The state of California has agreed to pay $24 million to investors to settle a four-year legal battle over a proposed deal to sell $2.3 billion in state properties, officials announced Sunday.

At issue was a plan that former Gov. Arnold Schwarzenegger hatched in 2010, at the height of California’s fiscal crisis, to sell and lease back 11 government office complexes – including two in downtown Los Angeles – to a consortium of investors called California First. The move was an attempt to reduce the state’s ballooning budget deficit.

But the deal came to a grinding halt in 2011, shortly after Gov. Jerry Brown took office, after independent analysts said it could cost the state as much as $1.5 billion. California First sued in 2011, saying that the state breached its contact.

A San Francisco superior court judge started a bench trial in December, but delayed the proceedings amid a dispute over evidence. Both sides then agreed to submit the case to an arbitrator. During negotiations last week, the two sides reached a settlement agreement, according to California First's attorney Angela Agrusa of the law firm Liner.

“We’ve been aggressively litigating this case for four full years,” Agrusa said. “California First is obviously pleased that the state is now being held accountable to California First for Gov. Jerry Brown’s breach of contract in 2011.”

Read more about the lawsuit in the Los Angeles Business Journal.

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