The Chelsea Board of Selectmen plans to meet Wednesday night to discuss a $20,000 settlement it might offer to a former contractor who is suing the town about an old plowing contract.

The board also will interview consultants to help establish a tax-increment financing district to capture tax revenue from a natural gas pipeline largely installed last year.

The board is scheduled to meet at 6 p.m. at the Town Office to interview the consultants in executive session, and the regular meeting will begin at 7:45 p.m. or immediately after the interviews.

Attorneys representing the town and the former plow contractor, Frank Monroe, agreed to a proposed settlement of $20,000, according to both attorneys.

Monroe sued the town in 2011 for more than $100,000 in damages, claiming the town had extended his plowing contract that ended in 2010 another two years. The town countered that the contract wasn’t signed by the board, so it wasn’t valid.

The contract dispute came about during a criminal investigation of the town’s contracting methods and of the former board chairwoman, Carole Swan. Swan was convicted last year of extorting money from Monroe in exchange for the town’s plowing contract, defrauding the federal workers’ compensation program in 2008 and 2010 and filing five years’ worth of fraudulent tax returns, along with other charges. Her husband, Marshall Swan, was convicted of filing false tax returns.

Both are scheduled to be sentenced on separate dates in June.

The town’s attorney, Stephen Langsdorf, of Preti Flaherty, said the town could end up paying about $50,000 in legal fees if the matter goes to court. Although he thinks the town would have a strong case, Langsdorf said there’s still no guarantee the town would prevail.

Town Manager Scott Tilton said after the board votes to approves a settlement, which he expects will happen Wednesday, the town will hold a special town meeting as soon as next month to ask residents to sign off on paying the settlement.

Tilton said he expects some residents to be bothered by paying a settlement to Monroe, but he said the town will save money in the long run by not going to trial.

“I know they’d like to prove a point, perhaps. They can always take that stance,” Tilton said.

Monroe’s attorney, Michelle Allott, of Farris Law, said the parties learned from the U.S. Attorney’s Office that Carole Swan had the board sign a separate contract that didn’t include the two-year extension, and she said Monroe relied on the belief that he had the two-year extension when buying new equipment.

“It appears, in my opinion, that both the town of Chelsea and Frank Monroe were victims of her misconduct,” Allott said, referring to Carole Swan.

Allott said she hopes the settlement will be the end of a difficult time for both the town and Monroe.

Monroe went to the Kennebec County Sheriff’s Office in 2011 complaining that Carole Swan was told him to inflate his bill for the winter sand delivery and kick back $10,000 to her. He testified in her trial last September that he previously paid Swan $3,000 and $7,000 for her renewing his contracts without going out to bid.

Police never charged Monroe in connection with the case.

In other matters, Tilton said he expects the selectmen to choose a consultant Wednesday night to work with the town to establish the district to shield new revenue the town will receive from the natural gas pipeline installed largely last year.

Tax-increment financing, or TIFs, allow municipalities to freeze the value of properties on the tax rolls before upgrades and use the tax revenue from new development that would have gone to the city’s general fund for set uses, such as capital purchases. The value from the new development is sheltered from the state for the duration of the TIF, decreasing the percentage the city has to pay for its share of county and school district costs, and increasing the amount of municipal revenue sharing and education aid from the state.

Although municipalities can give some of the sheltered tax revenue back to a developer, Tilton said that won’t happen in this case.

He said the goal of establishing a TIF district, which probably will take at least seven months before it’s brought residents for a vote, is to use the money for equipment purchases and to lower the amount the town would have to pay for school and county taxes.

The board also is scheduled to:

• review and accept a bid to print the town report,

• discuss whether to take part in the hazardous waste drop-off day at Hatch Hill Solid Waste Disposal Facility, and

• discuss a proposed ordinance to set restrictions on when contractors or utility companies can dig up newly paved roads.

Paul Koenig — 621-5663 pkoenig@centralmaine.com Twitter: @paul_koenig