MACHIAS – The town has met the terms of an amended state contract and will not be required to repay a 1998 grant for $376,538, according to the director of Maine’s Community Development Block Grant program.

Orman Whitcomb said Wednesday that the town has fulfilled the amended job creation requirement for the CDBG funds that were used to construct the Machias Telebusiness Center in 1999.

The center has created 21 new jobs, 11 of which have gone to people with low or moderate income, Whitcomb said.

There are many more than 21 people working in the building, but some of those people were already working at other locations and their employers moved into the center, he said.

Machias Town Manager Christina Therrien said Tuesday that the town “is thrilled” with the state decision.

“We’ve been putting $1,200 a month in a reserve account to repay the state,” she said.

Therrien was hired last November, within weeks after Machias selectmen learned that the state had ordered the town to repay the $376,538 CDBG because the center had failed to create jobs.

Job creation is a requirement of CDBG public infrastructure grants and, unbeknownst to selectmen, Whitcomb had written to then- Machias Town Manager Scott Harriman on June 8, saying that the grant would have to be repaid. The state said copies were also sent to selectmen, but selectmen said they never received those letters.

Harriman, who left to take a position with a local bank, said in an interview last fall that he never saw Whitcomb’s June 8 letter.

Whitcomb said he wrote the June 8 letter after almost a year of requesting job documentation from Harriman. The two-year window for job creation had closed, all the office space had been rented, and there were no jobs created, Whitcomb said in the June 8 letter, adding that the state was exercising its contract provision to withdraw the grant.

After learning of the June 8 letter in early October, Machias selectmen asked Chet Childs, the former manager of the center, to work with the state to resolve the problem.

Childs convinced Machias selectmen to apply for the CDBG in 1998, telling them that his business, North Coast Internet Services, needed to add staff and that the building would attract other businesses that relied on teleconferencing.

Childs sold North Coasts Internet shortly after the building was constructed and Log on America, which purchased Child’s company, moved out of the building in the fall of 2000.

When Therrien became town manager, she and selectmen met with staff from the Maine Office of Economic and Community Development.

The result was an amended contract. Whitcomb said Wednesday that the state allowed Machias to supply information on new jobs that were created after the close of the original contract period. The amended contract also reduced the number of jobs that needed to be created in order to keep the funding.

The required jobs were created by Washington County Psychotherapy Associates, an existing business that moved into the building in the spring of 2000 and hired 21 new people.

CDBG funds are federal funds from the Department of Housing and Urban Development that are administered by the state.

Terry Ann Stevens, the project development officer for the CDBG program, said Wednesday that Washington County Psychotherapy Associates provided the job documentation to meet the HUD requirements, which are different from the state CDBG requirements, she said.

HUD requires that at least one job be created for every $35,000 in benefits. The state’s requirement is that at least one job be created for every $10,000 in benefits, she said. Under the state standards, the project would have had to create 45 new jobs.

“The center is doing what it was intended to do, which is attract a good stable business such as WCPA,” Stevens said.