AUGUSTA – The state is starting a pilot loan program to help Maine cities and towns pay for sewer upgrades and extensions to encourage neighborhood development in residential growth areas.

Part of the Hometown Maine initiative, the program has $3 million available. It is a cooperative effort of the Maine Municipal Bond Bank, the state Departments of Environmental Protection and Economic and Community Development, the State Planning Office and the U.S. Environmental Protection Agency.

The purpose of the program is to provide low-interest rate loans covering the cost of new sewer lines or sewer extensions in eligible areas with a graduated payback plan that keeps payments lower at the start of the project.

Interest rates and loan terms are intended to be attractive enough to prompt communities and developers to create new or add to existing Great American Neighborhoods.

“Great American Neighborhoods,” according to Evan Richert, director of the State Planning Office, “can be found in many older Maine villages, town centers and cities. They are the compact neighborhoods where the homes keep their value year after year.”

Eligible applicants for the sewer extension loans include municipalities and sewer districts. Limitations on the source of funds restrict the state from providing direct loans to private developers. The State Planning Office expects and encourages municipalities and districts to form joint proposals with the private sector for this program.

Eligible expenses for the sewer extension loan program include extension of a sewer line to a site, construction of sewer lines on site and limited upgrade to downstream infrastructure to accommodate expansion.

Additional information and applications about the Great American Neighborhood Sewer Extension Loan Program may be found at www.state.me.us/spo/landuse.htm and from John DelVecchio at 287-8058.