BUCKSPORT – Town councilors took the first steps Thursday toward sending a $2.99 million sewer system upgrade to residents for approval.

Councilors introduced an ordinance regarding the financing of the project that will include borrowing up to $2,240,000 through the issuance of general obligation bonds.

Interest on the loan will be 4.25 percent. The town also has received a $750,000 grant from USDA Rural Development for the project.

The town’s charter requires that any project more than $100,000 be approved by voters in a referendum vote. The issue will appear on the ballot in the November election.

Although the ordinance addresses only acceptance of the grant/loan package for financing the project, counselors also expressed support for a payment plan that will limit the increase in sewer users’ rates to just 5.5 percent.

“We’re trying to keep the user rates as low as possible and still meet all the requirements of the DEP and the EPA,” Town Manager Roger Raymond told the councilors.

Raymond proposed drawing on undesignated balances and reserve funds to retire existing sewer debts, which are currently being paid for with sewer users fees.

That same amount from user fees would be applied to the new sewer debt payments along with about $15,000 in tax dollars the town currently pays toward the old debts.

Sewer users would be left to cover a $20,030 increase in debt payments, resulting in an increase of 5.5 percent.

According to Raymond, the base sewer rate is now $172.80 and the average user rate is $201.60. Under the proposal the base rate would increase to $183 and the average rate to $213, annually.

That is a reasonable increase for a project of this size, Raymond said, noting that the town already has among the lowest sewer user fees in the state.

If voters reject the grant/loan package, he said, the alternative will be to require all sewer users to repair older clay sewer lines that are leaking and resulting in infiltration into the system.

That would be very expensive for individual homeowners, Raymond said. He estimated the cost per home could run between $2,000 and $4,000.

The sewer project is being designed to handle excess water that enters the system during spring melts and periods of high rainfall.

That mainly comes from old clay pipes that have separated at the joints and allow groundwater to enter the system.

The project will install new pumps and a new line to the sewage treatment plant and install an additional clarifying tank at the facility.

Raymond said preliminary plans for the project should be ready for the councilors to review by the end of this month.