Waterford — A notice from state officials that the fund for local capital improvement projects has dried up and is frozen for the rest of the fiscal year has Waterford wondering if it will be able to collect on the nearly $1 million it has saved to one day help pay for renovations to its municipal complex.

The state Office of Policy and Management notified town officials on Dec. 29 that the state had reached its bonding limit for dispersing Local Capital Improvement Program (LoCIP) funds, and that it won't be accepting any new applications this fiscal year.

Towns that have applied for money for roads, sidewalks or municipal building project will get the funds promised to them if the applications were approved as of Dec. 22, 2016, the OPM memo said.

But for several years, Waterford has been banking its annual allotment of LoCIP funds, hoping to eventually use the money to pay to renovate the aging municipal complex on Route 85, which was built more than 50 years ago and includes offices, the town’s transfer station and a garage for town vehicles and equipment.

A recent estimate for the project topped $10 million, although the project’s planning committee has been on hold since the architecture firm hired to design the project stopped responding to messages from the town attorney or paying its subcontractors late last year.

The town has accrued more than $900,000 in promised LoCIP funding over about eight years, and has only applied for a small amount of money for smaller capital projects over that time, Waterford First Selectman Daniel Steward said.

Connecticut reimburses towns for a portion of capital projects’ costs, while state lawmakers and governors add to the fund and occasionally release the money for projects when cities and towns apply.

With the fund frozen, and no application submitted to withdraw it, the fate of Waterford’s banked money is uncertain.

“We left it there with the intention of taking it out when we needed it, and then all of a sudden it gets pulled,” Steward said.

Steward blamed state government officials for putting the burden of the state’s fiscal woes on towns.

“Ultimately if they don’t make good on it, then it’s just one more shot at the towns that they’ve taken.”

But Board of Finance member Cheryl Larder, who is also a member of the municipal complex building committee, said Sunday that Waterford has sent a message to state officials that it has enough money to pay for capital projects on its own.

Instead of using available LoCIP money, the town budget has provided funding for various road improvement and fiber-optic Internet improvements over the past several years.

“We have a million dollars at the state that we didn’t use — we used our own. We’re sitting here acting like we have all this money to spend,” she said.

Steward said the town’s finance department advised the saving strategy years ago, and that no one could have predicted that the fund would hit its limit and that Gov. Dannel P. Malloy’s office would freeze it.

"We’re not asking for more than what we really deserve,” he said. “We’re asking for money we should have gotten.”

Steward said he has asked local legislators, including state Sen. Paul Formica, to pursue a solution that would give the town access to the more than $900,000 in LoCIP funds he says the town is owed.

Formica, who was appointed earlier this month as co-chairman of the legislature's Appropriations Committee, said Sunday that he plans to try to ensure Waterford has access to the funds, but much of that plan depends on the coming negotiations over the state budget.

“I need to see, and sit with (Steward) and say, ‘how much are you counting on, what was the plan?' There are other towns that are in the same situation,” he said.

“I want to have one solution,” he added. But “at the same time we have to look at the bigger picture.”

Formica said he’s waiting to see what he and his fellow legislators can do until after Malloy releases his budget proposal for the 2017-18 fiscal year in February.

“It’s a hard budget year,” he said. “I think there’s going to be a lot of focus on how we continue to distribute municipal aid.”

m.shanahan@theday.com