The Holmes Harbor Sewer District got an early break this week amidst a storm of lawsuits concerning its illegal sale of $20 million in bonds in 2000.

On Monday, the district’s co-bond counsel for the sale, Mike McCall, agreed to pay the district $675,000 in an out-of-court settlement of the district’s suit against him.

The arm’s-length deal, negotiated by sewer district attorney Robert Gould and McCall’s attorney, could soon wrap up one piece of litigation the district began after the state attorney general ruled the bond sale to be a violation of state law. Sold to investors to fund the construction of a private office development in Everett, the bonds have since been declared illegal by an Island County judge and have lost all their value.

In January, bond investors filed a class-action lawsuit against the sewer district, several investment houses, and attorneys and former sewer district commissioners involved in the sale. The investors are seeking the $20 million they paid for the bonds, plus interest, legal fees and other damages.

Under the terms of the settlement, McCall and his Sacremento, Calif. firm, Schuering Zimmerman & Scully, LLP, will pay the district the settlement amount, which is much greater than the $140,000 McCall was paid by the district three years ago as a bond counsel. In addition, McCall will testify in litigation against the district’s former attorney, Charles Tull, former district engineer Les Killingsworth, and J. David Smith, the attorney who represented Terry Martin, the developer who proposed building and sought bond-financed funding for his Silver Sound Corporate Center. That testimony — including travel — will come at no cost to the district.

Speaking on a conference call at a special meeting of the district’s commissioners Tuesday night, Gould was reluctant to talk about how the settlement came about or how the sewer district would allocate the settlement money. He was also reluctant to discuss the possible impact of McCall’s testimony in the other litigation. Those details, he said, will come out at a reasonableness hearing in Island County Superior Court on April 24.

At the meeting, the commissioners voted 4-0 to give Gould permission to pursue the settlement offer. Stan Walker, the president of the sewer board, was similarly tight lipped on the importance of the offer.

“It’s just another indicator that our litigation is moving along,” he said.

The other litigation Gould is pursuing on behalf of the district is still scheduled for bench trials later this year. A suit against engineer Killingsworth and his firm, Datum Pacific, is scheduled for July, while attorneys Tull and Smith are expected in court on Nov. 18.