[FONT=Verdana]Ending perhaps its most contentious battle over a new campus, the Los Angeles Unified School District will pay $4 million to fund historic school conservation in exchange for the Los Angeles Conservancy dropping a lawsuit that sought to preserve the once-glitzy Cocoanut Grove nightclub at the former Ambassador Hotel.

"We still continue to believe that it was feasible to save the hotel," said Linda Dishman, the conservancy's executive director. "At this point, we as an organization want to move on. What's left at the Ambassador site is not really historic preservation at this point, and there's a lot of other buildings we can focus on."

The settlement will allow the school system to demolish most of the Cocoanut Grove's structure and begin building a sprawling, 4,200-student K-12 campus on the site, which it had been eyeing for a school for decades.

"It is my greatest hope that this puts the whole saga finally to an end," said Kevin Reed, the district's general counsel. He said the district would have won the lawsuit, but decided to end the case so the $566-million project could continue on schedule. The first of the schools, a K-3 building, is slated to open in 2009.

The conservancy dropped the case Jan. 2 after signing the settlement, but the district did not publicize it until Tuesday, in a joint statement initiated by the conservancy.

A district spokeswoman said in an e-mail that it was unclear "whether there needed to be a press announcement."

Officials said the Board of Education agreed to the settlement during a closed session Dec. 18, but its actions were not required to be reported until the court approved the dismissal of the case and then only in response to an inquiry.

The hotel, built in 1921, was a glamorous intersection of celebrity and politics in its heyday, the site of six Academy Awards presentations. Movie stars, royalty and every president from Herbert Hoover to Richard Nixon lodged there during visits to Los Angeles. It was also the scene of Robert Kennedy's assassination in 1968.

The hotel eventually fell into disrepair.

It was dilapidated when the district first set its sights on it in the 1980s. But before L.A. Unified could act, a group of investors including Donald Trump bought the hotel with plans to build the world's tallest skyscraper. The district initiated eminent domain proceedings, creating a legal tug of war. The fight continued after the real estate market bottomed out, with the sides arguing over whether the district had to pay market rates.

Ultimately, the district bought the 24-acre site in Bankruptcy Court in 2001.

Three years later, a divided school board approved a plan to tear down much of the hotel and replace it with new school buildings to ease crowding in the city center. The district said the structure was not strong enough to withstand an earthquake. At the time, officials said they would preserve the Cocoanut Grove and the pantry, where Kennedy was shot, as mitigation measures for tearing down the rest of it.

It wasn't long before the district found itself back in court.

The conservancy and other groups sued to block the demolition, arguing that the district was giving short shrift to the historic importance of the structures and failed to do enough to save them. It offered an alternative, backed by a number of politicians, to turn the main hotel building into affordable housing and place the school around it.

The Mexican American Legal Defense and Educational Fund and members of the Kennedy family sided with the district, saying any delay to the project would harm children by forcing them to continue attending overcrowded schools.

A judge dismissed the conservation groups' suit. Rather than appeal, the parties settled the dispute in August 2005 with the conservation groups agreeing to drop the case in exchange for the district pledging to set aside $4.9 million for preservation of other historic campuses. That deal was supposed to end the case.

But after the school board unanimously decided to tear down most of the nightclub, too, the conservancy sued again in October arguing the district broke its promises. The group also took issue with the treatment of the pantry, which it said the district had promised to keep whole, but saved only pieces after taking 3-D images of it, and storing it in two containers.

The district countered that its method of preserving the pantry was better than hauling the room elsewhere, especially because it could crumble during transport.

As for the Cocoanut Grove, officials said the structure was weaker than they expected and most of it could not feasibly be used.

Interior decorative elements were taken down and stored for use in the new space -- a school auditorium.

In November, the district reluctantly agreed to delay demolition when a judge indicated she was poised to approve an injunction while the case proceeded. A hearing was set for February.

Dishman said that her group felt it was important to hold the district accountable for changing its plans. But because so much of the building was gone, she said that true preservation on the site was now impossible.

The settlement proceeds will be added to those the district pledged to end the first lawsuit. Interest on the $4.9 million -- about $350,000 to $400,000 a year -- will be used to repair and replace historic light fixtures, preserve murals and otherwise maintain and care for 125 historic buildings in the district, she said.

Demolition of the nightclub is scheduled for Jan. 22.[/FONT]