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                                                                   EXHIBIT 10.28

                           MEMORANDUM OF UNDERSTANDING

         This Memorandum of Understanding dated December 4, 2002 is made between
the State of Connecticut (the "State"), acting through its Department of
Environmental Protection ("DEP"), and Connecticut Water Service, Inc. and its
Connecticut subsidiaries including Crystal Water Company and Gallup Water
Service (collectively ("Utility").

         WITNESSETH THAT:

         WHEREAS, Utility has land holdings in Connecticut;

         WHEREAS, the State has established a goal to preserve 21% of
Connecticut's land as open space;

         WHEREAS, the State, in 1997, intensified its efforts to preserve open
space in Connecticut by establishing a goal for the State to have at least ten
percent of the State's land area held by the State as open space land;

         WHEREAS, the State's legislature, in 1998 passed Public Act 98-157,
which created the Protected Open Space and Watershed Land Acquisition Grant
Program, to provide matching grants for municipalities, nonprofit land
organizations and water companies to preserve open space;

         WHEREAS, the State legislature, in 1999, passed Public Act 99-173,
which established the goal of having municipalities, land conservation
organizations, and water utilities hold 11% of Connecticut's land as open space;

         WHEREAS, in 2001, the Connecticut General Assembly passed Public Act
01-024, which stated that the DEP shall conduct an evaluation of lands of Class
A water companies as defined in Section 16-1 of the general statutes, to
determine the resource value and potential desirability of such lands for
purchase for open space or passive public outdoor recreation or natural resource
conservation or preservation;

         WHEREAS, the State and Utility agree that preserving open spaced
throughout the state is an important goal;

         WHEREAS, the State and Utility now wish to memorialize their present
understandings and intentions:

         NOW THEREFORE, the State and Utility hereby agree as follows:

         1.  There will be a voluntary two-year moratorium on the sale of all
             undeveloped land holdings of the Utility that are categorized as
             Class I, II and III land, other than land under contract for sale
             or where the sale has been approved by the Department of Public
             Utility Control ("DPUC") as of the date of this Memorandum,
             approximately 7117 acres.

         2.  During the moratorium period, the DEP, in cooperation with the
             Utility will undertake the assessment and evaluation of all Utility
             Class 1, Class II and Class III land holdings to determine the
             desirability of purchasing such land for open space and shall
             develop strategies to fund the acquisition of such properties in
             fee or by easement from the Company. DEP will consult with the
             State Department of Public Health (`DPH") regarding the importance
             of such Class I and Class II land to the public drinking supply
             watershed needs in accordance with applicable regulations. Utility
             agrees to provide the DEP with maps and any other documents that
             will assist in the assessment. The parties agree to begin the
             assessment without undue delay, including developing strategies to
             fund the acquisition of such properties, during the moratorium
             period.

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                                                                   EXHIBIT 10.28

        3.   Notwithstanding the moratorium period, the Utility may sell to the
             State, the town in which the land is located, or any non-profit
             land holding organization consistent with the Connecticut General
             Statutes and regulations, any Class I, Class II and Class III land
             for the purposes of preserving open space, consistent with
             watershed needs. The parties agree to negotiate in good faith to
             determine a price for Utility's Class I, Class II arid Class HI
             land holdings based on appraised values.

        4.   Notwithstanding the moratorium period, upon the determination by
             the DEP that certain parcels of Class I, Class II and Class III
             land do not meet the conservation needs of the Recreation and
             Natural Heritage Trust Fund or the Protected Open Space and
             Watershed Land Acquisition Grant Program, and upon determination by
             the DPH that, in the case of Class I and Class II land, said land
             is not required for public drinking supply watershed needs, the
             Utility may apply to the DPUC to sell said parcels in accordance
             with the statutory approval procedures for sales of water company
             lands.

        5.   A determination by the DEP that it is desirable to purchase land
             for open space and by the DPH that said land is not required for
             public drinking supply watershed needs, does not commit the utility
             to sell such land or the DEP to acquire such land, and the utility
             specifically reserves the right to make use of any such land for
             its business purposes.

        6.   Nothing in this MOU including the moratorium period shall apply to
             the acquisition by a third party of substantially all of the assets
             of Connecticut Water Service, Inc. and its subsidiaries or
             substantially all of the stock of Connecticut Water Service, Inc.

        7.   In any purchase by the State of land owned by the Utility, the
             State intends to finance such purchases through the Recreation and
             Natural Heritage Trust Fund, the Protected Open Space and Watershed
             Land Acquisition Grant Program or any other public or quasi-public
             financing alternative. Any sales of Class I, Class II or Class III
             land to the State shall occur according to a schedule agreed upon
             by the parties and in compliance with the Connecticut General
             Statutes.

         IN WITNESS WHEREOF, the parties have executed thus Memorandum of
Understanding as of the 4th day of December 2002.

         STATE OF CONNECTICUT                   CONNECTICUT WATER SERVICE
         DEPARTMENT OF ENVIRONMENTAL
         PROTECTION

         By: /s/  Arthur J. Roeque, Jr.         By: /s/ Marshall T. Chiaraluce
                  Arthur J. Roeque, Jr.                  Marshall T. Chiaraluce
                  Commissioner                          President and CEO

         Date:    November 22, 2002             Date:   December 4, 2002