The Riverhead Town Board has settled its lawsuit with Young and Young, the engineering firm the town blamed for letting its landfill reclamation project go millions of dollars over budget.
The town will receive $1.2 million in the settlement, with $400,000 of that going to pay the town’s lawyers, according to Supervisor Sean Walter.
The town began the landfill reclamation in 2003 after receiving an estimate that the entire job would cost about $40 million. Landfill reclamation, in which garbage and recyclables are excavated from the site, was considered experimental at the time, as the state usually required closed landfills to be covered with a plastic cap.
But the town received special approval from the state Department of Environmental Conservation to close its landfill using reclamation instead of capping. At the time, it was considered a one-of-a-kind effort using a more environmentally friendly process.
But early in 2006, officials discovered that the project was well over budget, with more than $40 million spent and only about one-third of the job completed.
The town eventually decided to abandon the reclamation approach and cap the remainder of the landfill. The final cost of the entire job, capping and reclamation combined, was about $50 million, though officials have since pointed out that the town would have had to reclaim part of the landfill anyway because it had encroached on a neighboring property.
The town’s lawsuit against Young and Young, filed in 2007, did not specify the amount of damages being sought, because the court process would have ultimately determined that number, according to town attorney Dawn Thomas. The amount was expected to be in the millions, she said.
Mr. Walter said the amount the town received is probably all they could expect.
Young and Young will pay $1.2 million to the town through an insurance policy that carries a liability limit of $2 million, he said. That policy, known as a “wasting policy,” deducts legal defense costs from total coverage limits, according to Mr. Walter.
“They had already spent about $200,000 and we were estimating that by the time we got to trial, it would easily be another $300,000 to $500,000,” the supervisor said. “If we had won everything at trial, probably all that would have been left in the insurance policy was $1.2 million or $1.4 million. So they offered the $1.2 million and the Town Board accepted that, and we should be receiving the payment shortly.”
He added, “What was our goal? To put [the engineers] into bankruptcy? That wouldn’t have been my goal.”
The supervisor said the settlement money will go into a reserve fund. The town is paying about $4.3 million per year in debt service on the landfill, according to Mr. Walter.
He said that continuing the trial could have taken up to two years.
“And the town didn’t come to this litigation with clean hands,” Mr. Walter said. “We should have realized a long time before this happened that we were way over budget.”
One third of the settlement, which was approved Monday, will go to legal fees, according to the town’s agreement with the firm representing it in the case, he said.
Representatives from neither Young and Young nor the town’s law firm immediately returned calls seeking comment. The Town Board approved, by a vote of 5-0, a resolution agreeing to the settlement Oct. 5.
Former supervisor Phil Cardinale, who was heavily criticized for not catching the cost overruns during his administration, estimated two years ago that about $15 million more was spent on the reclamation project than would have been otherwise.