HOSCHTON — Hoschton has escaped another year without having to enact costly methods on residents to help deal with the city’s increasing debt.

This year’s financial relief stemmed from a lawsuit Hoschton recently settled to the tune of more than $725,000.

In January 2008, Hoschton filed suit against its former wastewater treatment plant engineer, Charlie Armentrout of Armentrout, Roebuck & Matheny Consulting Group, regarding design flaws in the city’s wastewater treatment plant, which was completed in 2005.

The company had a $1 million insurance policy, according to city attorney Thomas Mitchell, but due to defense costs incurred during litigation, that amount has since been reduced.

Mitchell said he expects the settlement will exceed $725,000, although no final amount has been determined.

No date has been set for Hoschton to receive the money either, but Mitchell said it will hopefully arrive within a couple of months.

The fiscal resources committee met last Friday to distribute the settlement funds, and the Hoschton City Council approved the proposed allocations at its meeting Monday.

News of the settlement arrived just in time, as the city council recently announced that Hoschton was $77,000 in debt, most of which was due to litigation costs associated with its wastewater treatment plant.

In addition, Hoschton has two loans, totaling about $6.4 million, with the Georgia Environmental Facilities Authority, and both concern the plant.

As of Aug. 25, the city received approval from GEFA for an additional $300,000 — which will be added to the second loan — to repair the plant’s phase separator.

Councilman Tom Walden had proposed issuing general obligation bonds in the amount of $6.5 to $7 million to repay the debt, but with the recent settlement, he said bonds are no longer necessary.

Instead, the city will use funds from the settlement to make the required $480,000 in loan payments in 2010.

Hoschton will use $376,262 of the settlement to help repay these loans, and the remaining $103,738 will be paid using funds received through “normal business operations,” Walden said.

Additionally, an estimated $131,000 of the settlement will be designated in the 2009 and 2010 budgets for three new, fully equipped and computerized police vehicles. Two of the vehicles will be purchased in 2009 with the third slated for purchase at the end of 2010.

At the conclusion of Monday’s meeting, Walden announced his resignation, effective immediately, citing “concerns about my health and family relationships.” The council then approved a resolution to hold a special election on Nov. 3 to fill Walden’s vacated seat. Qualifying, at a cost of $11, will take place from 8:30 a.m. to 4 p.m. Oct. 6-8 at city hall. With Walden’s departure, four council seats are now up for grabs in the upcoming election.