The city of Guelph and Urbacon Buildings Group Corp. have reached an agreement out of court that will see the city pay the developer $6.635 million.

According to a news release, the city agreed to settle to avoid further legal costs.

Guelph had originally signed a two-year, $42-million agreement for Urbacon to build a new city hall and convert the old city hall to a provincial court. Instead, the city fired Urbacon in 2008.

Earlier this summer, an Ontario Superior court ruled the city had wrongly dismissed the contractor.

The city's legal costs came to $2,233,982 and in total, the city's deficit for the project is $8,346,261. According to Ann Pappert, the city's chief administrative officer, the city has already paid about $800,000 in fees that are currently being held back by the court and that she expects will be released.

City residents shouldn't expect to see any special tax levies to help pay for the settlement.

"We recognize that all of the money that we have is our taxpayers's money, and we have to live within our means,"said Pappert. "We have sufficient funds in our city reserves to fund the settlement."