photo by: Nick Krug

Lawrence developer Thomas Fritzel watches a video presentation of a Rock Chalk Park proposal during the city commission meeting on Tuesday, Feb. 19, 2013, at City Hall.

All parties have signed a settlement in the city’s lawsuit against The Oread hotel, queuing the case up for dismissal by a federal judge in coming weeks.

Attorneys representing both sides informed the judge of the agreement in a status conference Friday. Brad Russell, the attorney representing the city, told the judge both sides had signed the settlement.

“I’m pleased to report that as a result of the ongoing mediation, the case has resolved by way of settlement,” Russell said.

The lawsuit accuses hotel developer Thomas Fritzel of fraud and racketeering. The settlement provides $650,000 in damages to the city and includes an amendment to the hotel’s incentives agreement that will cut millions of dollars from its value. Fritzel must also resign his management position for the remainder of the hotel’s incentives agreement.

The city has not been distributing the rebates from the hotel’s taxing and development district since questions regarding the hotel’s actions arose in 2015. The finalization of the settlement means the city will collect the $650,000 in damages from those funds, and release the remainder to the hotel.

The only back-and-forth between the parties at Friday’s status conference pertained to the time frame for the rebates remaining in the city’s possession to be distributed to the hotel. Steve Six, an attorney representing the hotel, requested that the funds be released before a payment on the hotel’s property taxes on May 10. The judge ultimately decided that the city would disburse the funds via the court on May 5.

Russell later said that once the city deducts the $650,000 in damages, about $400,000 will remain in the fund. He said that now that the settlement is final, the hotel’s incentives agreement will resume under the new parameters from the amendment, which reduces the agreement’s total value by about $3 million.

“That was suspended when the controversy occurred,” Russell said. “And so the parties will now go forward with the prior understandings, subject to the changes to the redevelopment agreement.”

The settlement was reached after what Russell has described as a contentious mediation. The judge ordered the mediation, and the representatives of the city and hotel underwent two mediation sessions that totaled more than 18 hours.

Six did not immediately return a request for further comment regarding the resolution of the case.

In November, the city filed the civil lawsuit alleging that Fritzel had engaged in a fraudulent scheme to generate undue tax rebates from the city. The lawsuit alleges that Fritzel used other companies he controlled to improperly attribute retail sales at the hotel to collect inflated tax rebates. A city-commissioned audit report indicates that hundreds of personal purchases and construction materials for unrelated projects were all improperly reported as retail sales that occurred at the hotel.

The parties in the case must file the dismissal documents by May 9, and the judge is expected to dismiss the case by the following day. The dismissal of the civil lawsuit does not preclude a criminal investigation. Thus far, no criminal charges have been filed against Fritzel in Douglas County District Court or federal court.