It took months to start fixing a tiny Maine water district’s financial crisis

Democracy Project
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NEW SHARON, Maine — Few were directly affected when the water district failed in this town of 1,400 residents in Franklin County. Some who were did not even notice problems.

But the state’s utility regulator took notice, launching a probe into the 100-customer New Sharon Water District and appointing someone to oversee it. Months ago, the district was $250,000 in debt after trustees had not sought a rate increase since 2016. The short-term fix is a 64 percent hike that took effect on Thursday.

The district’s problems are an extreme example of how institutional issues are threatening vital government tasks. Cities and towns are largely run by these sorts of volunteer groups in Maine, which is the oldest state in the nation by median age. Since the COVID-19 pandemic, municipalities have also noticed fewer applications for jobs .

One of the factors in New Sharon was an aging board of trustees. Some who served were in their 80s. A series of board members came and went up until March, which often left the board without quorums and unable to easily work with regulators to fix systemic issues that have plagued the district.

“Public service, especially in small towns, it’s a family tradition,” said Shanelle Lake, the district’s new chair, who answered a question about her age by saying she’s in her early 40s. “And it’s time for the younger generations to start stepping up instead of taking it for granted.”

Following months of uncertainty , five trustees led by Lake are now in place after being appointed by selectmen. Things are hardly settled for New Sharon’s water system, which has slightly lowered its debt totals while seeking grants to ease the overall financial burden.

The district’s troubles ramped up last September when the Maine Public Utilities Commission launched an investigation into “systemic financial issues.” Then came a severe December storm and flood followed by a boil water advisory on Christmas Day . The town borrowed a generator to power the pump house and restore water service.

The commission had problems examining the district’s finances because trustees were coming and going. The situation forced Public Advocate William Harwood’s office as well as the nonprofit Maine Rural Water Association to all get involved to stabilize the district.

Kris Winther, senior counsel in Harwood’s office, described the New Sharon situation earlier this year as “extremely unusual” with “everything going wrong at the same moment.”

In mid-January, the commission appointed a receiver to oversee it. That ended in mid-February after the town appointed enough trustees to create a quorum. Those members, who had only been viewed as temporary help, had resigned by March.

Over the years, some customers did not receive bills and dealt with broken valves the district could not fix, and one of nine fire hydrants was shut off due to leaks, Kathleen Reis, one of three New Sharon selectmen, said. In April, Mark Deden, a district operator who was previously both its receiver and trustee, outlined various pressing matters in an email to commission staff.

Highlights included solving the “financial crisis” and figuring out how to operate at a loss until a rate hike gets approved, completing an inventory of 100 lead service lines by mid-October and conducting reviews of and potential updates to the district’s accounting system.

“I was completely blindsided by the enormity of the district’s issues when I took on the job and I feel that it will not be productive to have another receiver put in the same circumstance,” Deden wrote in his April 25 email.

During a May meeting in New Sharon, selectman Kevin Libby also said the liability trustees could face over the numerous unsolved issues made him uncomfortable to ask people to serve. But five trustees finally were in place by June, and they will have the option to run for terms of between one to five years at next year’s annual town meeting.

On Tuesday, the commission closed its investigation into the district in a milestone for the town, whose name is tied to 18th-century settlers who moved north from Sharon, Massachusetts. The most bustling spot is a farm supply and general store by timeworn buildings on Main Street.

For all the struggles since last year, several residents on the town’s water said the problems had not affected them in any obvious ways. Horace LaBree, who lives on Industry Road, mentioned no problems with his service. LaBree knows a lot about New Sharon, replying with “an awful long time” when asked about his age.

Yet water bills will soon increase significantly. For Lake and other officials, keeping the district humming for customers who otherwise face high costs to drill private wells is no small task. The base rate for customers will rise from $33.44 per month to $52.25 up to a certain amount of water used. That will generate nearly $41,000 per year in annual revenue.

“A lot of people are on fixed incomes or just struggling with the economy, so to [increase] your bill is going to hurt,” said Reis, the selectman who is a retired nurse and also serves on New Sharon’s volunteer fire department.

While New Sharon’s circumstances are unique, other small water districts have struggled, noted Phil Bartlett, the chair of the utilities commission. This ordeal offered the first chance to use a 2021 state law allowing for the appointment of a receiver to assist water utilities.

Regulators are also working with lawmakers on options for rural districts to share or consolidate services, Bartlett said. That may be needed if smaller government entities struggle like the New Sharon Water District did in the coming years. They often need significant investments to avert a crisis that smaller entities cannot bear on their own.

New Sharon’s public water consumers will not like their higher bills, but the goal is to avoid sharp hikes after this year, Lake said on behalf of the four other trustees — Jim Reis, Jeff Brackett, Del Harris and Ed Ferreira. She took the fact that the district even has trustees as a positive sign for the future.

“Providing fair and equitable access to safe and reliable water delivery is crucial to the entire town of New Sharon, not simply water district customers,” Lake said.