Seattle- A year after a federal court ruled that Seattle’s ban on new strip clubs violated the First Amendment, the city has paid aspiring strip-club owner Bob Davis a half-million-dollar settlement for refusing to let him open one.

Davis, who founded Giggles Comedy Club in Seattle, plans to use the money to open a new strip club in Seattle and to pay $100,000 in attorney fees.

“I decided to just settle it,” Davis said. “It’s not what I thought I deserved.”

An expert witness for his case estimated lost income of $3 million, he said.

City Attorney Tom Carr called it “a fair settlement for all concerned.”

In March 2004, Davis applied for a permit to open a “gentleman’s club” on Fifth Avenue in downtown Seattle. The city denied it, citing a moratorium on new strip-club licenses that the Seattle City Council had renewed each spring since 1988.

Davis sued the city in February 2005. In September, U.S. District Judge James Robart ruled that the moratorium violated Davis’ right to free speech.

The issue of damages was mediated and settled two weeks ago.

The federal-court judgment means anyone can obtain a city permit to open a strip-club in Seattle’s downtown and commercial zones.

But the City Council responded last year by passing strip-club rules that have chilled business prospects for new clubs. The rules require clubs to install bright lights, ban direct tipping and keep dancers four feet away from customers. Club owners have financed a referendum to overturn the rules and collected enough signatures to put it on the November ballot.

In addition to the new rules, Mayor Greg Nickels has proposed creating a strip-club zone in an industrial area south of downtown Seattle.

Earlier this year, Davis applied for a permit to open a strip club in Bothell but was unable to get one.

“I’ll be suing Bothell shortly” in federal court, Davis said.