MANCHESTER — Manchester’s Water Board anticipates an approximately $1.4 million excess of funds stemming from savings in the village’s upcoming water main project, raising a question that may be answered by voters at Town Meeting: how should those funds be utilized?

That question was the largest topic of discussion at Tuesday’s joint meeting of the Manchester Select Board, the Board of Sewer Commissioners, and the Board of Water Commissioners.

The meeting, focusing on the proposed budgets for the water and sewer departments, was relatively uncontentious with a large focus on upcoming capital projects on Main Street and Depot Street.

Both boards approved the proposed budget unanimously, which anticipates an approximately three percent increase in water and sewer user fees. Those increases stem from a surge in revenue, due to the increased usage seen by both systems following the construction of two new hotels in downtown Manchester: The Kimpton Taconic Inn and the Hampton Inn and Suites.

The upcoming overhaul of Manchester’s zoning ordinance is also expected to have a positive impact on connection fees by encouraging increased density in downtown Manchester.

Because of that increase in revenue, Town Manager John O’Keefe recommends the creation of a water assessment fee based on grand list value, estimated at $100,000 in the first year.

In terms of capital projects, $10,000 was allocated in both the water and sewer budgets to complete a paving project at the town Water and Sewer facility.

In the water budget $192,941 was allocated to pay off bond interest with $221,273 going towards bond principal, though those costs will be offset by $100,000 in assessment revenues.

In the sewer budget $30,000 has been designated to replace a sewer lagoon blower, the last of three scheduled for replacement. The capital reserve fund will support phase one of Sewer Department facility improvements, in this case roofing, which will total $26,000. $45,509 will be paid in bond interest, and $48,393 in bond principal, offset by $94,000 in assessment revenues.

Those capital items were kept relatively simple, according to O’Keefe, due to the challenges that 2018 will present. In anticipation of the roadway project on Depot St., that sewer main will require repairs or replacement depending on condition. Additionally, the town will be moving forward with the water main project on Main Street earlier than anticipated, as VTrans plans to re-pave main street this summer.

That four-inch cast iron water main is nearly 125 years old, is no longer connected to fire hydrants, and is too narrow to support fire protection according to the state. The road in which the water main rests, Main St., was originally scheduled to be repaved by VTrans in 2022. Last year that paving was moved up to the summer of 2018, requiring the town to move forward with the $3 million project earlier than anticipated.

While the town has financed that project through a bond, as approved by the 2017 Town Meeting, it will save an estimated $250,000 in paving costs and will be able to avoid ripping up the heavily trafficked road twice.

At Tuesday’s meeting O’Keefe explained that phase one of the project, focusing on 49 water connections, had been completed at a cost of $182,000 — significantly lower than previous estimates. Bidding for phase two, for the new water main reaching from Seminary Avenue to the Taconic Inn, came in at over $300,000 under the estimated cost.

Considering those savings, the project is expected to cost under $1.6 million — leaving an anticipated excess of approximately $1.4 million from the $3 million bond.

“The question for the water board is, there’s $1.4 million that we have various options for,” O’Keefe said. “Essentially we could either put it into the sinking fund and use it to pay off debt as we have in the past, we could seek approval from Town Meeting to do other projects, or we could do both.”

A third option would be to pay the bond proceeds back, though O’Keefe noted three upcoming capital projects on Roberts Road, Lincoln Ave, and Ways Lane, expected to total $600,000. Town Treasurer Dave Fielding proposed a balance between use in the sinking fund and for capital projects.

While capital projects are a priority, utilizing the excess in the sinking fund would allow the town time to consider forming a water district he said. That would allow more residents to participate in water financing, he explained, relieving some pressure on user fees and freeing up cash flow for future development.

“By putting money into the sinking fund, you’re buying time to set up this water district,” Fielding said. “You don’t want to stick it all in capital improvements, because then you’re back at square one.”

Select Board Chair Ivan Beattie, also a member of the Water Commission, spoke in favor of forming a water district. The board will have until Jan. 25 to pass a resolution to vote on the re-appropriation of funds at the 2018 Town Meeting.

Earlier in the meeting, the outgoing Water Board Commissioner Chops Zoller, who has been replaced by Bob Johnson, was presented with a proclamation by Select Board Vice Chair Wayne E. Bell for his over 30 years of service.

“Chops has been on the water board from the time it was created, I think chops and I have both been on it since day one,” Beattie said. “Chops had suggested that maybe it was time for him to do something else.”

Zoller, who has also served on the Manchester Select Board and Planning Commission, came to Manchester with his wife Joan after his service in the U.S. Marine Corps. Together the couple owned and operated the Montclair, now known as the Aspen Motel. Zoller also served in the Manchester Lions Club, and worked for 42 years at Manchester’s Equinox Hotel Golf Course.

“Lambert `Chops’ Zoller, a loyal and proud resident and loyal public servant of Manchester Vermont, will be retiring from his most recent service,” read Bell from the proclamation.”Be it known and resolved that we, the Selectboard and Water Board of the Town of Manchester, do, in appreciation of his service and extraordinary contribution to the fabric of our community, hereby make this proclamation to congratulate, honor, and sincerely thank Lambert “Chops” Zoller on behalf of the citizens of Manchester.”

Reach Cherise Madigan at cmadigan@manchesterjournal.com, or by phone at 802-490-6471.