After almost three months of hearings — many lasting for hours — city officials this week agreed to pay a Filipino American employee $200,000 and allow her to retire at her highest salary level to settle claims that her demotion was based on discrimination and insider politics.

City officials contend Edith Fuentes, who once held one of the city’s most powerful decision-making positions, did not perform her job well.

Since 2007, Fuentes’ job functions have been reduced and last year she was demoted from planning administrator to planner, an almost 30% drop in salary.

“I’m just happy this is over and finalized,” Fuentes said Wednesday after her last hearing with the Civil Service Commission, which oversees employee relations.

According to the settlement, Fuentes has agreed to take an unpaid administrative leave through Sept. 10 and then retire, but she will receive a $200,000 payment immediately.

Her pension will be based on her annual salary as planning administrator at $129,240. Since she worked for the city for 19 years, she will make roughly half her annual salary and receive retirement benefits as required by her California Public Employees’ Retirement System contract.

As a planner she made $89,472.

One of Fuentes’ attorneys, Albert Abkarian, said the city suggested his client resolve the issue and the two sides agreed to settle the case.

City Atty. Mike Garcia said the settlement was a mutual decision, but declined to further comment on the matter.

Fuentes’ boss, Community Development Director Hassan Haghani, said during the hearings that he had begun to notice Fuentes’ quality of work declining. Fuentes countered that Haghani put off voicing his concerns and delayed for several months arequired yearly employee review.

Last year, the city hired a private investigator to audit Fuentes’ work. The investigator found 10 cases that demonstrated Fuentes lacked a basic understanding of permit requirements and held inappropriate one-on-one meetings with applicants.

But one of her attorneys, Robert Racine, said the report cherry-picked cases that had political undertones.

“It’s an orchestrated lynching. They wanted her out. They did whatever they could to get her out,” said Racine during proceedings earlier this month.

However, Senior Assistant City Atty. Ann Maurer contended Fuentes’ demotion was due to a lack of understanding of the zoning code, subject matter that she was supposed to master for her position.

Some of the cases that were investigated involved Fuentes giving restaurants leeway to operate as banquet halls, which have long been a source of controversy in the community.

Fuentes claimed that, in addition to being rooted in ethnic and gender discrimination, her demotion may have been in retaliation for a successful lawsuit she filed in 2000 in which she claimed a supervisor harassed her based on her background. As part of that settlement, Fuentes received a public apology from city officials.