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KEY WEST, Fla. (Reuters) - An exotic dancer will get nearly $20,000 from city officials who moved to shut down her lap dance parlor in this historically easygoing Florida town known for its drag clubs and clothing-optional bars.

Key West has agreed to pay Christy Sweet $19,500 to cover legal fees and lost revenue for her business, Personal Dances, her attorney Richard Wilson said on Thursday.

The city had granted Sweet an adult entertainment license in 2002 but revoked it in January 2004, according to federal court documents.

Then four months later, city officials voted to drastically restrict adult businesses in the town of about 26,000, home to adult-themed festivities such as the annual Halloween-pegged Fantasy Fest.

Sweet filed a lawsuit in federal court. A judge sided with her and signed the settlement last month.

Key West city attorney Bob Tischenkel said the city agreed to settle because "she was going to win."