Tenants who sued Seattle and the would-be developer of the Civic Square project say they’ve reached a settlement. The case was embroiled earlier this month in an alleged City Council candidate shakedown.

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Tenants who sued Seattle and the would-be developer of the Civic Square project across from City Hall have reached a settlement with the company.

Displaced Tenants for Accountability and Transparency, a group organized with support from the Tenants Union of Washington State, challenged a land-use permit for Triad Capital Development’s project, saying city officials last year renewed it illegally.

Triad will pay $700,000 immediately and an additional $5 million if the Civic Square project is built, the group’s lawyer, Knoll Lowney, said at a City Hall news conference Wednesday. The city is not part of the settlement, Lowney said.

The company isn’t admitting to any of the lawsuit’s claims.

Displaced Tenants for Accountability and Transparency targeted the Civic Square project partly because it includes no on-site affordable housing and also because the Tenants Union has for years been at odds with Triad co-founder John Goodman.

Members of Displaced Tenants for Accountability and Transparency are former residents of Lockhaven Apartments in Ballard and Theodora Apartments in Wedgwood, low-income buildings recently bought by Goodman’s real-estate company.

Evan Sugden, a former Lockhaven resident and member of the group, described the settlement Wednesday as “a win for tenants” and “a lesson that activism, allies and perseverance can work together to achieve positive ends against huge odds.”

Triad President Fred Grimm called the settlement “good news for Triad and the city.”

Grimm said: “We can now move forward to reactivate an important piece of downtown Seattle and bring to fruition incredible public amenities and benefits.”

The lawsuit was dismissed by a King County Superior Court judge earlier this year but has been on appeal. The case gained new prominence this month when a Triad executive asked City Council candidate Jon Grant for help settling the appeal.

In return, Triad Senior Vice President Brett Allen offered to aid Grant in his bid for the council by scuttling a political-action committee poised to spend against his Position 8 candidacy. Grant led the Tenants Union when the tenants filed the lawsuit.

Allen spelled out his proposal in a text message to a potential intermediary, former Mayor Mike McGinn. Then Grant went public about the matter.

Triad parted ways with Allen, and Mayor Ed Murray condemned Allen’s actions and said the city would end its relationship with Triad.

The city had selected Triad in 2007 to redevelop the city-owned block between Cherry and James streets and Third and Fourth avenues — the site of Seattle’s old public-safety complex.

The plan has been for the city to transfer the bulk of the property to Triad in exchange for the company building a public plaza worth about $25 million alongside a high-rise residential and office tower with lower-level retail spaces.

But the site is still a hole in the ground as Triad has struggled to line up financing and permits for the project. Its deadline to close on the transfer of the property is Dec. 31.

Before Grant accused Allen of trying to shake him down, Allen expressed optimism the company would move ahead. And Grimm on Wednesday said: “It’s nice to put (the lawsuit) behind us so we can get started on this great development.”

But Murray has said Triad wasn’t on track to meet the deadline even before Grant’s allegations. The tenants’ lawsuit has been a headache for the company.

Of the $700,000 that Triad will pay under the settlement, $500,000 will go to a fund for affordable-housing projects, Lowney said.

The members of Displaced Tenants for Transparency and Accountability will control the fund, which will be managed by a qualified professional, he said.

Of the $5 million more that Triad would pay if the Civic Square project is built, the entirety would go to the fund, Lowney said.