City officials admit no fault in the settlement. The money tocover the bill is coming out of a city's facilities reserve fund,which is used to renovate government buildings and develop newfacilities. The city hopes to replenish the fund by reselling theproperty.

The lawsuit stems from Kelley's attempt to build a stripshopping center and an apartment complex in West Eugene in 1997 and1998. The city required Kelley hand over a right-of-way along adrainage ditch on the shopping mall site. It also required Kelleyto build a 60-foot-wide street all the way through the apartmentsite to provide access to another parcel.

Kelley argued both demands, but ultimately gave the city itseasement on the retail property and it off to a developer who builtthe retail center. Kelley never agreed to the through street on theapartment site, however, the project was never approved and thelawsuit was filed in 1998 based on the 1994 U.S. Supreme Courtruling in Dolan vs. City of Tigard, a case that championed privateproperty rights.

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