FREELAND — The Freeland Water & Sewer District is getting closer to putting pipes in the ground for its long-awaited sewer project.

By the end of the year, water district officials are hoping to close on the purchase of an 80-acre piece of property formerly owned by the Trillium Corporation and, more recently, by Dogwood Whidbey Development, an Arlington company that had hoped to build a planned residential development called the Estates at Whidbey. The company defaulted on its loans for the land, however, and the property is now owned by Shoreline Bank.

The sale price is $560,000, and water district commissioners met last week and gave District Chairman Rocky Knickerbocker the authority to sign the closing documents.

The water district has worked for years to create a sewer system that would serve Freeland’s commercial core, the center of economic activity on the South End. The $38 million project has been stalled over the years, however, by extensive planning, legal wrangling and a quest for funding.

With the impending property purchase, the district will clear a major hurdle in its path.

Gary Hess, engineer for the water district, described the magnitude of the moment last week for district commissioners.

“One small step for the district, one giant leap for Freeland,” he said.

District officials met late last week to sign a contract with Island County that would give the district $2.5 million in sales-tax revenues that are set aside for rural economic development projects.

The county approved the funding last January, and on Monday, county commissioners unanimously approved a draw on the fund in the amount of $563,822 for purchase of the 80 acres for the outfall for the new sewer system.

Chet Ross, president of the Greater Freeland Chamber of Commerce and a point person on the sewer project, told county commissioners that the water district would seek another draw next month of about $275,000 for purchase of another piece of property for a future sewage treatment plant.

According to the contract with the county, if the Freeland Water & Sewer District does not wrap up construction of the new sewer system within five years, it will repay the county for any money that was used to buy land for the project.

For months, water district commissioners have met privately in executive sessions to discus buying land.

They’ve also marshaled political support for funding, asking county commissioners to sign off on a letter touting the positive environmental and economic benefits of the project, which could include cleaning up Holmes Harbor and removing hurdles in Freeland to the development of multi-family housing and additional commercial areas.

Recently, the water district submitted grant and loan applications to the state and the federal government that could help pay for the new sewer system.

An application for $2.5 million has been made for a state revolving fund earlier this month. Roughly $1.9 million of the loan would be spent on design, right-of-way acquisition studies for the pipeline installation, and pre-design hydro-geological work.

The district has also applied for funding from the U.S. Department of Agriculture.

Hess said last week the application for federal stimulus money was based on a four- to five-phase buildout, and the proposal will compete against other applications for funding.

Ross told district commissioners that if the stimulus money comes through, a local improvement district — where property owners would be tapped to help pay for the project — would not need to be formed.

“It’s probably the best thing we have looked at, and the least onerous to the citizenry,” Ross said.