Dave Devine delivers a dispatch on the downtown deal of the day:

The Tucson City Council has settled a year-long legal dispute by handing over $750,000 and at least $125,000 in subsidies to downtown developers Scott Stiteler and Don Martin.

The city entered into a predevelopment agreement with a partnership that included Stiteler, Martin, developer Jim Campbell and Portland development company Williams and Dame back in December 2008. The idea was to give the developers land in exchange for private investment and redevelopment of downtown, with a provision calling for the city to pay damages if a development agreement couldn’t be reached.

Both Campbell and Williams and Dame ended up leaving the partnership and last summer, the rest of the deal fell apart, partly because of complaints from the Rialto Theatre Foundation. Rather than trying to salvage the deal, Stiteler and Martin walked away and then demanded compensation.

The City Council reviewed the settlement in an 11-minute executive session on June 8 and the settlement was finalized six days later.

Stiteler and Martin will get $750,000 from the city’s strapped budget after they’ve shown that

they’ve spend three times that amount fixing up their own properties on Congress Street. They’ll also get $125,000 in permit-fee waivers for that work and a special, below-market-rate deal on parking spaces in a new city garage.

The city will get money money for a piece of downtown land that it’s selling to Stiteler and the developers will give $50,000 to Skrappy’s Youth Club.

Councilwoman Karin Uhlich considers her support for the predevelopment agreement one of the biggest mistakes of her first term, but says there was “enormous pressure” to approve it.

“I wouldn’t support that kind of provision in the future,” Uhlich says. “Unfortunately, it’s a lesson learned.”

Uhlich calls the settlement “the best we could make in this situation.”