The St. Mary's County commissioners are nearing an agreement to settle the lawsuit brought by a developer whose proposed 37-lot subdivision in the rural preservation district has been blocked, county officials said this week.

Under the terms being discussed, which have not been approved by the Board of County Commissioners, the developer of the Eldorado Farms subdivision in Mechanicsville would be allowed to build 24 homes, and the project would be exempted from the adequate public facilities ordinance, which can delay construction of houses if there is not space in the school system for the children expected to live in them, officials said.

The county's planning staff members were moving this week to add preliminary approval of 24 lots for Eldorado Farms to the agenda for the Dec. 12 Planning Commission meeting, said Phil Shire, senior plan reviewer with the county's Department of Land Use and Growth Management.

"Eldorado at this point looks like a go," Shire said.

That was not the case Feb. 8, when the commissioners voted 3 to 2 to deny Eldorado's proposed amendment to county water and sewer rules. All residential subdivisions of more than 25 lots are required to connect to a public water system. But to build a water tower to serve the project, developer Lois Leicht of Talon LLC needed to have an amendment to the county's Comprehensive Water and Sewerage Plan approved by the commissioners.

The choice was tough for some commissioners. Although the 116-acre property along Eldorado Farm Lane near Golden Beach Road is in the rural preservation district, "it's an area that we perceive to have development in, which is the Charlotte Hall area," Commissioner Thomas A. Mattingly Sr. (D-Leonardtown) said at the time.

"So I'm really torn about this one here," Mattingly said, according to a transcript of the meeting. "I'm not sure exactly even at this point, given that we're about to vote, I'm not sure exactly how I want to vote on this."

In the end, Mattingly joined commissioners President Thomas F. McKay (R-At Large) in the minority by voting for the developer's request. Commissioners Larry Jarboe (R-Golden Beach), Kenneth R. Dement (R-Callaway) and Daniel H. Raley (D-Great Mills) formed the majority in voting to deny the proposal and stop Eldorado Farms.

But the situation became murkier about a month later, when another developer asked for an amendment to water and sewer rules for another subdivision also in the rural preservation district. This time, the 111-lot Grandview Haven subdivision, less than 10 miles from the Eldorado Farms subdivision, was approved by the commissioners. The vote was also 3 to 2. Raley was the only commissioner to change position.

The developer of Eldorado Farms sued the commissioners, saying their decision to deny the water and sewer amendment was unconstitutional because it was "unsupported by adequate findings of fact and conclusions [and] was arbitrary and capricious," according to documents filed in St. Mary's County Circuit Court.

"There is no discernable difference between the Eldorado Farms subdivision and the Grandview subdivision that would account for the County Commissioner approval of the latter's application and the denial of the former's," the developer's complaint alleged.

The settlement negotiations began because the commissioners expected to lose the case, Jarboe said. He said that under the settlement proposal, the developer would pay a fee of about $50,000 for school capacity.

"Because of the inconsistencies of the commissioners' votes, this is where we're at, and you have to accept that fact," he said.

Jarboe viewed his vote on denying the Eldorado amendment as a statement against unbridled growth on the county's farmland.

"In order to give someone a special change in the plan, they should be able to prove what they're doing for rural preservation," he said. "Isn't it better to go within the code and not have a water tower in the middle of the community? . . . A water tower invites more development because people want to hook up to it."

But McKay said the water and sewer rules are not to be used as tools to control growth; they are intended to determine whether there is sufficient water for a neighborhood. The zoning ordinance controls growth, he said.

"It's not a matter of whether we like the project or not, it was whether they adhered to the law, . . . and they adhered to the letter of the law," McKay said. "We just arbitrarily and capriciously denied it."

Edward Gibbs, an attorney for the developer, declined to comment. Raley and Mattingly could not be reached Tuesday.