The Bozeman City Commission voted 4-1 Monday night to approve a court settlement calling for the city to pay its insurer $2 million for a judgment regarding Mandeville Farm.

The city had been preparing to pay up to $3 million, the amount a jury found the city liable for in 2008.

“There’s not a whole lot left to say, other than there were many lessons to learn I hope we’ve learned them,” Deputy Mayor Jeff Krauss said. “All in all, it is an expensive class that we’re taking and the taxpayers should pay attention to how this all went down to who was responsible to make sure that it doesn’t happen again.”

The city of Bozeman bought the 85-acre Mandeville Farm, west of North Seventh Avenue and north of Interstate 90, in 2003 to use for a waste transfer station, but that project never came to fruition.

Bozeman developer Mike Delaney later sued the city for lost profits for undermining his plans to buy the property.

In 2009, the Montana Supreme Court found in favor of Delaney and determined the city must pay $3 million in damages. The city’s insurance company paid the money, and then the city and its insurer went to court to determine whether the city was insured for this kind of situation.

In April, a court ruled the city did not have coverage. The city appealed that decision, and as part of required negotiations, officials hammered out this settlement.

“We inherited this and we did the best that we could … I’m sorry that it landed where it did," Commissioner Cyndy Andrus said. "I, too, hope that we do not find ourselves here again in the near future.”

Commissioner Carson Taylor cast the lone vote no. He said he wanted to put a time limit on a clause that requires the city to reimburse its insurer, the Montana municipal Insurance Authority, if the city sells Mandeville Farm for a profit.

Commissioners asked City Manager Chris Kukulski to try to negotiate those limitations but that they wanted to vote and complete the settlement rather than have it come back to them for consideration again. Kukulski said this agreement was the insurer’s final offer.

The money to pay the settlement agreement is expected to come from the city’s reserve fund.

The City Commission has been preparing to potentially pay the judgment and had put together a plan that delayed three projects for one year in order to set aside money in the city’s reserve. The three projects are $250,000 for the design of a new municipal police and court facility, $177,000 for repairs or redesign of Bogert Pool and $175,000 for the replacement of the bathrooms at Lindley Park.

The Mandeville Farm is currently rented out to farmers. The city is in the process of developing a plan to use the property and adjacent state land to attract businesses.

Amanda Ricker can be reached at aricker@dailychronicle.com or 582-2628. She is on Twitter at @amandaricker.