The city on Wednesday night agreed to pay a $495,000 settlement to a homebuilders group contesting a fee that supported the city’s affordable housing efforts.

The City Council unanimously approved the settlement, capping an eight-year legal battle with the Homebuilders Association of Kitsap County and three Bainbridge development companies.

“I’m very pleased we can settle this matter,” Councilman Barry Peters said. “But the key issue is: it’s a lot money.”

The settlement will take a sizable chunk of a $1.8 million reserve the cash-strapped city is trying to build by the end of the year.

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The Serenity House is no more.

A fixture in the south island community of Lynwood Center for nearly a century, the group home for developmentally disabled adults was torn down Wednesday by the property’s new owner.

Serenity House closed in March after its 17 residents were moved to care facilities and group homes around Kitsap County. The Kitsap County Consolidated Housing Authority, which owned the 3.4-acre property, could no longer afford to subsidize Serenity’s operating costs, which amounted to about $16,000 a month.

KCCHA abandoned plans to redevelop the property with new assisted-living homes.

Built as a public school in 1914, the 11,000-square-foot facility had fallen into disrepair.

The building also served as a sanitarium and, for the last 40 years, a home for developmentally disabled adults and others in need of full-time care.

KCCHA listed the property in March for $1.95 million. A development company led by island resident Steve Romein purchased the property last month. Romein could not be reached for comment.

The property boasts panoramic views of Rich Passage and sits across the street from the the theater property, which is also owned by Romein.