Faced with mounting evidence that nitrogen loading from septic systems and failed cesspools are seeping into environmentally sensitive coastal waterways like Sengekontacket and Farm ponds, the Oak Bluffs wastewater district has begun developing a long-range wastewater management plan.

Wastewater superintendent Joe Alosso and two members of the wastewater district, Hans von Steiger and Gail Barmakian, appeared before selectmen at their regular meeting Tuesday to provide an update on the performance of the town’s wastewater treatment plant and discuss the future of the district.

Mr. Alosso said a long-range wastewater management plan will almost certainly involve hiring an outside firm to examine every property in town and suggest the best wastewater solution for each.

The plan would focus on properties near environmentally sensitive areas like coastal ponds, wetlands and watersheds.

Possible solutions might include connecting more homes to the town sewer system, building smaller package treatment plants for clustered homes or installing high-tech nitrogen-removing septic systems for homes in nitrogen sensitive areas.

Mr. Alosso said hiring a consultant will be costly, and implementing recommended changes will be even more expensive. Yarmouth is currently considering a new sewer system with an estimated price tag of $250 million, while Falmouth is considering some $500 million in system upgrades.

Although upgrades in Oak Bluffs will cost less, wastewater officials said the town will have to make some hard choices in the coming years that will likely come with a hefty price tag. But faced with a treatment plant that is approaching maximum capacity, the town has little choice, officials said Tuesday.

“We’re at the end of our rope right now,” Mr. von Steiger said. “We just don’t have the capacity . . . we have to be very selective about how we connect [wastewater service].”

Mr. von Steiger said the commission has to consider the long-term impact on the treatment plant as well as the environmental impact when deciding whether to allow new sewer hookups. He said the commission recently rejected an application from a new church on School street next to the town library on property formerly used by the trash hauling company Browning Ferris Industries (BFI).

Selectmen also discussed a push to possibly eliminate the use of cesspools in town. Board chairman Ron DiOrio, who has expressed concerns about the subject at previous meetings, said that under state guidelines all cesspools are considered failed wastewater systems.

“We have an obligation to protect the environment,” Mr. DiOrio said after the meeting. “I understand installing septic systems can be expensive, but these [cesspools] are allowing pollutants to leach into our groundwater and damage our ponds.”

Town records show that there are approximately 146 cesspools that service private homes in Oak Bluffs.

On Wednesday the board of health sent a letter to seasonal residents John and Lisa Stewart confirming a previous decision by the board to reject a request for an exemption to allow the continued use of a cesspool.

The cesspool at the Stewart property has reportedly failed and the board of health has ordered the home to remain unoccupied until the septic disposal system is upgraded, according to the letter.

Mr. DiOrio said selectmen will help homeowners obtain money from a revolving state loan fund that offers low-interest loans for wastewater upgrades.

One resident questioned why he should pay as much as $40,000 to install a septic system when it would cost the town considerably less to connect his home to the sewer. “I think the town made a mistake by not putting sewer in [my neighborhood],” said Ken Taylor.

Selectman Kerry Scott criticized the wastewater district for failing to connect more homes when the town treatment plant was built eight years ago.

“It is almost inconceivable that some environmentally sensitive areas like Lagoon Pond, Farm Pond and Sengekontacket Pond were not sewered,” she said.

But Mr. Alosso said eight years ago the town had no comprehensive wastewater plan for guidance; he said the sewer system was designed simply to address the most pressing need in town at the time — the business district along Circuit avenue and surrounding area.

“So it was business driven?” asked Ms. Scott.

“It was business driven,” agreed Mr. Alosso. “There are many other areas that need service [now],” he said.

Selectman Gregory Coogan said the decision eight years ago was driven by taxpayer reluctance to spend millions of dollars more.

“We’re talking about money. And the reason it was built so small was because of money,” he said.

Selectmen have scheduled a second meeting with the wastewater commission on Oct. 7.