NEW GLOUCESTER – Selectmen on Monday unanimously agreed to hold a special town meeting Jan. 14 on a package of agreements and an ordinance to build the town’s first public water system.

The total cost is estimated at $2.355 million, of which 60 percent is financed by three entities. A funding commitment from the town is required.

If all the approvals are granted, construction would start June 1, 2013, connections completed in the summer of 2014.

The New Gloucester Water District was formed last year and received a commitment from the USDA Rural Development to fund a major portion of the project.

The system will supply drinking water for 10 households with benzene contamination and 10 households with contamination from salt.

All 48 properties along the route will have hook-ups, a requirement of the Rural Development funding approval.

The project area stretches from the New Gloucester Fairgrounds at Bald Hill Road to Upper Gloucester village. An eight-inch water main will run along the Bald Hill Road to the Upper Village, including Wayfarer Village, with a short branch to the Snow Hill and Sawyer roads for properties at risk in addition.

Between 11 and 14 fire hydrants will be installed and as well as an underground storage pump for fire suppression.

The Maine Department of Environmental Protection has committed $379,827, plus $78,000 with cleanup funds, to connect households with contaminated water that date back to the mid-1980s.

Cumberland County Community Development Block grant promises $233,000 toward the project.

And, the USDA Rural Development package of $675,000 in grant and $800,000 in loans, for a total of of $1,475,000, has been OK’d but requires voter approval.

The town is seeking approval to assume the loan of $800,000 for 40 years at an interest rate of 2.125 percent.

Town officials say the 20-year Mid-Maine Waste Action Corp. debt will be retired next year, saving annual payments of $169,000.

Voter approval is sought to adopt an easement deed to the New Gloucester Water District from the town dealing with a wellhead.

An interlocal agreement between the town and the New Gloucester Water District spells out provisions of a public water supply system, administration, duties and responsibilities between parties.

In addition, a New Gloucester Upper Village Water Service Ordinance requires approval and is separate from the town’s zoning ordinance.