NORWALK. Conn. (CBSNewYork) — The city of Norwalk and officials planning to build a mosque have agreed to settle a case that could have cost the city millions. But some neighbors of the project are still not happy.

Under the proposed settlement, the city and its insurer will pay the Al-Madany Islamic Center around $300,000, according to The Hour of Norwalk. The size of the project, however, will be reduced, WCBS 880’s Paul Murnane reported.

In June 2012, Al-Madany filed a lawsuit against the city that included allegations of discrimination after its building plan for the mosque and a community hall was rejected.

The settlement requires approval from the Zoning Commission and the Common Council, The Hour reported. The Zoning Commission will hold a public hearing on the proposed deal Sept. 4.

The mosque and community hall will be nearly 22,000 square feet — or about 26 percent — smaller than originally planned, but will include 135 more parking spaces, The Hour reported.

Julie Chapman, who has lived in the condos across Fillow Street from the site for eight years, believes it’s still a bad fit along the winding two-lane road.

“I am really upset about how much more traffic and congestion it’s going to cause this little tiny area of Norwalk,” Chapman told Murnane.

“Regardless of what it is or what it’s for, it doesn’t matter, it’s really the traffic issue that I’m concerned about,” she added.

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