People vote at the Hampden Town Office in 2017. Credit: Gabor Degre / BDN

The Hampden Town Council has endorsed a local developer’s plan to build affordable houses using money from a new $10 million state loan program designed to increase the number of single-family homes on the market in Maine.

The developer, Stan MacMillan, told councilors he would set aside 23 of the 36 lots in his Stearns Farm subdivision, located off Main Road South, for affordable homes if he’s approved for a loan.

MacMillan expects the three-bedroom, ranch-style homes with one- or two-car garages to sell for $287,000 or less, he said. To qualify, buyers’ incomes would have to be $110,000, or less or 120 percent of the area median income, which is $84,000 in Hampden.

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The Hampden businessman also developed the Chickadee subdivision off Main Road North.

Gov. Janet Mills last month announced the zero-interest loan program that is part of $50 million set aside for housing in her Maine Jobs and Recovery Plan, funded with federal money from the American Rescue Plan Act.

MacMillan told the council that he wanted his application for funds to be the first one approved by the Maine State Housing Authority, which is administering the program.

The loans can pay for land acquisition; site development costs; infrastructure costs such as roads, utilities, sewers and sidewalks; and home construction, according to MaineHousing.

Hampden’s planning board and council have approved MacMillan’s subdivision plan.

If he receives the state loan, MacMillan said, he plans to ask councilors to make the subdivision a Tax Increment Financing district. A TIF with the town would provide the developer with tax breaks on the new property value the development creates.

While the council has not considered a residential TIF, Hampden’s Economic Development Director Amy Ryder already had recommended against it.

“These homes are single family, and likely to include several children to enter into [Regional School Unit] 22, as well as incur all other costs of residential development,” she said in a memo to the council.

She also said that affordable housing TIFs typically are in larger cities and are typically for rental units for senior housing, as in Bangor.

Ryan has previously said that Hampen needs more businesses to help lower the tax burden on homeowners.