San Diego and SeaWorld Reach Settlement on Back Rent

City Sued SeaWorld for more than $12 million in back rent and fees from Pandemic Days

By Lori Weisberg / The San Diego Union-Tribune / December 10, 2024

More than three years after SeaWorld was first told it owed millions of dollars in back rent that went unpaid during the pandemic, it has now reached a settlement to pay the city of San Diego $8.5 million.

That sum, while close to the $8.8 million that city officials originally said was unpaid, falls short of the more than $12 million San Diego was seeking in a lawsuit it filed last year alleging breach of the lease that governs rent for the park’s Mission Bay site.

A judicial posting Tuesday in the federal court case revealed only that a settlement of all claims had been reached, but the terms were not divulged.

Former San Diego City Attorney Mara Elliott, whose successor Heather Ferbert was sworn in on Tuesday, provided the Union-Tribune with the terms, which include complimentary SeaWorld passes for the military and San Diego teachers.

“This is a good result for San Diego taxpayers,” she said. “We’ll recover overdue tax and provide benefits to service members and local schools. This also allows us to reset a fractured relationship, avoid a lengthy trial and put the money to work for taxpayers immediately.”

The settlement money would also come at a financially precarious time for the city of San Diego, which faces projected budget deficits of nearly $1.5 billion over the next five years.

“We are grateful to have reached a resolution of this matter and look forward to continuing our strong partnership with the city of San Diego for years to come,” SeaWorld said in a statement Tuesday. “We’ve valued our collaborative relationship with the City for 60 years and are happy to be a part of the San Diego community. We look forward to many years of working together.”

Other components of the settlement include what Elliott described as “lease sweeteners”:

• Over five years, SeaWorld will offer complimentary season passes to current San Diego teachers each year.
• For five years, SeaWorld will offer active duty military and veterans one free admission (for just the service member or veteran) each year.
• SeaWorld will give to the city 1,000 SeaWorld admission tickets that will in turn be provided to school districts within the city of San Diego.

The court-mediated agreement brings to an end a sometimes contentious contest of wills that inspired strong language from city officials over the unwillingness of SeaWorld to pay back rent. Up until now, SeaWorld remained the only city lessee out of more than 800 tenants in default for unpaid rent during the pandemic when many businesses, including theme parks, were shut down.

In March of 2022, SeaWorld was first informed by the city that it was in default of the conditions of its lease related to the payment of rent. At the time, it was told that if it agreed to a 24-month repayment plan that was made available to all city tenants facing financial hardships because of the pandemic, San Diego would waive any added fees and penalty charges, leaving a balance of more than $8.8 million.

“This is a very lucrative company that’s done well,” Elliott said at the time the suit was filed. “We’ve got a long-term relationship and we expect them to pay what’s due, just like everybody else did.”

SeaWorld later filed a countersuit contending that the city’s forced closure during the pandemic was a violation of its lease and it, therefore, owes nothing to the city. More recently, it made a similar argument, filing a motion in October seeking a summary judgment of its case, a legal move that allows a party to ask for a ruling in its favor based on its contention that the facts of the case are undisputed and therefore no trial is needed.

From the start of the dispute, SeaWorld said little publicly about its resistance to paying the back rent, but early on told the city that while the San Diego theme park was shuttered for months and collecting no revenue, it still had a large collection of animals to care for, animal rescues to perform and rides it had to operate periodically to ensure they were in working order.

Of the particulars of the settlement, Elliott explained that they were a good outcome given what were sometimes difficult settlement talks.

“We had been in discovery for quite some time,” Elliott said. “I feel we had a very strong case, but there’s always a long road before you get to a resolution. This was not an easy negotiation.”

Before the settlement can be finalized, a “settlement disposition conference” will be held Jan. 31. Elliott said the $8.5 million is to be paid by SeaWorld within 30 days of the formal execution of the agreement.

Tuesday’s settlement milestone followed multiple mediation sessions pushed by the U.S. District Magistrate Judge Daniel E. Butcher in San Diego.