The town council of any town or the city council of any city may grant to any person or corporation the right to lay water pipes in any of the public highways of the town or city for supplying the inhabitants of the town or city with water, and may consent to the erection, construction, and the right to maintain a reservoir or reservoirs within the town or city, for such time and upon such terms and conditions as they may deem proper, including therein, the power and authority to exempt the pipes and reservoirs and the land and works connected therewith from taxation.
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