OXFORD — The town has received nearly $23.7 million in federal funding to complete work on its proposed municipal sewer system.

Oxford’s sewer project is one of 116 in 40 states and Puerto Rico that are set to receive almost $387 million in funding from the U.S. Department of Agriculture’s Rural Development program for water quality projects in 2014.

“This is a double shot in the arm for Oxford,” Selectman Roger Jackson said Tuesday. 

The town’s funding, which accounts for three-quarters of the total $29.7 million given to communities in Maine, was “above and beyond” what town officials expected when they applied, Jackson said. 

“It puts us out there,” Jackson said. “I’m sure it’s going to draw additional businesses into the community.”

The town has been working on the sewer system for more than two years, Jackson said. He lauded the efforts of Town Manager Michael Chammings, who spearheaded the project. Chammings could not be reached Tuesday evening.

The award was announced by Maine Rural Development Director Virginia Manuel during a ceremony in Hartland on Tuesday.

Oxford will receive almost $9 million in 2014 Farm Bill funding. The bill was signed into law by President Barack Obama in February.

The town also will be granted nearly $1.4 million from the Department’s Water and Environmental Program and another $13.3 million in USDA loans to finance the project. 

The funding should allow the town to complete both phases of its sewer project. Phase I includes the construction of a state-of-the-art sewage treatment plant at the Welchville Dam near the intersection of routes 26 and 121.

Sewer lines also will be installed north and south on Route 26, as part of the first phase, mainly to service commercial users such as the planned Hampton Inn, the construction of which has been timed to coincide with the completion of the sewer.

The sewer lines will run through the town’s Tax Increment Financing District, and TIF funds and user fees are expected to be used to help pay down the debt incurred from the sewer project. 

About a year ago, selectmen voted to borrow $13.7 million through a Maine Department of Environmental Protection loan to finance construction. Bidding on the project is expected to be completed this month and construction could start in autumn, according to Brent Bridges, a vice president for Woodard and Curran, the town’s hired engineering firm.

The second phase proposes to extend sewer lines into Oxford’s more residential areas, in the north and into Oxford village. 

On several occasions, Chammings remarked that the second phase of the project might not move forward without USDA funding, but in an interview Tuesday, Jackson hedged his bets about the plan. 

“The money is there, but we are going to play it close to the vest with what we have,” Jackson said. He cited the high cost of construction, possible complications with installing sewer lines and cost overruns as concerns that could still force the project’ scope to shrink in size.

Nationwide, USDA grants worth $150 million are being provided through the 2014 Farm Bill, while $237 million is being allocated directly from the department, according to a news release from USDA Director Tom Vilsack.