Commissioners of the Freeland Water and Sewer District announced Tuesday they were shelving, for now, their plan to form a local improvement district, or LID, to pay for a new $40 million sewer system.

Commissioners said they would take several more months to gather information on the LID project in light of information from a district consultant that showed the sewer system faced serious funding challenges.

The proposal to install sewers in Freeland’s downtown commercial core and the surrounding residential area — and have property owners south of Holmes Harbor cover most of the costs — has grown increasingly controversial in recent weeks. Property owners have said the assessments they will have to pay to fund the new system would be excessive, and would cause many of them to sell their properties and move.

A crowd of more than 200 attended Tuesday’s meeting, including members of POOPS (Property Owners Opposed to Proposed Sewers). Opponents of the sewer plan have been meeting weekly to organize a campaign to stop the formation of the LID, and members have been going door-to-door and collecting letters of opposition to the sewer project.

Talk of a new sewer system for the Freeland area stretches back years, and proponents say it will allow further development in the South End’s main commercial hub while also helping to clean up pollution in Holmes Harbor.

Last July, the board for the Freeland Water and Sewer District approved a “resolution of intent” to form an LID to help fund the design and construction of the sewer system. Under an LID, property owners receive assessments from the county to pay for infrastructure improvements, but the actual amount of the assessments is typically not be determined until after the LID is formed.

District officials had said they would release preliminary estimates of LID assessments in May, but critics of the new sewer system have said it’s already clear they will face substantial assessments, with some estimating those costs may run close to $70,000 per parcel.

District officials said Tuesday they will take the next several months to gather more information before proceeding.