FII WATER SYSTEM TRANSFER STUDY

FII is undergoing a study to determine if some of its assets should be sold or given to the Town of Frye Island. This study examines the water system.

There are four considerations to discuss concerning feasibility of transferring the water system from FII to the Town:

• Liability
  
• Differing requirements for water quality and testing
  
• Ability to obtain grants
  
• Taxes, insurance and lease considerations
  

LIABILITY

At present the water system is owned by FII, and is maintained and operated under the provisions of the Lease by the Town. Before the formation of the Town, MSC maintained and operated it. In the event of an accident in which persons or property are damaged, or become ill because of failure of the system to be operated properly, both the FII and the Town would be considered at fault. FII caries insurance to protect itself, as does the Town. However, the Town's liability is limited by the State Tort Claims Act. Transfer of the system to the Town would remove FII from possible liability, and would eliminate the need for FII to carry insurance.

DIFFERING REQUIREMENTS FOR WATER QUALITY AND TESTING

We have held conversations with officials of the State Drinking Water Program concerning this. They have informed us that water quality requirements and testing requirements are based on the size of the system, and the number of people served, not on the ownership of the system. There would be no change these requirements if the system ownership were to be transferred to the Town. Any future requirements would apply no matter the ownership of the system.

ABILITY TO OBTAIN GRANTS

The Town has entered into a contract with Pine Tree Engineering to study modifications to the present water system, and to present engineering costs for these modification, which will potentially cost up to almost a quarter of a million dollars. The Town can apply for a grant from the State Drinking Water Program, under the SRF Funding program, which would not be available if the water system is privately owned.. In other words, we will not be awarded a grant for system upgrade unless we make this transfer. The Grant will consist of a low interest loan, which we would otherwise have to obtain commercially or use money from one of our reserve funds. The State has set aside this money, so we will obtain it as soon as we make the transfer and perform the necessary paperwork.

CONCLUSION

Since the liability to FII will be eliminated if the water system is transferred to the Town, since there will be no change in State water quality requirements and testing requirements, since State grants can be awarded only to municipal water system, and since tax, insurance,  lease and interest payments will be reduced, it is recommend that the water system be turned over to the Town.