FAIRBURY - For the past year, the city of Fairbury has been facing a lawsuit concerning the funding to convert a former school building into an apartment complex 20 years ago. This month, the city council agreed to settle that suit, and avoid going to trial.

The lawsuit was initially filed in U.S. District Court in October 2024 by Allied Development LLC and Fairbury '23 LP, who managed the project to renovate the former Fairbury high school building into an apartment complex in 2004. The case claims that the money - more than $200,000 - the city sent Steve Foutch, the project's developer, to execute the renovation was all grant money. The city had contended the money was generated through a loan, and expected some of that investment back.

Foutch sold the property in May 2023 and the lawsuit was lodged the following October. Now, the two sides are a few steps closer to closure.

Fairbury mayor Kelly Davis outlined the process it took to ultimately reach the final terms of the settlement. Last month in July, mediation deliberations began with Foutch's camp looking for $297,785 and the city countering with an initial offer of $45,000. Slowly but surely over the course of six hours, the two sides worked toward a midpoint.

"Mr. Foutch made the comment to his attorney that this was ridiculous and he would go to trial and either get it all or nothing," Davis said. "His attorney asked the mediator to leave them alone to talk, and after talking they came back with an ‘Oklahoma offer’ of $178,400. My understanding is that meant this is our final offer, take it or leave it, or we’ll see you in court and take our chances."

Finally, the two sides came to an agreement to settle for $178,400, with the city's insurance company agreeing to foot $20,000 of that total.

"And I understood that if we went to court we could lose the whole thing, lose everything, it would be just a judge making the decision, it wouldn’t be a trial per se with a jury," Davis concluded. "And we would possibly have to pay all of Mr. Foutch’s legal fees which could be quite a bunch because he’s either on his third or fourth legal team. So we went back in and I was going to accept the offer, pending the council’s approval."

With those deliberations complete, the next step was for Davis' fellow city council members to determine whether or not to accept those terms, or send the case to trial. City attorney Kurth Brashear cautioned that deal likely would not remain on the table should the council decide to go to court, where the city - or the plaintiffs - could potentially be awarded all or none of the money.

"In litigation there is no certainty either way – it's what the judge says, and this would be going to a judge to [decide] this," Brashear said. "All the evidence may be on our side – a judge may see it differently, and rule against us, and the same is true from Mr. Foutch’s perspective. Which doesn’t mean you can’t appeal and do those things, but all of those things have costs."

The initial lawsuit filed last October claimed "the project was a resounding success" for the city of Fairbury. "Rather than a dormant, unused and decaying property, which Fairbury would have had to pay hundreds of thousands of dollars to demolish, Fairbury and its...citizens have had (and continue to have) the benefit of a fully-functional and restored historical property."

The terms of the prospective settlement prompted plenty of discussion, especially among the council’s more senior members.

"This is money that was out there that we didn’t know was out there," John Ebke said. "There’s $116,000 that we didn’t have that would’ve been forgotten until 2030, so there’s something to that too – there's another $116,000 that we didn’t really know was ours."

"If we do try to send this to trial, the attorneys are going to take what is left of it. It’s going to get drug out for years. I think this is a way to walk away with something, and be done with it, put it to bed, and just move on," Brian Schmidt said.

"It's negotiations. Nobody is going to be totally happy on either side," Tim Polson said.

"If they are, then you did it wrong," Ebke added.

"Either way, if we can just accept this and move on, because I don’t think it’s going to end up any better," Polson concluded. "Do I like it? No. Can I live with it? Yes."

"This is a classic ‘bird in the hand, two in the bush’ situation to consider: what you have before you that the plaintiff has already signed and agreed to, versus what could happen in proceeding forward in litigation," Brashear said in his closing comments. "If the council chooses not to approve this settlement, I would tell you I don’t think you should expect another one to be coming."

Ultimately, the council voted 7-1 to accept the terms of the settlement. Phil Rogge was the lone no vote, underscoring the city's initial position about the identity of the money in question.

"The paperwork all says it’s a loan. There’s nothing in the paperwork that says it’s a grant," he said. "A loan is a loan, the city might have got the money granted to them, but yet...there’s a lot of programs like that where you get the grant and then you lend it out, as they pay it out, you use back into the community. Number one, he’s not paying it back, and if he does, he’s going to take it out of town. So to me, a loan’s a loan."