ORONO, Maine — Representatives from the town and University Credit Union have signed a formal agreement to redevelop the downtown site that was once home to the Katahdin Building, the credit union announced Wednesday afternoon.

During the next few months, Orono and the credit union will work together to design a new building, prepare budgets and complete financing for the project. UCU president Matthew Walsh said he expects to break ground later this year or in early 2013.

The Katahdin Building, which was built in the 1820s, was gutted by a fire in August 2009, and the site has been vacant ever since.

The agreement calls for the credit union to build a 16,000-square-foot building at the intersection of Main Street and Bennoch Road in Orono’s downtown. UCU would use about half the building as its new headquarters, while the other half would be leased out to other businesses, according to Walsh.

The site will feature a public plaza, parking facilities and a UCU building that will be the new “focal point” for downtown Orono, Walsh said earlier this month.

Town Manger Sophie Wilson said last week that, although UCU is a nonprofit, it is not exempt from paying property taxes — a concern several residents have raised since the Town Council approved a memorandum of agreement with the credit union.

“Along with providing a prominent anchor that announces Orono’s downtown and the gateway to the University of Maine, the town will realize additional parking capacity, a public plaza and long-term property tax revenue as a result of this project,” Wilson wrote in an email. “We are pleased to formalize our partnership with the University Credit Union and look toward moving forward with this project.”