PAXTON — The sale of the city’s airport to a man who wants to use it for his aerial crop-spraying business continues to be delayed over concerns that the city could be sued by one of his competitors if the transaction were to proceed.
It was in February 2017 when the city council approved a letter of intent to sell the airport to Atlantic Ag Aviation Inc. — a firm owned by David Hrupsa of Roper, N.C. — for $100,000 in cash and a note for $50,000. Under the terms of the sale, Hrupsa would be required to continue to operate the property as a public airport for the next 30 years.
However, 22 months later, the sale is no closer to being finalized, and the prospects appear to be waning.
During a meeting of the council’s TIF committee Tuesday night, the city’s tax-increment financing (TIF) consultant, attorney Dan Schuering of Springfield, said that one of Hrupsa’s competitors in the aerial crop-spraying industry — Scott Schertz, owner of Hudson-based Schertz Aerial Service, Inc. — has threatened to sue the city if it sells the airport to Hrupsa.
Schuering said he believes such a lawsuit could survive a motion to dismiss, potentially leading to lengthy litigation that could cost the city anywhere from $50,000 to more than $100,000 in attorney’s fees.
"This thing has the potential to turn into a significant financial problem for the city, and I’m not going to let it do that," Schuering said.
According to Schuering, Schertz’s attorneys claim that because the airport is located within a TIF district, the city can only sell it after first publicly soliciting requests for proposals for its redevelopment — which the city never did.
"Their position is that the city knew or should have known by including the airport in the TIF (district) that it would become an economic-development project and that the city should have taken proposals (for its redevelopment)," Schuering said.
‘Just blowing smoke?’
City officials said that after Schertz learned of the airport’s impending sale to Hrupsa, Schertz informed city officials that he, too, wanted to buy it. After being told a deal was already being finalized, Schertz asked if the city would be willing to instead sell or lease to him its former landfill property adjacent to the airport so that he could put a hangar there to store his crop-dusting airplanes and use the airport’s runway.
The city then aggressively began trying to get the Illinois Environmental Protection Agency to sign off on the former landfill as having completed its "post-closure care period" in preparation for selling it to Schertz.
In the months to follow, however, progress on any deal — with either Hrupsa or Schertz — began to take a step back, with talks of litigation in its place.
Schuering said Schertz has claimed that he planned to "put over a million dollars out there" to redevelop the property, although Schuering pointed out he does not know if that would actually happen.
"The only way we’ll find out for sure is if they file a lawsuit," Schuering told aldermen. "And when the city gets into that lawsuit — $50,000, $70,000, $100,000, $125,000 in legal fees — there won’t be anybody happy, and it won’t make any difference how good of a deal there was."
"Are these people just blowing smoke or are they really going to follow through on that threat?" Alderman Bill Wylie asked Schuering.
"I think they’re going to follow through on it," Schuering responded. "If I didn’t, I’m just enough of a hard-headed gunslinger that I’d tell you to go ahead (and sell the airport to Hrupsa)."
Schuering said the only way, it seems, to move forward without the threat of litigation is to come to an agreement with both Hrupsa and Schertz.
"You can’t do one (deal) until you can do them both," Schuering said.
‘Too late’ to seek proposals
Schuering noted that it would be "too late now" to solicit requests for proposals to allow the two parties to submit their plans for redeveloping the airport.
Part of the problem with doing so would be that both parties have made offers to buy the airport, and Hrupsa’s plans have already been made public.
"You’ve got an offer on the table (by Hrupsa), and you’ve got a counter offer (by Schertz)," Schuering said, adding that Schertz’s offer "is much more generous."
"So how do you (solicit requests for proposals) without the proposers knowing what’s already out there on the table? You can’t have a fair auction now because you’ve already got two opinions about what the value (of the property) is, and one is motivated by, ‘I’m going to walk into City Hall and try to make a quick deal at a good price,’ and the other one is motivated by, ‘I want to stop my competitor from getting that deal so I’m going to put a number on it that probably is unrealistic for anybody else,’" Schuering said.
"So what you’re telling me is we’re in a Mexican standoff here, and we’re going to sit here until the airport closes because the state won’t allow it to stay open (due to the aging runway’s condition) and now we’ve just got dead ground out there?" Wylie asked Schuering.
"I would go any direction you want me to go," Schuering responded.
"There’s no interest in splitting the two parcels of property? None?" asked Alderman Rob Pacey.
"You can’t, alderman," Schuering responded, "because if we do a deal with Hrupsa, it would be cheaper for (Schertz) to sue us and try to get what they want or settle with us at some future point than it is to do a deal (with Schertz). And they’ll take the position that (the city) just ‘proved our point’ — ‘We made them an offer with higher substantial consideration than they were originally offered, and (the city) didn’t take (the offer), so this is not an arms-length, fairly motivated transaction (with Hrupsa).’
"It’s a tough spot."
Confident no more
It was earlier this year when Schuering told aldermen he felt confident the airport’s sale would be finalized by the end of last summer.
"What changed in the interim?" Wylie asked Schuering.
Schuering said that besides concerns over litigation related to the city not having solicited requests for proposals, another holdup is the fact that regulations exist that would require the city’s airport, if continued to be used as a public airport, to provide access to Schertz’s planes if he were to buy or lease the landfill property.
Federal Aviation Administration rules say that a public airport must allow access from properties abutting it, as the landfill does in Paxton’s case, Schuering explained. However, it was not immediately clear whether Hrupsa would be willing to allow his competitor access to the runway if Hrupsa ends up buying the airport.
"They make a reasonable case," Schuering said about Schertz. "Do they have enough to survive a motion to dismiss? Yes, they probably do. And, frankly, in litigation, that’s what I worry about, because once you get over that bar you’re in it for the long slot."
In the city’s defense ...
If a lawsuit were to be brought against the city by Schertz, Schuering said the city could use in its defense the fact that it included the airport in the redevelopment plan for its TIF district not with the intention of selling it or redeveloping it, but instead because the city may someday want to make improvements to a road that runs by its hangars.
"If you go back and read the redevelopment plan, there is not one sentence in the plan about any kind of redevelopment at the airport," Schuering said. "Nobody ever thought (Hrupsa would) walk through the door (and ask to buy it).
"Now at the end of the day, does that probably carry us (as a defense in litigation)? Yeah, it probably does. But I don’t want to be here two years from now explaining to you why you had to spend $50,000 or $75,000 or $100,000 on legal fees to prove that we were right. I’m better off figuring out some way to make a deal and be done with it."
Wylie then asked: "Are they just not wanting a deal? Are they just stuck in their position?"
"Yeah, the latter," Schuering responded.