Owners of three homes that slid into the North Saskatchewan River Valley in 1999 will receive $1.35 million in provincial disaster funds now that the city has agreed to write-off unpaid property taxes that have accrued since then.

The province would not release the funds to the homeowners until $569,000 in taxes were cancelled. The deal is also conditional on the city regaining title to the original lots.

Mayor Stephen Mandel defended the deal during Wednesday's city council meeting.

"Let's be a bit fair, this was an incredible difficult time for those people, that had their houses fall into the river bank. They never expected it to happen," he said.

"They should or shouldn't have built there that's not the issue. And so to add insult to injury, to keep pushing for that amount of money, they need closure as well and so this allows them to get closure, allows us to get the land and then we get some compensation from the provincial government."

The homes were built at the top of a slope on Whitemud Road in the 1980s.

The city demolished the homes in 2000, with the cost added to the tax bill.