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Four years ago, when the Academy of Our Lady of Peace began planning to add classrooms and parking to its Normal Heights canyon-top campus, the high school found itself fighting the city and its neighbors over how to use land it already owned.

On April 23, the city council voted to pay the school a settlement of $500,000 — less than half the amount awarded by a federal court jury in October 2012 after the jury found the city's development permitting process was restrictive and interfered with the all-girls school's freedom of religious expression. (Council president Todd Gloria and District 1 council member Sherri Lightner voted no.)

"To finally have the entitlements to proceed with our modernization project is a bright and positive light at the end of, what for us, was a long tunnel," said academy CFO Dasan Mahadevan. "We look forward to working with the city on much needed pieces of school infrastructure."

The school was founded in 1882 by the Sisters of St. Joseph of Carondelet on the bluffs above Mission Valley east of Texas Street. Starting in 2006, academy officials and planners spent four years trying to build a classroom building on the west side of the campus and add parking on the east side. Plans called for the demolition of three residences deemed historic.

The school ran into opposition from a neighborhood group called Between the Heights, and worked to answer their concerns. For example, the academy added parking to keep cars off the street and then reduced parking when neighbors objected to the size of the parking structure. After a number of design changes to the original plan, the city denied the academy's permits.

In 2009, the academy sued in federal court, arguing that the city had denied the academy and its students the right to religious education and had held the academy to a more restrictive standard than nonreligious institutions. The jury agreed, awarding more than $1.1 million in October 2012. The judge ruled that the city would relocate two of the historic buildings.

The city and the academy continued to fight after the verdict, with the academy asking for attorney fees and the city threatening to appeal the verdict. After four months of wrangling, the city and academy reached a settlement at the beginning of March, according to court records.

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