The city of New Orleans and the operators of a New Orleans East landfill that opened after Hurricane Katrina and quickly became the region’s busiest dump have agreed to pay $8 million to settle a long-running lawsuit with a group of people who actually own the property on which the landfill sits.

The settlement agreement — which was filed in Civil District Court on Thursday — will make the city the owner of record of the land.

It also will absolve the old property owners from any environmental liabilities that might arise from the millions of cubic yards of waste that have been dumped on the site, according to Joel Waltzer, lead attorney for the plaintiffs.

The suit was filed in November 2007, roughly two years after the hastily permitted Old Gentilly Landfill opened its doors and began taking in as much as 100,000 cubic yards of debris on busy days.

The suit’s central claim was a startling one: that most of the land under the dumping site — which the city of New Orleans purported to own — actually belonged to hundreds of private landowners, who had purchased lots in three residential subdivisions that had been platted, but never built, decades earlier.

Many of the landowners were unaware that the city had taken over their land for a dump until Waltzer, who had been filing suits against the Old Gentilly Landfill on environmental grounds, began investigating. He discovered that about 80 percent of the dump site was in private hands and that the city was still mailing property tax bills to all of the landowners each year.

One of them, Doretha Walker, then 77, became the lead plaintiff in Waltzer’s lawsuit. She recalled paying $6,000 in 1981 for four adjoining lots in a subdivision with the optimistic moniker Flowerdale. Walker paid her modest property tax bill each year, hoping that one day Flowerdale might become a reality or at least that her land might become more valuable. She never actually laid eyes on the property.

While neither Flowerdale nor its neighbors, christened Lichentag and Forestlawn, ever got built, the land did become more valuable, after a fashion. After Katrina, the otherwise unremarkable, desolate area off Old Gentilly Road suddenly had immense value as a dumpsite.

The operators of the landfill — the AMID/Metro Partnership, a joint venture between construction company owner Stephen Stumpf and trash hauler Jimmie Woods — were charging about $3.50 per cubic yard for waste, meaning the site was generating hundreds of thousands of dollars a day on busy days.

How much the landfill has taken in since 2005 is unclear, but the figure likely is in the tens of millions of dollars.

Under a favorable deal it had with the city, AMID/Metro was allowed to keep 97 percent of the money it generated, while the city, the purported landowner, got the other 3 percent as a “royalty.”

It’s not clear when the city helped itself to the land, but it apparently was decades ago. The post-Katrina Old Gentilly Landfill actually sits atop an older city dump that had been closed in the 1980s. On all the paperwork filed with the state Department of Environmental Quality, the city was listed as the owner.

While people who win civil settlements against the city of New Orleans often never get paid, or at best have to settle for partial payment years after the verdict, Waltzer said a fund already has been set up to pay the plaintiffs in this case.

He said a maximum of 25 percent of the $8 million settlement would go to attorneys’ fees and costs and the costs of claims administration, with the remainder going to the claimants.

The settlement calls for each property owner to receive about $1 per square foot, plus a flat payment per owner, which works out to about $12,000 for the owner of a typical subdivision lot. Waltzer said that amount “represents a premium price for the land in the area.”

In a prepared statement, he added: “While hurricane debris had to go somewhere, the landowners here were clearly mistreated. They clearly deserve the premium the settlement provides for their ruined land.”

The defendants have filed a motion seeking to keep confidential the terms of how the settlement is being funded.

The suit is a class action, which means the court must hold a fairness hearing to ensure the settlement is fair to the class. The hearing is set for April 13 before Judge Sidney Cates IV.

Walker said she thinks the sum she’ll get for her four lots will be a “decent return on my investment” of $6,000, more than 30 years ago.

“I’m very, very pleased,” Walker, who’s now 84, said in a brief phone interview. “I’m happy we’ve come to a settlement. I never thought I would be receiving the money before I passed.”

Follow Gordon Russell on Twitter, @gordonrussell1.