MADISON — With the town’s tentative deal in place to not compete with a private company to build a natural gas pipeline through central Maine, an upcoming referendum vote may come down to one thing: trust in town officials.

That’s because even though selectmen left the 12-community project up to Portland-based Kennebec Valley Gas Co. to pursue, Madison residents will still go to the polls in two weeks to vote whether to borrow $72 million.

A yes vote would give selectmen leeway to do a number of things: possibly build the pipeline through central Maine if the Kennebec Valley Gas project failed, construct distribution lines to connect with homes and businesses just in Madison, or nothing at all.

“It’s going to come down to: Do the residents trust the selectmen with that much money?” selectmen chairman Bob Hagopian said after a public hearing Wednesday where officials announced the public-private partnership, which also includes pipeline installer Summit Utilities Inc., of Colorado.

Hagopian added, “We’re not going to spend any money without any tax relief for it.”

After opting to join with their former competitor, however, selectmen disappointed some residents who wanted the town to pursue the pipeline in hopes the revenue would lower or eliminate the town’s tax burden.

“I fought … to get the town to run the line,” resident Peter Sirois said. He helped gather petition signatures to bring the bond issue to the second referendum vote, to be held Tuesday, March 13, after the first vote failed by 27 votes in November.

Selectmen are giving in to representatives of Kennebec Valley Gas who previously campaigned hard against a town-owned line, he said, and now the town is “here as second fiddle.”

He will no longer vote to support the bond question, he said, and is “thoroughly disappointed” in selectmen. “I no longer trust them,” he said.

Though some people say a town can’t legally use revenue to offset the tax base, as the town-owned gas line would have done, others point to a Maine statute that gives the Maine Public Utilities Commission final say.

Title 35-A, Chapter 47, Section 4706 says that the title “may not be construed to prohibit the commission from or to restrict the commission in establishing or authorizing any reasonable alternative rate-making mechanisms for gas utilities to promote efficiency in operations, create appropriate financial incentives, promote rate stability and promote equitable cost recovery.”

The problem is that the statute doesn’t address a municipality, said Town Manager Dana Berry.

“It’s never been requested, so that’s what caused us concern,” he said. That concern is one of the reasons why selectmen decided to back off the project and not compete with Kennebec Valley Gas.

Kennebec Valley Gas is asking the other towns its line is going through for a tax increment financing agreement, which gives some of the tax revenue the town makes back to the company for a limited time. Madison officials wouldn’t consider the issue in the past. Berry said Thursday that, so far, the town’s stance hasn’t changed.

Some residents at Wednesday’s hearing agreed with Berry and said they don’t want to pay several hundred thousand dollars on research, designs and plans to build the line, only to be told later by the utilities commission that the town can’t get a return on its investment.

“I trust (selectmen), but I don’t see spending $3-400,000 to find out something we already know,” resident Marc Leslie said. He is in favor of Kennebec Valley Gas installing the line.

Resident Paul Fortin, who campaigned against the town’s original proposal to build the line, said he is pleased that Kennebec Valley Gas and Summit Utilities have a tentative partnership with the town.

“Now we’ve got the best of both worlds,” he said.

He is encouraging residents to vote no on the referendum question. Among other reasons to vote against it, he said, is that there is no start or end date specified for issuing the bonds.

Chris Roy, who helped gather petition signatures, said he’s fine with the ballot question being different than what was worded on the petition to bring the matter to a second vote. He’s supportive of the public-private partnership, he said, and trusts elected town officials to do their job.

“I don’t think they’re going to take out a bond if there’s no project to do it with,” he said.

Lee Bragg, the town’s attorney, said selectmen were legally able to have a ballot question that differed from the wording originally presented on the residents’ petition.

Because there was a vote Nov. 8, selectmen did not have to accept the petition at all, Bragg said, and they had the prerogative to accept, reject or change the petition wording.

In the meantime, Berry said the town will continue to negotiate with Kennebec Valley Gas and determine where distribution pipes would run within town — in case the referendum question passes and selectmen decide to pursue the local project.

There would probably be about 14 miles of distribution line running underground that would connect to 700 or 800 homes and businesses, he said.

“If we have the money, it doesn’t necessarily mean that we will (do the project),” Berry said. “We think it would be very helpful to have the issue pass to assist the town in future negotiations and to allow the town some flexibility.”

At the end of their meeting with Kennebec Valley Gas on Wednesday, before the public hearing began, selectmen unanimous consented without voting to form a tentative agreement because they have the town’s best interests at heart, Berry said.

Madison would have likely ended up in a legal battle before the utilities commision with Kennebec Valley Gas, he said, and Summit Utilities plans to finish the line faster than Madison could — by Nov. 30, 2013. Then there is the question of using pipeline profit to offset the municipal budget.

“We just thought in the best long-term interests of the town, this would be the way to go,” Berry said.

Erin Rhoda — 612-2368

[email protected]

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