Residents of a struggling Annapolis Valley town are bracing for more bad news: a potential doubling of their water rates this year.

Bridgetown wants to increase water rates by 96 per cent in 2011 and by smaller amounts in the following two years.

It needs the money to cover $1 million the town borrowed to build a new water treatment system needed to meet new Nova Scotia drinking water standards.

"That's a huge amount of money for basically 600 ratepayers on the water supply," Bridgetown Mayor Art Marshall told CBC News.

"No one is saying this is a good thing. It's a sudden and dramatic increase in the cost of water in Bridgetown."

Last month, the Nova Scotia Utility and Review Board held hearings into the town's water rate application. Without the extra money, the town water utility is looking at a doubling of its deficit to $1.3 million in 2013.

Resident Dan Adler wrote to the UARB to protest the increase.

"The taxpayers of the town are primarily seniors citizens living, for the most part, on low fixed incomes with absolutely no way to supplement their incomes to support such dramatic cost increases," he wrote.

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Bridgetown resident James Scafte doesn't like the idea of water rates doubling. ((CBC))

James Scafte, who owns a rental property in Bridgetown, said the increases are huge.

"You have roughly an increase from $200 to $400. That's a lot considering the property assessment goes up every year. Never mind the new sewer bill recently introduced in the fall of 2009," he said.

The town is already facing multiple financial challenges. It's losing people and businesses and has "a significant problem" with delinquent water, sewer and property tax accounts.

The mayor estimates "in the vicinity of $300,000 (is owed) in back taxes going back seven years. That's about one-third of what we take in one year."

In an effort to clean up its books, the town now threatens to foreclose and sell properties after taxes are unpaid after one year. Delinquent taxpayers used to have three years before action was taken.

Lewis Falls, who owns Endless Shores Books, said the town doesn't "have a handle on how much they are spending.… Simply having the ability to borrow doesn't mean it's a good thing."

"What we're afraid of, it's going to drive people away and make it harder for businesses to come in,' he said.

The UARB is examining the town's application, and a decision is expected this spring.

The Nova Scotia government has found the town an interim chief administrative officer and hired a financial consultant to help put its books in order.