Derby stands to receive between $1 million and $2 million by selling a water distribution system on the city’s east side.
The Board of Aldermen opened two bids for the sale of the system Thursday — a $2 million bid from the Aquarion water company based in Bridgeport and a $1.1 million bid from the South Central Connecticut Regional Water Authority based in New Haven.
Both bids are posted at the end of this article.
The Aldermen met in executive session to go over the bids with corporation counsel Joseph Coppola and Sheila O’Malley, the city’s economic development director.
Elected officials could make a decision on selling the system at the Thursday, Jan. 24 Board of Aldermen meeting.
East Derby Water Works is a water distribution system providing water to 500 Derby customers, including about 27 commercial customers. The pipes and pump stations are owned by the city, but the water is provided by and the system is operated by the South Central Connecticut Regional Water Authority.
The system was built in 1971 under a contract set up between the city and Birmingham Utilities. In 2008, the South Central Regional Water Authority acquired Birmingham Utilities for $40 million.
The 7 miles of pipes of the East Derby Water Works were included in the deal.
The city has been working for several years to sell the system, since the city gets no real benefit from owning it, Mayor Anthony Staffieri said.
The assets of the system are not being taxed under the Regional Water Authority’s ownership, the mayor said.
Selling the system will allow Derby to collect money from the sale — and get it on the tax rolls (if Aquarion is awarded the bid), Staffieri said.
“It’s a piece of city property that is no benefit to the city,” the mayor said.
Derby had been bickering with the Regional Water Authority over about $500,000 worth of routine maintenance needed on the system. However, city officials said the system will be sold as is, with maintenance being the responsibility of a new owner.
The Regional Water Authority, the lower of the two bidders, mentions the maintenance on the last page of the company’s bid.
“The bid takes into consideration the over $500,000 in system capital improvements the City of Derby would be required to make within the next year …,” the company states in its bid.
The Aquarion bid states the company will have completed its due diligence on the system’s assets before any sale closes.
“We have undertaken some preliminary due diligence prior to submitting this proposal, and nothing we have observed thus far causes us any concern, but we would obviously need to complete that due diligence before we close the transaction,” the company states in its bid.
Barbara DeGennaro, president of the Derby Board of Aldermen, said the potential income will help the city’s bottom line.
“It’s money for the taxpayers,” she said.
The two bids are below:
