PORTLAND — A state arbitrator awarded the city nearly $300,000 Friday to settle a dispute with Shipyard Brewing Co. over unpaid sewer charges.

The binding decision ends a four-month process in which the city and Shipyard worked with the arbitrator to figure out payment for water the brewery discharged into the sewer system for 15 years – without being billed.

The problem started in 1996, after a 6-inch water service line was installed at the brewery at 86 Newbury St. The line was incorrectly designated as a “no-sewer” line, and as a result Shipyard was undercharged for sewage disposal.

While the city hasn’t said how much the brewery was undercharged, the amount has been estimated to be as much as $1.5 million.

The mistake wasn’t discovered until 2011, and last year City Manager Mark Rees hired attorney Bryan Dench to investigate how it happened. Dench concluded it was the result of human error and miscommunication.

The city and Shipyard negotiated unsuccessfully for six months over a solution to the back payments, and then agreed last November to enter binding arbitration.

Shipyard President Fred Forsley on Friday called the undercharge “an honest mistake by the city … that never cost ratepayers any additional cost.”

He said he’s “happy with the outcome” of the arbitration.

“There was a lot of energy that went into (the arbitration),” Forsley said. “We’re glad to have this behind us, and to be moving forward.”

In a written statement, Rees said, “The decision provides a significant award to the city’s sewer fund. Given the complicated circumstances surrounding the case and the fact that there is no evidence of wrongdoing, we accept the arbitrator’s decision and award to the city as the final resolution to this matter.”

William Hall can be reached at 781-3661 ext. 106 or whall@theforecaster.net. Follow him on Twitter: @hallwilliam4.

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