DAWSON CITY - Dawson's town council is uncertain how to respond to a demand by Dawson City Hotels. Ltd. that the town should reimburse the company for damage to the walls, ceilings and floors of some of its buildings by condensation caused by the town's water supply.

Town manager Paul Moore said the company's owners, Peter and Karen Jenkins, had expressed their concerns to the town office in April 2007 and that the issue goes back further than that.

Peter Jenkins originally invoiced the town in April of this year, having brought the issue to council in person in October 2007.

Then, as now, Jenkins protested that the town's water supply contains an excess of carbon dioxide, which made it corrosive to copper piping, brass fittings and solder.

At that time, he was complaining about the excessive failure of water heaters in his hotels and staff quarters, but his invoice of April indicates that he has had to replace rotten walls, ceilings and floors as well.

He has only invoiced for partial costs involving these repairs, but the bill amounts to $12,180.

Following Jenkins' original complaints, the town had water tests carried out by Gartner Lee Ltd.

That firm reported last February that Dawson's water supply is within acceptable Canadian standards, a report Moore reminded council of at Tuesday evening's meeting.

"The bottom line is that we know that our water meets all municipal standards. The quote from Gartner Lee was that most municipalities would kill to have water as good as ours."

That doesn't mean that the town will do nothing, but it is pursuing several lines of inquiry, and these were ratified by a council resolution Tuesday.

The town administration has forwarded the matter to its lawyers for a legal opinion.

Council has also instructed that a second water quality study be carried out, by a different firm if possible, just to have a second opinion.

In addition, council would like to determine how much it would cost to make an inventory of the water meters which were installed throughout town during the last elected council term earlier this decade.

These were part of a move toward reducing water flow and getting ready for a mechanical sewage treatment plant but, while they were installed, they were never activated.

The mechanical plant option was subsequently abandoned by the territorial government when both construction and O&M costs were found to be excessive.

It is known that some meters have failed, but the status of the entire installation is not known.

Jenkins' latest letter indicates that he believes these meters are part of the condensation problems he has experienced.

"The city failed to insulate the water meters and related piping," wrote the former mayor.

Dawson's water comes out of its wells at very close to freezing temperature and has to be warmed before it is put into circulation.

The water and sewer system here, which was originally installed by the territorial government, relies on a steady movement of water in all the pipes to keep the flow from jelling.

Underground pipes in Dawson have been known to freeze even in July. The need for water bleeding into the pipes for much of the year is the major reason why Dawson uses as much water as does a town more than four times its population.