IOWA CITY - The University of Iowa has settled a lawsuit filed against the company blamed for starting a fire at the Old Capitol nearly three years ago.

The university accepted $1.9 million in exchange for dismissing the case. That falls short of the university's insurance deductible of $2 million but was determined to be all the money Enviro Safe Air Inc. had in the bank, said university spokesman Steve Parrott.

The university sued North Sioux City, S.D.-based Enviro Safe on Oct. 31, 2003, claiming negligence and breach of contract by workers who used open flame torches to remove asbestos from portions of Old Capitol.

The resulting fire caused an estimated $5.6 million in damage including the building's 160-year-old cupola and bell.

The building was covered by an insurance policy with FM Global, Parrott said.

The university replaced the dome in February 2003 and plans to have all remaining renovations completed this year, said Gary Nagle, Old Capitol project manager.

Renovations include replacing wooden floors, plaster and paint damaged by water from fire hoses. Nagle said the building is being renovated to resemble pre-1920s architecture and paint styles.

The university received a check from Enviro Safe on July 23 and agreed to settle the case Thursday, Parrott said.

Enviro Safe has received more than a dozen citations from the Iowa Occupational Safety and Health Administration for failing to take fire prevention steps and required safety measures for workers removing lead-based paint and asbestos at the Old Capitol, according to data from the state office.

Galena, Ill.-based Renaissance Restoration Inc., a contractor for initial Old Capitol renovations, joined the university in the lawsuit and will receive $40,000 for supplies and scaffolding damaged or lost in the Nov. 21, 2001 blaze. They originally sought $120,000.