Danville settles lawsuit over bond proceeds
DANVILLE — The city has agreed to settle a lawsuit and pay the plaintiff $300,000 rather than taking its chances in civil court, according to the city's Corporate Counsel David Wesner.
Wesner said Wednesday that city officials still maintain that the city was not at fault about two years ago when it worked with a company to close out some 2001 bonds, netting about $390,000 in proceeds.
A developer who used those bonds to renovate properties in several Illinois communities, including senior housing in Danville, filed a lawsuit, claiming that all proceeds from the $55 million in multi-family housing bonds that were issued in 2001 should go to him. The individual developer is not named in the settlement agreement, and Wesner did not identify the person.
The Danville City Council approved the settlement at its meeting Tuesday night after discussing it in closed session. Wesner said the plaintiff also has approved the settlement, which now must be approved by a judge.
The individual had used the bonds in 2001 to fund redevelopment projects in six other Illinois communities, including Macomb, DeKalb, Fox Lake and Danville, and those communities combined some of their bonding authority, and Danville agreed to be the city that would issue all the bonds, according to Wesner. The project in Danville was at Vermilion House, senior apartments at 3535 N. Vermilion St., Danville.
City Comptroller Gayle Brandon said the city set aside the $390,000 in proceeds it received from the bond close-out in 2010 and has not spent any of it, so it's a matter of simply accessing $300,000 of that money to pay the developer.
Wesner said the settlement stipulates that the plaintiff will be paid $270,000 in cash and $30,000 in chamber dollars. Chamber dollars are issued by Vermilion Advantage and can be spent only at participating businesses in Vermilion County. Wesner said his understanding is that the plaintiff plans to distribute those chamber dollars to the residents at Vermilion House.
Wesner said the city had to weigh the risks that would be involved in fighting the lawsuit in court, and the decision was that the risk outweighed agreeing to a reasonable settlement. Wesner said in a worst-case scenario, the city could lose the lawsuit and be responsible for a $569,000 payout in addition to legal costs and time and labor involved in a court case. So city officials approached the plaintiff about a settlement.
Wesner said this settlement avoids the risk of a larger payout and is "very reasonable and beneficial to the city."