City councillor Doug Graham says he's still not in favour of proceeding with a well-drilling loan program for residents after the matter again came to council for consideration Monday night.

'It's going to cost us,' he warned during discussion on the issue.

Unless the city can get a better deal with the territory to offer loans for residents drilling wells, Graham said, it shouldn't go ahead.

Earlier this year, the territory asked that communities consider offering a similar loan program for residents drilling wells to its rural domestic well-drilling program. The territory isn't able to offer the program to residents living within municipal boundaries because the loan payments are attached to property taxes.

The city asked the territory to look at an alternative arrangement to what was proposed, and the Association of Yukon Communities requested the territory look for ways to assist communities wanting to offer the program.

It was subsequently announced the territory would lend the money to municipalities to cover the cost of agreements reached during the year.

The city then opted to survey potential loan candidates who aren't on the city's water system about the program.

At last night's meeting, Dennis Shewfelt, the city's director of operations, reported that of the 313 mail-out surveys, 53 were returned, with 38 saying they would be interested in participating.

'This has been interpreted to mean that the cost of the loan and short repayment period was viewed as a deterrent,' reads an administrative report delivered to council Monday.

'The proposed program allows for a lower interest rate and longer repayment period, making it more affordable for homeowners.'

Applicants would be eligible for loans up to $50,000 or 25 per cent of the assessed property value, whichever is less. The exact amount of the loan would be based on a design phase estimate.

Repayment would be required regardless of whether the ground is found to be suitable for a well.

Wells generally cost between $20,000 and $30,000.

The city would work with the property owners to develop the loan agreements then or, toward the end of the year, the city would recover the capital money it lent out from the territory, Shewfelt told Coun. Jan Stick when she asked about the program.

'We'd basically make one application to recover all the loans we had (approved) in that calendar year,' he said.

That's one of Graham's biggest problems with the initiative, he said.

'If you take money out of reserves, it's that much money we won't have available for other things,' he said. 'It also means we won't have the money available from the interest that we would normally make on those reserves.'

The proposal left the councillor wondering what happens when a loan recipient defaults on it.

'Is it the city's responsibility to collect the money so we would have to take the legal action and do whatever's necessary?' he asked.

Similar to the territory's program, the city would collect the repayment as part of the property taxes, Shewfelt explained.

Coun. Mel Stehelin, who has noted his support for the program in the past, said the city will likely 'do OK' with such a program in place.

The city would not, however, get back the cost of administering the program.

Questioned by Coun. Dave Stockdale, Shewfelt explained the administrative costs are expected to be similar to that of the municipal rural electrification program.

'We've gotten very few applications for that over the years and don't believe (there'd be significant administrative costs),' Shewfelt said.

'The more people that participate in the program, obviously, the more cost that would be associated with it, but we have no idea right now how many people would apply in any given year.'

If the program went ahead, those receiving loans would be required to have their well water meet the national drinking water standards through testing, Shewfelt told Stehelin.

Council will vote on whether to adopt the program at next week's meeting.