The city will take $1.75 million from its fund balance to settle a lawsuit brought on by a developer who sued Derby for breach of contract.
The move comes after the city’s Board of Aldermen unanimously voted Oct. 22 to settle the litigation with Cerruzzi Derby Redevelopment LLC.
Ceruzzi was the company charged with redeveloping land between Main Street and the Housatonic River downtown.
However, the Boad of Aldermen threw them off the job, citing a lack of progress. Ceruzzi sued, blaming city officials for the lack of progress.
The city’s Board of Apportionment and Taxation approved the $1.75 million payment Thursday after meeting in executive session.
The city opted to use money from the city’s the fund balance, sometimes referred to as a “rainy day” fund.
Prior to Tuesday’s election, city officials estimated they had $4.1 million in its fund balance — but an audit is being conducted, the results of which won’t be known until December, so the $4.1 million is not necessarily accurate, the New Haven Register reported last month.
Generally, towns are advised to maintain a fund balance between 5 and 10 percent of its operating budget.
After making the payment, Hughes said Derby’s fund balance will be 6.8 percent.
“It’s a one-time payment, the money was there and our credit rating will not be effected,” Hughes said. “It was a no-brainer.”
The vote was unanimous, 7 – 0.
The judge in the lawsuit has yet to formally approve the settlement.
Once that happens, “a dark cloud” over the long-planned downtown redevelopment project will have been removed, Hughes said.
