City Council Disputes Claim ‘23 Apartments Loan Was Supposed To Be Forgiven

By Gordon HopkinsIn 2004, Steve Foutch, until recently the owner of Fairbury 23 Apartments, was loaned $202,000 by the City of Fairbury to convert a former school building into low-income housing. The city is now asking for repayment of that loan, despite Foutch’s claim that he believed the loan would be forgiven and despite the fact that the money did not originally come from Fairbury.In 2003, the city was given two grants; $130,000 was money from the Cranston-Gonzalez National Affordable Housing Act of 1990 (HOME program) and $72,000 was CDBG (Community Development Block Grant Programs) money. Both of these were grants given to the city for the expressed purpose of creating affordable housing. According to Fairbury Mayor Spencer Brown, the money was then given to Mr. Foutch in 2004, not as a grant but as a loan. The mayor believes the money should now be repaid to Fairbury. Foutch appeared at a recent meeting of the Fairbury City Council to make his case that the loan should be, and was also interned to be, forgiven.Foutch also spoke at a previous city council meeting on June 6 of this year, where he indicated the loan was supposed to be forgiven in the deal he made. He indicated that the agreement to make the loan forgivable was made with Ralph Knobel, who passed away in 2018. Fax From City ClerkFoutch has sent numerous additional documents that he says support his claim. As he went through these various items, Mayor Brown interrupted him multiple times. The mayor told Foutch, “If we can keep the information relevant to you know, where where’s the smoking gun?”Among these documents is a fax sent by then city clerk Tami Arnold, dated March 1, 2006. A comment on the fax cover sheet stated, “Please be advised that his was a loan that will become a grant if all conditions are met.”Foutch said the fax was sent when, “They were doing the first year audit after we finished the project.”City councilperson Bradley Kuzelka immediately seized on this item, “That sounds like your smoking gun.”The mayor disagreed. In an email to FJN after the meeting, Brown wrote:“1. One singular person (clerk, a member of council, mayor, etc.) does not have the ability to change a loan to a grant or forgive a loan. However, if the council chooses to do so, they can. The council voted to not forgive the loan.“2. Tami Arnold could have been mistaken or was thinking of something else, she may not have understood the terms since there were many pieces to the funding.“3. At no point, at any council meeting (by the minutes) or any letter, would there be a reference to the loan being changed to a grant, or forgiven. It would have been very easy for the council to create a memo stating the fact.”“4. The ‘conditions’ referenced in the fax are not defined. You could assume that one of the conditions would be approval by city council.” City Council President Kelly David agreed with the mayor. He told FJN, “As you know, we have been advised not to discuss this at this time. I questioned Tami Arnold’s statement and pointed it out to a couple others. As the Mayor stated, she has no authority to make those decisions, and I know from past experiences with her before I got on council, if she thought something was to happen in a certain way, you could not get her to change her mind, even if you had the proof and backup to the issue. Also, anyone else that would have been involved at that time is no longer alive or has (no) memory of it.”Davis added, “Now, my experience in working with CDBG and other funding sources, we had loans, forgivable loans, and grants. It was always spelled out in no uncertain terms where the money was coming from and what of the 3 options it fell under. Mr. Foutch does not have anything but Tami’s side note. I truly feel that Mr. Foutch honestly felt that he was working with a forgivable loan, and he is not trying to get something that he knows he doesn’t feel he has coming, but then again, he doesn’t have the documentation to back it up. I feel bad for him, but until I can see something more solid, I can’t vote in his favor, I would be committing political suicide if I were to want to run for council or anything else in the future.” After the meeting, Foutch told FJN a lawsuit against the city was likely.Future Housing DevelopmentHousing development is a priority for the city. When asked if he was concerned that the city’s actions might dissuade other developers from building or renovating in Fairbury, Mayor Brown said, “There are builders and renovators in town that are having great success. The city has and will always welcome anyone with a plan to build in Fairbury with open arms.”In response to the same question, Davis said, “I have thought about that myself. I don’t think there would be a project like that happen here again, but I could be wrong. I see more totally new construction being down if anything ever happens. And I would hope that if they needed our help. everyone involved would make sure they understood how things were to happen and documentation would be available.”

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