NEW GLOUCESTER – New Gloucester residents will vote Monday, Jan. 14, in a special referendum to decide on a drinking water distribution system for Upper Village.

The system would cost $2.36 million, with almost two-thirds of the funding coming from a recently received federal grant. At issue is whether the project, which proponents say would make for healthier water and may spur economic development, is worth the cost, or are the filters now in place enough.

For many decades, wells in the area have been contaminated with benzene and salt, both of which can cause significant health issues. The sources were first noticed in 1990, and the groundwater will remain contaminated for many years, if not decades, as there is no way to remove the contamination. The benzene was associated with leaking underground gasoline tanks at several fueling stations in Upper Village and the salt is traced back to a Maine Department of Transportation sand-and-salt pile that went uncovered from the 1950s to 1980s.

About 20 wells in the surrounding area, covering several thousand square feet, are known to be contaminated, and for years the town has provided residents with filtration systems.

A permanent solution has been explored for nearly two decades but the cost of the new system proved too steep for local taxpayers to bear on their own, town officials said. However, with a $1.47 million grant received in November from the federal U.S Rural Development agency, the project could get off the ground if voters approve the project at next Monday’s special meeting.

Details of the plan and ways to pay for it were discussed at a public hearing held Monday night at the American Legion Hall in the Upper Village. Town and state officials as well as design engineers from Wright-Pierce detailed the scope of the project for the several dozen residents who attended.

With the money secured from the federal government, New Gloucester taxpayers would be responsible for $990,000 of the total project cost of $2.36 million, plus ongoing maintenance costs. Town officials say the local contribution would be paid over a period of 40 years at an estimated interest rate of 2.125 percent.

Local water users in the affected area would be required to hook into the system. Those who live along the water line but don’t have contaminated wells would pay for connecting, since cross-contamination could result if they didn’t connect, officials said. The 20 homeowners who have contaminated wells would receive free hook-up. Homeowners with benzene contamination would be provided with funding from the state, and the town would cover all installation costs for salt-contaminated households.

Those living along the system would be responsible for the estimated $350-$400 annual water rate that would be charged by the New Gloucester Water District, which will provide oversight and maintenance of the system.

The source of the water would be located near the New Gloucester Fairgrounds on Bald Hill Road, located outside of the contaminated area. The system, consisting of mostly 8-inch water mains, would provide drinking water to an adjacent 39-unit mobile home park as well as businesses and residents in and near the Upper Village.

If voters approve the local funding, construction on the well, pump station/treatment plant, storage tank, and about 10,000 feet of water mains could begin in the spring.

Public comment on the system was mixed at Monday’s hearing, during which a handful of residents spoke. Some residents, such as Laura Jane Sturgis, who owns a three-unit apartment building in the contaminated area as well as her residence adjacent to the contaminated area, was excited to see some relief coming to the residents.

“I’ve never felt comfortable renting to anyone with a family or young children because my well is contaminated, and I don’t choose to take that responsibility because I have a moral obligation to my tenants,” Sturgis said.

Others, such as Patrick Gwinn, who lives outside of the contaminated area, wondered why the town couldn’t continue paying the $5,000 annual cost to maintain the filters and avoid the costly expenditure.

Town Planner Paul First said the filters weren’t “doing their job” for a number of reasons. He said the reverse osmosis systems, which are located inside the 20 affected homes and act to draw the contaminants out of the water, can break down and are costly to the homeowners.

“It’s a substantial amount of energy to run these systems,” First said.

The osmosis system requires the use of salt, which costs about $200 a year, First added, plus the added electrical costs of $20-$30 a month.

Gwinn, who said he had researched the system, said the homeowners that would be forced to connect into the system despite having uncontaminated wells, would suffer from the additional costs. He said those homeowners would need to pay extra property tax as well as the cost to hook up to the system and new water rates.

First countered by saying a properly working water system would possibly spur economic development in the Upper Village, which is the main business center for the town.

He also said all homeowners in the area, whether they have contaminated wells or not, have been suffering “significant heartache” even though they may not be directly impacted by the contamination. They have had trouble refinancing or selling their homes since potential buyers can be scared off by water contamination issues in the area. He said median home prices are lower in the affected area as a result.

“In addition to public health, there’s an overall economic cost. Twenty years of contaminated groundwater has led to the disinvestment here in our business district,” First said. “You can’t have a thriving business district without clean drinking water. There’s a concrete benefit to developing this water system. And this water system will create conditions for future growth.”

Concerning impact to property taxes, Steve Libby, chairman of the Board of Selectmen, said the hook-up cost would be $189,601, which would pay for pipe running from the water main to the foundation of the 10 salt-affected homes. (The state would pay for the 10 homes affected by benzene.) The $189,601, paid over a period of 20 years, is likely to add 2 cents per thousand dollars of valuation to the property tax rate, Libby said.

The remaining portion of the local share of the project, a loan of $800,000 that the town has secured from Rural Development in addition to the grant, would add about $30,000 to the town’s annual budget.

Libby said offsets from discontinued projects, including the $5,000 in annual costs associated with the filtration systems, are coming in future budget years that would reduce the impact of the local share of the project.