The City of Santa Barbara has agreed to pay $225,000 to settle the controversial dispute over the Flightline Restaurant at the Santa Barbara Airport.

The city will pay the money to avoid going to a jury trial.

“The city reached a global settlement, which represented the anticipated cost of a trial and the city’s expense for outside counsel,” city attorney Sarah Knecht said.

The settlement, signed Nov. 15, comes after Santa Barbara County Superior Court Judge Donna Geck threw out the city’s request for a summary judgment, and instead said the case could go to trial.

The payout is validation for restaurateur Warren Butler and his team of investors who sought to take over the restaurant from High Sierra Grill. Butler in 2019 secured a $500,000 loan from ACI Jet, a fixed-based operator that serves airports in San Luis Obispo, Orange County, Paso Robles and Oceano, and acquired $100,000 in seed funding from limited partner Steve Siry.

High Sierra struggled at the spot, at 521 Firestone Road, the former site of the Elephant Bar restaurant. So, Butler, a dapper businessman with a history of managing successful high-end restaurants in New York, Los Angeles and other parts of the country, swooped in with his money and sought to take over management of the restaurant.

He rebranded the restaurant as Flightline, an ode to World War II memorabilia and a celebration of airplane and aviation culture. The city, however, refused to let the plan take off. Then-Airport Director Henry Thompson and other city officials refused to let High Sierra transfer the lease to Butler, raising questions about his financial viability.

At the same time, the city has and is working on an Airport Master Plan that involves a wholesale redesign of the area for its fixed-based operators, which include Signature Flight Support and Atlantic.

Butler eventually closed Flightline and hired powerhouse attorney A. Barry Cappello to file a claim against the city.

Just about everyone who was around during the decision-making of not transferring the lease is now gone from the city, including Thompson, former City Administrator Paul Casey and former City Attorney Ariel Calonne.

“This is definitely validation that we were right,” Butler told Noozhawk. “This was my dream.”

Butler said he never understood the city’s unwillingness to allow the lease transfer. The restaurant has sat empty for three years, and a reporter’s stroll around the property on Friday showed cracked firepits, overgrown weeds and dirty, unkept patio areas.

The money will be distributed among attorney fees, Butler, High Sierra and Siry, who was the original $100,000 investor in the project.

“I don’t think the settlement, what we were awarded, comes anywhere near a fair compensation for the kind of stuff we had to deal with from airport administration and the city in the general,” Siry said. “It was a slap in the face to us the way the airport administration treated us.”

Siry grew up in Goleta and is an accomplished pilot. He learned to fly when he was 35, has more than 1,200 hours and owns a four-seater.

Siry said he’ll be lucky to get 25% of his investment back. It’s about more than the money, he said, adding that city officials are thumbing their noses at the public.

“I want the taxpayers to know where their money is going and why,” Siry said. “I don’t think the city knows anything about this airport.”

Attorney Cappello said “it’s a fair settlement for both sides.” The city would have paid potentially much more had it gone to trial.

“The former airport director, Thompson, should not have denied this lease transfer; his actions were arbitrary and without any legal basis,” Cappello said.

He added that the city’s denial of the lease transfer had a cascading effect; Butler lost a business opportunity and the funds he had invested in it to date.

The High Sierra Grill owners were being forced to swallow a lease they had legitimately assigned to Butler but was improperly denied.

“This exposed them to a claimed lease obligation that an assignment would have removed,” Cappello said.

He said the employees and customers of the restaurant also suffered because loyal employees were out of work unnecessarily, and local customers who loved that location and really enjoyed the Flightline concept got an empty building.

In addition, the city airport coffers were denied multiyear lease revenue from a solid tenant, and the building remains empty today, Cappello said.

“All around, a good result,” Cappello said. “Wasn’t necessary, shouldn’t have happened, but the action was corrected by the settlement, and the mayor and council did right and saved the taxpayers a ton of money.”