You have skimmed the background research and have had a number of very interesting phone interviews. And you have visited the district and seen the situation for yourself. Unfortunately, your hypothesis has changed. Never be afraid to redefine your story in the light of new information! Flexibility is one of the most important principles in conducting a good investigation. Do not cling rigidly to your original idea and try to force the new facts to fit it.
After this background has been established, next it is time to deepen your research and discard what is irrelevant. It hurts to discard work you have done. But you must. File old notes, as they may prove useful for a future story. Look for meaningful official comments and retrace your steps to the most interesting sources and references. What you are looking for is concrete, specific evidence to replace abstract assumptions. And here is where you will deepen your understanding of the subject. You do not want to be hit with a legal suit. Forget anything you cannot verify. Look for conflicting points in your notes – can they be reconciled? And what do your ‘biased’ sources have to say about it all? Try to get all comments on-the-record. Check, cross-check and check again.
As you proceed, inform your editor about what is happening so he or she may need to re-plan space or place this different story on another page. You should do this as early as you can. Also, flag the risk of defamation and other legal issues with your editor. To protect you both, your editor may need to forward the finished story to a lawyer for advice.