard. Tenants in the area won a lawsuit against the owners giving them unfettered access to financial statements. Several of the tenants believe they have been charged too much for maintenance and event expenses.

A group of tenants at the Railyard has prevailed in their breach of contract lawsuit against the entertainment district's owners.

A Lancaster County District Court judge ruled last month that language in the tenants' leases gives them the right not only to inspect the books of TDP Phase One LLC but also allows their accountant to make copies of records without having to sign a non-disclosure agreement.

The tenants -- Buffalo Wings & Rings, Gate 25, Rule G, Longwell's, Hiro 88, Jimmy John's and Rocket Fizz -- alleged that they were being overcharged for expenses related to maintenance and special events at the entertainment district and sought to audit the books to see if that was the case.

TDP Phase One, which is a partnership between WRK LLC of Lincoln and Chief Industries of Grand Island, was willing to grant that access but would only allow the tenant's accountant to make copies of documents if he signed a non-disclosure agreement. The tenants balked at that requirement and filed a lawsuit.

In her ruling, Judge Susan Strong said the fact that the tenants' leases give them the right to "inspect and audit" the records was key.

According to professional standards, certified public accountants must keep copies of important records in order to perform a proper audit.

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Because there was no provision in the lease that mandated a non-disclosure agreement as part of access to the financial records, "defendants have breached their lease agreements with the Plaintiffs as a matter of law by restricting their right to an audit conducted by a certified public accountant in accordance with generally accepted auditing standards," Strong wrote.

Will Scott, one of the owners of WRK LLC, said in an email that the dispute was a simple disagreement that should never have ended up in court.

"It is very important to reiterate that the records have continuously been available for the tenants to review at our office at any time. In addition, we have always been willing to allow tenants’ accountant to make copies provided they sign a confidentiality agreement," Scott said in his email. "We still believe that is a reasonable policy, but, in light of the Judge’s order, we have agreed to provide a copy of the records to the accountant."

TDP Phase One announced last week that it has hired a national company, Spectra by Comcast Spectacor, to take over management of the Railyard, which has been open since the fall of 2013.

Scott said the lawsuit "did not play any role" in that decision, and discussions with the company began months before the suit was filed.

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Reach the writer at 402-473-2647 or molberding@journalstar.com.

On Twitter @LincolnBizBuzz.

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Business editor/reporter

Matt Olberding is a Lincoln native and University of Nebraska-Lincoln graduate who has been covering business for the Journal Star since 2005.

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