City Hall and the Richmond School Board appear to be on the verge of settling a 17-month dispute over control of the aging Arthur Ashe Jr. Athletic Center, a basketball arena and convocation center that the school system managed since it opened in 1982.

As the Free Press previously reported, both sides claimed ownership of the 4.1-acre property that occupies a key corner of the planned 67-acre, $2.44 billion Diamond District redevelopment initiative — and until now, an ugly and embarrassing court battle appeared to be looming to settle which entity holds title to the building.

While the paperwork that details the terms in proper legalese is still being created, the Free Press was told by representatives of both sides that a tentative agreement has been reached that would help improve relations between the largest elements of Richmond’s government.

Based on the terms, which would include a $5 million payment, the School Board would gain significant benefits in exchange for ceding the center even though the city publicly still maintains it is the rightful owner, the Free Press has been told.

The representatives, who spoke on condition of anonymity as they are not authorized to make the terms public, said the agreement calls for the city to provide the $5 million payment for the center that stands at Arthur Ashe Boulevard and Robin Hood Road in North Side, and is scheduled to be demolished to make way for the new Diamond District development.

The payment, though far smaller than the $12 million to $16 million the School Board had sought, would be equal to the amount that RVA Diamond Partners LLC is anticipated to pay the city for the center property as part of its plans to bring offices, apartments and retail to the area best known for the Richmond Flying Squirrels and their home, The Diamond baseball stadium.

Though still not underway, the Diamond District also includes plans for a replacement stadium for the Squirrels and an 11-acre park dedicated to the late Richmond-born tennis great and humanitarian.

Also, the city has agreed to pick up Richmond Public Schools’ annual payments to an internal storm water utility, which runs between $350,000 and $400,000 a year, the representatives said. Public and private property owners are required to pay into the utility, which was set up to meet the U.S. Environmental Protection Agency’s requirements to reduce pollution from rainstorm runoff.

Also, the representatives said the deal includes relieving RPS of a property tax bill on a former tobacco factory in South Side that the school system and city previously agreed is to be transformed into a career and technical high school, replacing the Richmond Technical Center that is located on Westwood Avenue just a few blocks west of the Diamond District.

An arm of tobacco giant Altria donated the building to RPS in 2017. At the time, RPS created a private company to formally own it so that historic tax credits could be used to help pay for the renovation.

According to the city, that voided RPS’ tax-exempt status and triggered the assessment of property taxes, which the school system has never paid. Taxes, penalties and interest have ballooned the outstanding bill to $600,000, the representatives said.

The representatives said the tentative settlement calls for the city to temporarily take title to the building so it would again be tax-exempt, the representatives said. The plan is for the city to cede the property back to RPS once the plan of and funding for renovation are in place, they said.

Finally, the representatives said the city has agreed to aid RPS in finding replacement for the center, which will not be rebuilt. They said the city is now working to secure agreements with Virginia Commonwealth University, the University of Richmond and other owners of sizeable venues to allow RPS use of the facilities for specific events, depending on availability.

VCU previously promised to allow RPS to use a multi-purpose building that is included in the plans for its $100 million-plus Athletic Village that is to rise on the east side of Hermitage Road across the street from the Diamond District. VCU planned to start the first phase of the project in the coming months.

The city is hopeful VCU would make other large venues available to RPS until the multipurpose building becomes a reality. Both City Council and the School Board would need to ratify the agreements, but the representatives were optimistic that elected officials would prefer an agreement over a court wrangle.