East Lyme - The town could see a 10 percent drop in water consumption when J.B. Gates Correctional Institution closes June 1.

But First Selectman Paul Formica called the drop "a double-edged sword" because the closing of the prison will also mean less money flowing to the town's Water and Sewer Commission, which manages water rates.

"It's going to cost us revenue, and it's going to impact operating expenses," confirmed Joe Mingo, a water commission member. Gates, which has 700 inmates, uses 70,000 gallons a day, he said.

The Department of Correction announced on April 1 that the 30-year-old prison will be "mothballed" for the foreseeable future to save an estimated $12.3 million a year, although the state will continue to own the facility.

In discussing the closing, DOC spokesman Brian Garnett said the state's overall prison population has dropped by 10 percent.

Formica said East Lyme would have more water available in town wells, especially in the summer, when residents are expected to ration and conserve water.

But, he said, Gates' closing will not result in any changes to the town's summer water-use policies.

He cast aside the notion that the prison's closing means the town should abandon its plan to build a connection to the New London water supply, which voters approved in a February referendum.

"Gates' closing is not going to solve our summer problems," Formica said.

The first selectman said he expects the state to continue payments in lieu of taxes - or PILOT money - to town coffers at the same rate.

The town receives a lump sum of $750,000 for all state property in East Lyme, including the Janet S. York Correctional Institution, Rocky Neck State Park and Camp Niantic.

The amount, however, could change after next year's property revaluation. Formica said the town has hired a firm to research the value of state property.

Other effects on the town of the prison's closing are less dramatic.

The closure will mean fewer people working in town. The state plans to transfer the 270 workers at Gates to other state facilities, although some may remain employed in the region.

"We're trying not to cause too many disruptions for the employees," Garnett said. "We want to keep them as close to home as possible."

Garnett said the transferred employees will fill vacancies left by employees retiring at other DOC faculties.

Because prison work is considered hazardous, workers are eligible for retirement after 20 years of service.

Formica pointed out that some businesses, such as bars and gas stations, could see fewer patrons after the prison is closed, but he noted that residents along Bridebrook Road could see a welcome drop in the amount of traffic.

s.chupaska@theday.com