Petaluma has agreed to pay a contractor that built the city's $160 million wastewater treatment plant an additional $4 million to settle a legal dispute over final billing.

Kiewit Infrastructure West was seeking about $13 million in compensation it said it was due after completing the massive Ellis Creek sewer treatment plant on Petaluma's east side.

The city hired Kiewit in 2005 and the plant went into service in 2009.

Kiewit submitted documents with the city claiming it was due additional payment for construction delays and changes in the design that cost more than initially anticipated.

The company was threatening to sue over the dispute and had entered into closed-door meetings with city leaders over how to reach a compromise.

An agreement for $4 million was reached last week. During Monday night's City Council's closed session meeting, the council voted 6-1 to formalize the agreement.

Councilman Mike Healy voted against the deal.

"I didn't think their claim was worth that much, and if it was worth that much, it was the fault of persons other than the city, specifically the design group or the construction management firm," said Healy, a lawyer.

The $4 million will be paid through a long-term state loan the city recently refinanced to a lower interest rate.

Other council members decided the $4 million agreement was better than being sued and possibly going to trial with Kiewit seeking many millions more.

"I think that's what we were all concerned about," said Councilman Gabe Kearney. "It was important to settle this now and get it done quickly so we were not fighting it in court and racking up exorbitant expert fees and attorney fees."

Kiewit representatives at the company's Fairfield division did not return a phone message seeking comment.

The agreement calls for Petaluma to send the funds by wire transfer within 10 days.