Redland City Council has signed a secret settlement with housing developer Ausbuild over a Thornlands sub-division.
Ausbuild sought court action after council refused it permission to build eight extra houses on land deemed to be a Community Purposes Zone.
The council had wanted the green zone to be used for a 50m-wide tree-lined avenue.
Court documents show details of the agreement were placed in a sealed envelope not to be opened without permission of the Planning and Environment Court registrar.
Council will amend an existing Infrastructure Agreement to slash $800,000 off the developer's infrastructure charges bill of $6.5 million.
In exchange, Ausbuild will hand over a 6218sq m strip of land running through the middle of the estate on Boundary Road at Thornlands.
It will then be up to the council to maintain the land which will be the estate's main thoroughfare.
The council has also indicated it will not object to Ausbuild applying to the court to increase the number of three-bedroom houses in the estate. The estate will have 244 houses, some on lots of less than 200sq m.
The council was initially divided over the Ausbuild estate.
Deputy Mayor Alan Beard used his casting vote to allow the estate to go ahead in 2013 and a vote with a similar result was taken behind closed doors last year to allow the out-of-court settlement.
Mayor Karen Williams did not vote on either of the issues after declaring a conflict interest as Ausbuild had donated to her election campaign.
Division 7 Cr Murray Elliott was angry the council settled out of court when legal advice was to proceed with the action.
He said it was the most disgraceful decision the council has made during his 18 years as a councillor.
"Under the structure plan, the land should have been designated community purposes, so any relaxation on infrastructure charges to obtain this land is obscene," he said.
Cr Julie Talty said it was a good outcome for ratepayers and such offset arrangements were typical under the Sustainable Planning Act.
Ausbuild has also discontinued a second appeal lodged against the council's refusal of 259 lots across the development.