NEW GLOUCESTER — In what resident Laura Sturgis termed a “contentious” meeting Monday night, voters narrowly rejected a $2.35 million public water system. The vote was 101-116.

The system would have stretched from the New Gloucester Fairgrounds on Bald Hill Road to the Upper Village along a section of Route 100. It was to serve about 40 residences and businesses with wells contaminated by benzene and salt since the 1980s, a result of unlined gas storage and a local municipal salt lot.

Although the Department of Environmental Protection had installed filtering mechanisms in properties contaminated by salt, some people had to replace numerous pumps due to corrosion, Sturgis said.

A resident of New Gloucester for 43 years, she said that while she didn’t mind paying taxes for emergency medical services and education, “a lot of people resented being told what to do by the government.”

The project would have been paid for through a combination of grants, a U.S. Department of Agriculture Rural Development loan and local taxes.

According to the details of the proposal, $800,000 would have come from a USDA loan over 40 years at 2.12 percent interest. Another loan for $189,601 over 20 years would pay for hooking up the system, and $8,000 would be sought for fire protection. To match these amounts, the town would have received $1.36 million in grants.

According to Board of Selectmen Chairman Steve Libby, it wasn’t as much the figures that roused opposition, but rather, the wording of the documentation that brought 217 people to the meeting.

“It tells you the importance of the issue,” Libby said, noting that while the vote didn’t go his way, he was impressed with the turnout. With 15 years of service on the board, Libby said he could not remember such numbers for a local vote.

The vote involved the board and Water District working together in what Libby called an interlocal arrangement. The Water District would then seek an easement for laying the new water lines and a new ordinance would take effect requiring compliance from properties along the line. That would mean residences and businesses along the new water line would have to give up their wells in favor of town water.

“We were not aware of the mandatory hookup until October,” Libby said. This, according to Libby, is where people felt they were being forced by local government.

He said 48 properties would have had to hook up, including one bulk water purchase from a mobile home park. A crucial point of the USDA loan was that the affected wells would have to be sealed, effectively forcing some residences with “borderline” test results to buy in to town water, Libby said.

He said he felt a little defeated until Tuesday morning when he received calls and messages from both sides of the issue, asking how the community could move forward.

“They want to work through the issues,” Libby said, “I’m very encouraged by the process.” A meeting to talk about the options is tentatively scheduled for Thursday.