The settlement, passed unanimously by city council, will have the city pay $24 million to the Houston Waterworks Team. That’s roughly half of the $46 million the city had withheld after the contractor filed suit in 2022, trying to force City Hall to cover cost overruns that the city said it was not obligated to pay.
Roughly $6 million of the payout will be contingent on unfinished projects. All remaining funds will be kept by the city and redistributed among the four area water authorities that are supporting the project.
Known as the Northeast Water Plant, the purification facility has operated since 2005 and produced roughly 80 million gallons of drinking water per day.
The expansion project, originally slated for completion in August 2025, will increase capacity to 320 million gallons per day, a critical part of the city’s efforts to meet rising demand along with a refurbished East Water Plant.
Though the region is generally not at risk of water shortages, the plants are important for meeting state goals for shifting away from groundwater to surface water, which carry heavy penalties for local water districts and municipalities.
The agreement reflects a “desire to compromise,” the city legal department said in a statement, with both sides dropping numerous claims made across hundreds of filings.
The contractors had accused city staff of burdening the project with “internal squabbles” and argued that the city should be on the hook for unforeseen costs, including a dramatic rise in the price of the 4 million pounds of steel needed to complete the project.
The city’s lawyers in turn accused the contractors of several breaches of contract and of threatening to walk away from the project, thereby holding the region’s economy “under a proverbial gun.”
“Houston faces imminent, irreparable harm if Plaintiff follows through on their threats of refusing to perform work,” the city wrote in a counter-suit.
The cost of the prolonged legal fight also mounted, with the city and water authorities paying a combined $8.7 million in fees to hired legal counsel.