The city of Oakland has agreed to pay $70,000 to settle a lawsuit challenging a controversial ordinance allowing police to seize cars that are used in illegal car rallies known as sideshows, attorneys in the case said Wednesday.

Although their cars weren't seized, Aram Sohigian and Sam Horton of Oakland said in their taxpayer suit that they didn't want their tax money used to enforce what they say is an illegal ordinance under which people's cars can be seized and sold -- rather than be impounded for 30 days as allowed under state law -- for such relatively minor crimes.

The suit also said hearings over whether police had legal grounds for the seizures are often delayed for up to six months and that those who hear the challenges are "unilaterally selected and paid by the city." The city attorney and police have a "pecuniary interest in the outcome of forfeiture proceedings," the suit said.

Without admitting wrongdoing, the Oakland City Council approved the settlement Tuesday night, said Erica Harrold, spokeswoman for City Attorney John Russo.

The parties decided to settle before an expected California Supreme Court ruling in the next two weeks on the legality of a similar ordinance in Stockton that allows for the seizure and sale of cars used by drug suspects and clients of prostitutes, the plaintiff's attorney, Mark Clausen, said Wednesday.

Oakland also has a separate ordinance authorizing car seizures in drug and prostitution cases. Lower courts have issued conflicting opinions on the legality of seizure laws in different cities in California. The state Supreme Court's ruling is expected to address the constitutionality of local car-seizure ordinances in general.

"Had we waited for a decision by the Supreme Court, it likely would have definitively dictated the outcome in favor of one party or the other," Clausen said. "So rather than each side taking a risk and going for broke, each side gave a little and found a middle ground."

As part of the settlement, the city must not seize cars used in sideshows until the Supreme Court rules, Clausen said.

"Plaintiffs cannot seem to understand that these matters are not frolics of departments of the city, but nuisance abatement actions directed against serious urban problems undertaken on behalf of the people of the city of Oakland," Deputy City Attorney Christopher Kee wrote in court papers.

In January, the state First District Court of Appeal ruled that a similar ordinance in Richmond is unconstitutional, because it doesn't entitle the owner to an early hearing to try to reclaim the car.

But the appeals court noted that the state Supreme Court would probably have the last word.

E-mail Henry K. Lee at hlee@sfchronicle.com.