Old Lyme — After years of studies and planning, town officials took another step forward with the proposed $7.44 million Sound View neighborhood sewer project this week, scheduling a townwide referendum that they say needs to pass to avoid state fines and the loss of grants and financing.

With resolutions passed earlier this week by both the Board of Finance and the Board of Selectmen authorizing the town to borrow money to finance the project, town residents will vote Aug. 13 whether they will allow the town to borrow a total of $9.5 million to finance the project with 25 percent to be covered by a state-federal Clean Water Fund grant.

The remaining $7.44 million, then, will be financed through Clean Water Funds the town will borrow but which future ratepayers, and not town taxpayers, are expected to pay back over 20 years at a 2 percent interest rate.

The sewer project, which has been in the works for years now through the town’s Water Pollution Control Authority, has gone through a range of variations, including a plan to install an independent sewer system to service beach neighborhoods, as the town sought an affordable and efficient solution — under an administrative order by the state — to address groundwater pollution in the Sound View neighborhood area, which relies on cesspools and septic tanks to process its sewage.

As outlined in the town’s Coastal Wastewater Management Plan, which was approved by the state Department of Energy and Environmental Protection in June, the town plans to install a gravity-fed sewer system within the Sound View neighborhood and a neighborhood north of Route 156, known as Miscellaneous Town Area B, by connecting to New London’s wastewater treatment facility. The project also is set to combine with another separate and ongoing project among the Miami Beach Association, Old Lyme Shores Beach Association and Old Colony Beach Club Association — all of which are chartered beach neighborhoods and considered separate municipalities from the town — by sharing one pump station and one force main.

According to a charging formula that the WPCA passed in its June meeting, each equivalent dwelling unit, or a median-sized home, in Sound View and the Miscellaneous Town Area B will pay an estimated $31,007 to cover the project's capital costs. Homeowners could pay that amount, which comprises a betterment fee and a facility connection fee, in a full one-time payment, or they could finance it over 20 years with a 2 percent loan, which equates to two payments of $944 per year, WPCA Chair Rich Prendergast has said.

Annually, homeowners also would pay an estimated $430 operations and maintenance fee.

In addition to the capital cost and the annual maintenance fee, homeowners also would be responsible for the plumbing cost to install the line from the house to the curb. According to WPCA presentations detailing the project, each foot of piping could cost between $50 and $100.

According to Sound View Commission Chairman Frank Pappalardo, however, “a large majority” of Sound View residents feel that paying for the entirety of the project is “unfair” and that the project should be financed by all taxpayers.

“I think the town has to take a really close, hard look at what they are trying to do here. They are trying to make a small group of people pay a hundred percent on a town project,” Pappalardo said by phone Thursday. “When (the town) built a dam on Rogers Lake, it doesn’t affect the shoreline, but we paid for that dam. They are doing weed control on Rogers Lake. It doesn’t affect the people on Long Island Sound, but we paid for that weed control. It comes out of our tax dollars.”

Pappalardo said that besides speaking out against the project in the past, several residents recently came to voice opposition to the plans at a question and answer session hosted by the WPCA this week in an effort to dissuade the town from proceeding with what Pappalardo said will be an unfair referendum.

“It’s ridiculous to have the entire town to vote on something that the entire town won’t have to pay for,” Pappalardo said. “We can’t do that. We won’t be adequately represented.”

Emphasizing the need to pass the resolution this year, Prendergast detailed by phone interview Wednesday the state’s administrative order for the town to install sewer systems throughout the Sound View area, warning that the state may take away Clean Water funds earmarked for the town and may start fining the town, should it not follow an order to complete its outlined wastewater management plan.

“If you put all these things in context, it all adds up that you need to do it,” Prendergast said. “Right now, the state is being nice and they’re saying, ‘Okay, we approve your plan, go ahead and go forward.’ But they could start imposing fines.”

Prendergast said that expecting ratepayers to pay for a sewer system that will service their homes is standard practice and that the town — which includes town officials and taxpayers — would never sign off on bonding millions for the project, despite the project being a necessity, unless ratepayers are held responsible.

Adding to that, Prendergast explained that having ratepayers pay for the project has been the plan for years now and that the plan will not change before referendum.

“We said, ‘This is the best option, and this is what it will take to get the Board of Finance, the Board of Selectmen and the Planning Commission to pass resolutions in favor of this, regardless of what the WPCA wanted to do,'” Prendergast said. “Here’s your choice: If you want the whole town to pay for this, there is no way you’re going to get a referendum. You can ask for it, but you’re not getting it.”

“We tried to put together the best deal that would be the most successful. For the lowest cost. The most flexibility. The best chance for success. And this is it,” Prendergast said.

Should the referendum fail, Prendergast said, "We would have to delay (the referendum) a year, and the cost for the same project would go up. We could possibly modify the project in some way to fix what people objected to and that would change the cost, but no one should think, 'Well, let's just vote it down and that will lower the cost.' That's irresponsible."

m.biekert@theday.com