An unusual deal between the town of Freeport and the local chapter of Habitat for Humanity has enabled the nonprofit to start sooner on the construction of eight affordable homes.

The $1.18 million project represents an ongoing collaboration between Habitat and the town to expand Freeport’s stock of affordable housing.

Town officials helped the nonprofit obtain a $143,000 federal grant to build an access road and allowed the group to delay upfront payments for the land to free up cash for construction, said Stephen Bolton, executive director of Habitat for Humanity of Greater Portland. Workers are now clearing the site and building the road.

After the home sales, Habitat plans to pay the town $40,000 for the 2.39-acre parcel on West Street and an additional $103,000 for costs associated with property it bought on South Street, where Habitat built three, three-bedroom homes last year.

The odd-shaped parcel on West Street next to the Downeaster rail line has remained undeveloped for more than two decades. Developers and real estate agents passed on buying the property, which is not in a prime location, said Donna Larson, Freeport’s town planner.

“Habitat is not looking to make a profit,” Larson said. “They’ll pay us back every time they sell a unit.”

The development will consist of two triplexes and one duplex. Each home will have three bedrooms, one bathroom and a half-bath, Bolton said. The first triplex units will be reserved for low-income residents and are expected to be priced near $175,000.

“It’s going to be our largest project to date” in Freeport, Bolton said. “The economies of scale are in our favor.”

The delayed-payment arrangement between Habitat and Freeport, used once before, gives Habitat momentum to move from one project to the next without producing large sums of money to buy real estate, Bolton said.

As in other Habitat developments, prospective residents will have to contribute hundreds of hours of labor to help build their homes. If all goes well, the development could be finished before the end of 2013, Bolton said.

For the town, it’s a win-win, he said.

“The town gets the full value of the tax base for each house that we build … and they stabilize their work force,” Bolton said.

The $1.18 million project will bring the number of affordable units built by Habitat in Freeport since 2003 to 14, he said.

The project will require the new road, Hummingbird Lane, to connect West Street to the site of the three buildings. Construction began on the road and utilities this month, with help from the $143,000 federal Community Development Block Grant.

In addition to donated labor and materials from contractors, three funding sources will help Habitat pay the building costs. Bank of America has donated $40,000, Wells Fargo plans to contribute $10,000 and the Greater Portland Board of Realtors has given about $50,000, with plans to raise $50,000 more in the coming months, said Rita Yarnold, who heads the board’s Habitat committee.

Staff Writer Matt Byrne can be contacted at 791-6303 or at:

[email protected]