CASTRO VALLEY -- Eden Township Healthcare District owes $17 million to Sutter Health, an arbitrator ruled Wednesday.

The settlement is the result of a legal dispute Eden Township lost to Sutter over ownership of San Leandro Hospital. Sutter, which has held title to the hospital since September, had sought $29 million in damages, according to a news release from the district.

Sutter has signed a letter of intent to donate the hospital to Alameda Health System. As part of that agreement, Sutter would release Eden Township from paying damages if the district helps financially support San Leandro Hospital.

On June 21, Eden Township directors pledged up to $20 million to keep the facility open as a full-service hospital with an emergency room.