WAILUKU, Maui — The county announced yesterday that it had acquired a portion of the Montana Beach Condominium on Maui's north shore as part of a $4.58 million settlement in a dispute over coastal zone management laws.

Of the settlement amount, $2 million was paid by the county's insurance company, Royal Sun Alliance.

The 1.5-acre beachfront parcel next to Baldwin Beach Park in Pa'ia was acquired from Dennis and Diane Holland, who had filed a lawsuit claiming their civil rights were violated when county officials suspended the building permits on their nearly completed home in August 2001.

The property was part of the Montana Beach Condominium project on a 5.7-acre property known as the Old Lime Kiln site. Critics attacked the development because it threatened beach access and was built on land designated in the area's community plan for park and open space. They also accused former Maui planning director John Min of improperly granting special management area permit exemptions for the project in December 2000.

Former Mayor James "Kimo" Apana later acknowledged that what occurred was "an abuse of a loophole in the law.'' County attorneys ordered the work stopped, saying the granting of such exemptions for single-family residences that are part of a condominium project was contrary to state law. The county stopped short of ordering the Hollands to tear down the home, allowing the owners to file a court appeal and perhaps negotiate a settlement.

Mayor Alan Arakawa said he expects to wrap up the $1.8 million purchase of a vacant oceanfront parcel in the same condominium project in September, settling a lawsuit filed by owner Michael Weidner.

Deputy Corporation Counsel Madelyn D'Enbeau said Weidner's 1.4-acre property was appraised in February at $4 million, with proper permitting, and that the Holland property, which includes a 2,250-square-foot home, had a market value of $7.45 million.

She said the settlement with the Hollands includes an agreement that the property be used solely for public purposes and not as a private residence or for commercial benefit.