Worcester will pay $35.5 million to settle a yearslong court battle over sewage fees, the city announced on Wednesday.
The nearby town of Holden sends its sewage south, passing through Worcester on its way to the Upper Blackstone Water Pollution treatment plant. In 1999, the two municipalities and the state Department of Conservation and Recreation reached an agreement that Holden would pay Worcester for this service. The money helps cover sewer maintenance needs in Worcester.
But in 2013, Holden sued Worcester, alleging the city had overcharged about $1 million each year since it had made the agreement. Worcester spent years fighting the lawsuit.
A jury ruled in 2022 that the city owed Holden $14.6 million for those overpayments. Worcester appealed that decision, and when a judge rejected that appeal, he added more than $11 million for interest that accrued over the years.
As interest continued to increase — about $9,000 each day — the city filed for review with the Supreme Judicial Court, which was denied in February. Worcester has now exhausted all its appeals.
Under the settlement, Batista said the city will make payments to Holden over the next three years: $10 million by April 1 and $10.5 million by July 1 this year, followed by $5 million payments in 2027, 2028 and 2029. As part of the negotiated terms, Holden agreed to forgive interest accrued past February of this year.
Worcester will take out a loan to help cover the payments.
“This has been a long, complex legal case,” Batista said in a statement. “As City Manager, my goal has always been to act in the best interest of our residents. In this situation, that meant exhausting all legal options. We accept that the courts have spoken and I have negotiated what I am confident is the best possible outcome — spreading out judgment payment over the course of three years and eliminating interest accrual to have the least amount of impact to Worcester ratepayers.”
Holden Town Manager Peter Lukes said he’s pleased with the resolution, which will result in lower rates for Holden customers.
“I would like to thank Worcester City Manager Eric Batista for his attention to this matter and for his reasonable disposition,” Lukes said in a statement. “I believe that had he been in charge when all of this started, we could have resolved the issue much sooner and at a far lower cost to both parties.”
Some Worcester residents have expressed frustration that the city spent years fighting the case instead of settling sooner. During the public comment period at a recent City Council meeting, Steve Hart said city leaders had effectively been “rolling the dice with the city’s money.”
“How does this happen? Is it because of malfeasance? Ineptitude?” he asked.
It’s not yet known how the hefty settlement will affect Worcester residents. The initial payment of $10 million will come from the city’s sewer reserves. Worcester City Manager Eric D. Batista said he will bring a report to City Council “in the coming weeks” that details how the settlement will impact municipal sewage rates.
The two municipalities also plan to negotiate a new agreement over sewer use.
