Lake Elmo and Stillwater Area School District officials have reached a settlement with a developer over the $7 million terminal for Stillwater school buses in Lake Elmo.

Under the terms of the settlement agreement, which was approved Oct. 24, the school district will receive $400,000 from EN Properties, while the city will pay EN Properties $75,000.

“It’s a fair settlement that allows all parties to move forward,” said Superintendent Mike Funk.

The $75,000 that Lake Elmo will pay to EN represents half of the funds the company paid as a cash contribution for the parts of its proposed development that were to be tax-exempt. Only the school-bus terminal development moved forward, but a proposed Metropolitan Transit park-and-ride facility did not, said City Administrator Kristina Handt.

“The city is glad to be able to put this behind us and focus on working with our partners to serve all of our residents and businesses,” Handt said Friday.

An attorney for EN Properties did not immediately return a phone call or email seeking comment.

In 2018, EN Properties sold 11 acres to the school district, on Interstate 94 east of the Vali High Drive-In theater in Lake Elmo, for a school-bus terminal. The district, which paid $5 million for the land and $2 million for improvements, moved in with its 160 vehicles and began operating. The terminal was served by private water wells and a septic system, and EN Properties agreed to hook up city water and sewer lines.

But, according to a lawsuit filed by EN Properties against Lake Elmo last year, city officials grew hostile to the project. As a result, the suit alleged, EN was temporarily unable to build the facility and lost $1 million in fees and expenses.

In January 2020, the city forced the school district out of the terminal — not for anything the district did wrong, but because the developer had not connected it to city water and sewer.

When the city pushed the school district off the property, the district sued EN, and EN, in turn, sued the city.

In October 2020, EN agreed to install the water and sewer lines, and Lake Elmo and the district resolved their differences, and the school district reoccupied the bus terminal site.

The settlement does not include an admission of liability “by or on behalf of any of the parties, by whom all such liability is expressly denied, said parties intending by this settlement merely to avoid litigation and buy their peace,” the agreement states.

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