The Windham Town Council voted unanimously Tuesday night to approve an agreement with the Maine Department of Transportation that raises $500,000 in state funds toward a roughly $1.25 million construction project that will align an intersection on Route 302.

The agreement commits the town to funding the remaining costs of the project, which will align Anglers Road with Whites Bridge Road and construct a new center left-turn lane in the same area, according to Town Manager Tony Plante.

“This does commit the town to the project, and it does commit the town to a stream of funding to pay for the project,” Plante said.

The town, not the department, will manage the construction effort, which must be completed by August 2016, according to the agreement. The town has 12 months to start construction after the agreement is formalized, and another 12 months to finish.

According to Plante, the department has considered the Windham Economic Development Corporation’s purchase of a property on Anglers Road that is critical to the realignment effort as part of the town’s financial contribution. The town loaned the development corporation $455,500 for the purchase.

Plante said the town will need to come up with $300,000 in order to pay for the rest of the project. Earlier this year, the council passed a roadway impact fee that is designed to collect, in total, $150,000 in assessments on new development that generates traffic through the Whites Bridge and Anglers roads intersection. The proposed fee, which was designed to help fund the road realignment project, will be in place until either the town has collected $150,000 or July 1, 2026, whichever comes first.

Plante said the town might not raise $150,000 from the impact fee in time to pay for the alignment.

Plante said the remaining funding could come from the town’s roadway improvement budgets in fiscal years 2016 and 2017, as well as funds from tax increment financing districts.

The council approved the agreement in a 5-0 vote. Councilors Donna Chapman and Roy Moore were absent.

Councilor David Nadeau said the alignment would improve traffic flow at the intersection.

“The other thing to remember is that the realignment is going to be a big plus in … North Windham, because right now you’ve got one (traffic signal) cycle going north and south and you’ve got two cycles going east and west,” Nadeau said. “You’d cut that down to one.”

Councilor Matt Noel hailed the passage of the agreement, which he said would improve the “dangerous” intersection.

“I think that the plan, the process is well under way,” Noel said. “It’s coming to fruition. I think this is huge.”