The Hancock Select Board discussed a proposal to establish a water capital reserve at its Dec. 15 and Dec. 22 meetings.
The current Hancock water system was developed in 1907 and given a shelf-life of 150 years. Water Board chair Tom Shevenell said the water system will be considered antiquated in 2057, but the town doesn’t have the necessary funds to handle rehabilitation or replacement of the system.
“The current revenue for the customer service usage is sufficient for the system’s operating budget,” he said. “The budget includes costs for operation, testing and regulatory requirements, maintenance and a contingency for minor breaks.”
However, the Hancock Water Works does not have a reserve fund to offset the annual depreciation of the system’s capital assets, he added.
A previous reserve fund was established in the 1960s. As of December 1976, it had $10,000 in principal with an income of $2,745.40. In 1978 the fund was abolished by a town vote to replace it with a Town Water Equipment Replacement and Repair Fund. This fund is intended to cover the cost of small fixes and periodic repairs, not full-scale replacement and rehabilitation like the proposed fund.
“There is a $10,000 initial investment required to get the reserve fund started,” Shevenell said. “The Water Commissioners’ plan to the Capital Improvement Program Committee shows the need for $40,000 a year plus inflation for the short term, with it increasing as segments of the water main reach the end of their estimated useful life.”
With a little over 30 years left in the system, the funding would come from taxpayers. Shevenell said the fund should not be for the water supply itself, but for water system repairs.
“The challenge to the water system issue is complex and analytically hard. How the town goes about analyzing the problem is worth a serious conversation,” CIP chair John Rodat said. He noted that the CIP has determined “establishing the reserve is important.”
Town officials have drafted a warrant article to look into the proposal.