The City of Montreal has agreed to pay $220,000 in compensation for bungling a construction permit issued to the owner of St-Laurent Boulevard's iconiclandmark Warshaw's supermarket.

Harvey Levyrented his space to a big-chain drugstore and was forced to tear down its trademark storefront after public protest.

The city issued a building permit in 2003 to a numbered company owned bythe Montrealbusinessman and his family, after they sold Warshaw's and rented the commercial space to Pharmaprix, Shopper's Drug Mart's sister chain in Quebec.

The drugstore erected its familiar red-and-white store sign, drawing protest from heritage groups and residents in the neighbourhood who thought the bright incandescent banner was an eyesore.

The borough responsible for St. Laurent Boulevard revoked the permit, and the numbered companyhad to tear down the sign and replace it with a smallerversion.

On Thursday, the City of Montreal's executive committee admitted it had made a mistake and settled with the company out of court for $220,000 in damages.

Mayor Helen Fotopulos of Plateau Mont-Royal borough said an employee in the permit office signed off on the wrong papers.

"Certain things that you're not allowed to do on the Plateau was allowed," she told CBC."It was a general permit that was given. That was the employee's fault."

Fotopulos wouldn't say what happened to the city employee. The numbered company was originally seeking $450,000 in damages.

The $220,000 settlement will be paid to the company.