ARLINGTON — A decades-old dispute over the proposed development of rural land along I-5 at Island Crossing finally appears to be resolved.

Dwayne Lane’s Arlington Chevrolet can build a new 4.5-acre car lot at Island Crossing, but the Stillaguamish Flood Control District gets to review every step of the planning and permitting — for the car lot and for any Island Crossing projects Lane might become involved in later.

The two longtime legal adversaries reached a compromise last week, signing a settlement that took effect on Halloween.

The agreement marks the end of a case that has spanned more than 20 years, during which Dwayne and son Tom Lane fought to build a car dealership on property they own at Island Crossing.

The litigation also has involved the city of Arlington, Snohomish County, Futurewise, Agriculture for Tomorrow, the Pilchuck Audubon Society, the state Department of Transportation and the state Department of Community, Trade and Economic Development. There have been lawsuits, hearings, repeals and remands in front of the Central Puget Sound Growth Management Hearings Board, Snohomish County Superior Court, the state Court of Appeals and the state Supreme Court.

It’s one of the county’s most contested pieces of property.

Island Crossing is a triangular, 110-acre swath of land in north Arlington, at the junction of I-5 and Highway 530. It was designated agricultural land in 1978.

In 1995, city and county officials began a quest to re-designate the land a commercial corridor along the highway and to develop it as part of Arlington. The acreage has been the centerpiece of a contentious, convoluted land use battle ever since.

Proponents of commercial development have cited high traffic flow and the promise of new tax revenue as reasons the land would be better suited to commercial development than farming. Opponents worry about the destruction of farmland and the threat of flooding in the area, which lies along the flood-prone Stillaguamish River.

As part of the effort to settle the dispute, Lane agreed to build a car lot designed so that, in the event of a flood, it would contribute minimal net rise in the water level on properties nearby or downstream.

A hearing examiner issued building permits for the dealership in October 2013 that included the zero-water-rise stipulation. A month later, after an appeal by Lane, the examiner loosened that restriction to allow for up to seven inches of water rise during a 25-year or 50-year flood event, and up to two inches of water rise during a 100-year flood. At that point, the state Department of Transportation and the flood-control district filed the case’s most recent appeal, worried that the dealership could cause floodwater to reach I-5 and close the area’s most vital highway. WSDOT withdrew when Lane agreed to redesign the lot for minimal water rise.

“From the standpoint of the Stillaguamish Flood Control District, its main concern was the flooding, and specifically the zero-flood-level rise,” attorney Henry Lippek said. “It is extraordinarily bad judgment on the city’s part and Dwayne Lane’s part to allow commercial development in the floodplain, but if it’s going to happen, it shouldn’t affect other properties.”

The settlement requires Lane to give any future Island Crossing applications, designs, studies and other planning documents to the flood-control district as soon as they are submitted to the city or county for review. Lane also agreed to provide the district with notice at least five days before any development meetings so district representatives can be involved in discussions.

“Island Crossing offers huge economic opportunities for the future,” said Lane’s attorney, Brent Carson. “To the extent that Lane is involved in that process moving forward, he has agreed to essentially give them a seat at the table. What it does is guarantee an informed discussion and better dialogue.”

The agreement calls for Lane to pay the district $30,000 in three payments of $10,000 each. The money is to be used for expert review and analysis of development proposals at Island Crossing and for district officials to attend related government meetings. After 10 years, unused funds must be returned to Lane.

In return, the flood district has agreed to release all existing legal claims regarding the Chevrolet dealership. The issues “have been deemed fully and finally resolved,” according to the settlement. The district also promised not to oppose future government approvals, such as permits or licenses, or help other parties challenge the dealership.

Carson expects the dealership could pave the way for other developments in the area.

“I know the city hopes so,” he said. “Island Crossing was brought into the city, designated commercial. It’s 100-plus acres ripe for development and economic opportunities.”

The Lanes plan to break ground on a 35,000-square-foot building as soon as weather allows. They plan to hire between 25 and 35 employees for the dealership, which they expect to open sometime late next year.

“We are moving forward,” Tom Lane said. “The plan has never deviated for us. We’re relocating to a new building as soon as possible.”

But while the flood control district agreed that it will no longer oppose the car lot, the organization retains its ability to challenge plans for other projects at Island Crossing.

“The original idea was that the floodplain is great for agricultural use but not so much for any other use, seeing as car dealerships and such don’t work so well when they’re under water,” Lippek said. “But from the standpoint of the district, it believes it’s accomplished its objectives in a way that is more cost effective and more certain than if it had gone through future appeals. Sometimes, you do what you can do, and then move on.”