Norwich — The former Shetucket Iron & Metal property on Norwich Harbor will be auctioned at noon on July 29, potentially resolving a bitter family dispute among members of the Seder family that led to the closing of the nearly 100-year-old business last year and several lawsuits involving various parties.

New London Superior Court Judge Robert F. Vacchelli set conditions for the auction sale following a court hearing Monday on the latest disputes regarding the sale and how proceeds would be divided among the ownership partners.

The sale will take place at the 7 New Wharf Road property, with the winning bidder required to provide a deposit of $25,000 at the sale. Attorney Mark Block, who represented three Seder family members during the dissolution dispute, was appointed as the sole committee of sale for the auction. Results of the sale must be reported to the court for approval.

“The parties reserve the right to object to the sale when it appears before the court for approval,” Vacchelli wrote in the order. “Proceeds of the sale shall be deposited in court by the committee pending further order of the court on a motion for supplemental judgment.”

The scrapyard closed last July amid declining scrap prices and the escalating dispute between equal partner company directors Walter Seder of Norwich and his nephew Stephen Seder of Bozrah, son of Walter’s deceased brother, Edward Seder. Other family members and Walter Seder’s ex-wife also became parties in the lawsuits challenging the proposed business dissolution and sale of the property.

The property includes 3.68 acres of land — with varying levels of environmental contamination stemming from decades of scrapyard operations — and seven buildings. It is located directly across Norwich Harbor from the Marina at American Wharf at the mouth of the Shetucket River.

City officials said Thursday there have been no discussions about the city potentially entering a bid in the auction. The city is owed more than $200,000 in back property taxes, but would be first in line for payment if the property is sold at auction, City Manager John Salomone said Thursday.

An environmental study of the property done in 2003 revealed ground contamination “from 0 to 2-foot interval generally throughout the site.” Contamination reaches up to 6 feet down in a vehicle service area.

In addition to the contamination, the entire property is designated as a high-hazard floodway on a Federal Emergency Management Agency flood map, severely limiting future development, City Planner Deanna Rhodes said. No new buildings can be constructed, and if a buyer renovates existing buildings to a level greater than 50 percent of the building’s current value, the entire building would have to be brought into compliance with federal flood regulations, she said.

But it could be revived as a scrapyard. Scrapyards are not allowed in the Waterfront Development District encompassing the harbor area, but Rhodes said the scrapyard’s designation as an “existing non-conforming use” remains valid.

The Waterfront Development District allows numerous uses that could not be developed in the floodway, including residential housing and anything that would require new construction.

The property could be used for a boatyard, Rhodes said, perhaps the most desired new use from the city’s perspective, if the proposal made use of the existing buildings.

Dennis Schain, spokesman for the state Department of Energy and Environmental Protection, said in general, state law does not prohibit someone who buys a property like this at an auction from conducting business activities there. But the new owner may be assuming liability for the cost of future cleanup, depending on the conditions of the sale.

Mayor Deberey Hinchey said environmental contamination issues, the floodway combined with a steeply sloped access road and active freight rail tracks make it a difficult property to develop.

"As far as I’m concerned, I’m not interested in buying it," Hinchey said.

c.bessette@theday.com