CHICAGO — A group of Muslims has sued the city of Palos Heights, alleging that the Chicago suburb's city council conspired to foil its plan to convert a vacating Christian church into a mosque.

The lawsuit, filed July 28 in U.S. District Court in Chicago, accuses the city council of everything from constitutional violations to religious discrimination to breach of contract.

The legal action stems from the council's plan to pay the Al Salam Mosque Foundation $200,000 to drop its mosque plan. The foundation had agreed to take the money but the plan fell apart last month when Palos Heights Mayor Dean Koldenhoven vetoed the payout, saying "government has no place in this issue."

Now the foundation is seeking more than $3.5 million in damages in its suit.

Among other things, the lawsuit states that the foundation has "suffered violations of its members' constitutional rights." The lawsuit also claims that, based on the Religious Freedom Restoration Act, the actions by the city have "burdened the plaintiff and its members from the free exercise of religion."

The breach of contract claim stems from reneging on the $200,000 offer.

Rouhy Shalabi, the mosque foundation's lawyer, said his group had to chose between walking away from its plans to build a mosque or taking a stand against religious bigotry.

"The lawsuit that was filed clearly speaks to the fact that this was an action against Muslims and it will not be tolerated," Shalabi said at a news conference in suburban Oak Lawn. "This is to send a message that the Muslim community will not be discriminated against and walk away."

The issue has divided the City Council and residents in this mostly Christian town of about 12,000 people. There are approximately 450 Muslim families living here.

The mayor had called the $200,000 offer "an insult" to those families, many of whom are Arab-Americans.

But four aldermen, including Jim Murphy, insisted they offered the payment so the city could buy the church and convert it into much-needed recreation space.

Murphy blamed the mayor for the lawsuit.

"I think the Al Salam Mosque Foundation has acted honorably. I regret and apologize for some of the statements of the residents of Palos Heights," Murphy said on July 28. "However, this could've been stopped back in 1997 when the mayor became aware that this property was for sale ... but never shared that information."

The Council of Islamic Organizations of Greater Chicago had no comment on the lawsuit but did have kind words for the Christian clergy and residents who have supported the foundation's mosque plan.

"We commend all those individuals within and outside Palos Heights who have spoken and stood up in support of the religious rights of Muslims to associated and worship freely in that community," the council said in a statement.

The council also said it hoped the foundation would be able to buy the church and establish its place of worship in Palos Heights.

Alderman Jim Donnick, who has sided with the mayor, referred questions about the lawsuit to the city's attorney, who did not return a phone call seeking comment. The mayor also did not return messages seeking comment.