A cracked dam has left Hudson’s iconic Pine Lake looking like a drained mud puddle.

And while residents who live around it have asked the town to step in and fix it, how to do that and who should pay for it is being debated.

Cynthia Maher bought a home on the lake 17 years ago, but she is watching both the view and the value of her property diminish before her eyes.

“I see an ecological disaster, in a way. It's sad. It's not pretty,” she said.

An engineering report says the dam cracked during winter and water tunneled under the structure.

The town was given three options - repair, replace or get rid of the dam altogether.

Mayor Ed Prevost says the large crack has left the structure beyond repair.

Replacing it would be costly – at the high end, it would cost “three quarters of a million dollars, money we don't have. The low end, to remove dam and reinforce the culvert under the road, around $300,000,” he said.

This land was originally owned by all the neighbouring homes here who built a dam in 1948 to create the lake.

It was sold to the town for a dollar in 1984 on the condition they maintain it.

Right now the dam is being monitored on a daily basis and the province is doing an environmental assessment.

Once the assessments have been completed, the next hurdle will be convincing the town's taxpayers to pay to save the lake. Saving it could come down to a referendum.

If the dam is rebuilt it could take up to six months to complete.

While some residents think it should be returned to its original state as a creek, Maher says saving Pine Lake is a good investment.

“This is the jewel of the town, this is the beauty of Hudson, this is what shows up on the website - this picture of Pine Lake. I mean I'm talking about our property value but it's also the value of the town I'm talking about,” she said.