However, the Boy Scouts can continue the fight, if they
want to foot the bill:

http://www.kfmb.com/topstory21345.html
(note that the headline is 100% wrong!)

BOY SCOUTS, ACLU SETTLE LAND LEASE LAWSUIT

(01-08-2004) - San Diego and the American Civil Liberties Union settled
a lawsuit over two leases between the city and the Boy Scouts, both
sides announced Thursday.

The ACLU suit, filed in 2000, challenged the city's subsidy of the
Desert Pacific Boy Scout Council through leases for public land in
Balboa Park and Fiesta Island Aquatic Park.

In July 2003, a federal judge ruled the Balboa Park lease violates First
Amendment guarantees of separation of church and state. The judge also
put over for trial the matter of the Fiesta Island lease.

Under its settlement with the ACLU, the city will take no position on
the validity of the leases in future legal proceedings, and the city
will pay the ACLU's attorneys $790,000 for legal fees incurred during
the three years of litigation and $160,000 in court costs.

"The Boy Scouts cannot have it both ways," said ACLU volunteer attorney
M.E. Stephens. "Having gone to great lengths to establish that
discrimination against gays and (athiests) is essential to their
mission, and, therefore, protected by the First Amendment, they cannot
now turn around and ask the people of San Diego to foot the bill for
that discrimination."

The settlement also relieves the city of any liability to pay future
ACLU legal costs.

"While it may be legally acceptable for the Scouts to privately
discriminate against so many boys and their families, it has never been
acceptable for the city to bar those families from a public park," said
ACLU co-counsel Mark Danis. "Government has a constitutional duty to
treat everyone equally and fairly."

The Boy Scouts of America, which is not a party to the settlement, has
the right to continue to present defenses to ACLU legal claims.

The national organization, based in Irving, Texas, also retains
possession of the leased properties during the pending litigation,
including all appeals, according to Deputy City Attorney John Mullen.

The BSA says the mission of the organization is to "prepare young people
to make ethical and moral choices over their lifetimes by instilling in
them the values of the Scout Oath and Law."

The Scout Oath reads: "On my honor, I will do my best to do my duty to
God and my country and to obey the Scout Law, to help other people at
all times, to keep myself physically strong, mentally awake and morally
straight."