OXFORD — A $15.4 million hotel and restaurant development, described as a “catalyst” for economic development, took a major step forward Thursday when selectmen signed a credit enhancement agreement with the owners of property across from the Oxford Casino on Route 26.

The agreement, which comes after months of negotiations, allows Thurlow Family LLC to retain some of the property taxes generated as a result of the development. The town will keep the funds in a special account to reimburse specific infrastructure projects.

In the past few weeks, a portable construction office and several signs announcing the development have been installed at the site where Crestholm Farm, a business owned by the Hall family, stands. According to development plans submitted to the town in November, the project is expected to cost $15.4 million.

It is still unclear when groundbreaking will occur, and building plans have not yet been submitted to the Town Office. The effective date of the agreement is also contingent on the dismissal of a multimillion-dollar lawsuit filed against one of the parties to the development by Mechanics Savings Bank earlier this year.

According Joe Casalinova, president of Casalinova Development Group, the Oxford company that has been shepherding the project along, developers would like to finish construction in time to attach the hotel to the town’s proposed sewer system, expected to be completed next year.

The parcel planned for the hotel is within a Tax Increment Financing District that allows the town to shelter higher-assessed property value brought on by new commercial developments.

According to the terms of the 15-year agreement, the town will annually allocate 20 percent of the increased property taxes — $367,500 total — generated by the hotel development into a special account that can be used to reimburse Thurlow LLC for expenditures on drainage, paving, landscaping and water and sewer projects.

The account will remain under the town’s control, and the company will be reimbursed after proving it has made approved expenditures.

As of March 31, the 19.5-acre property had an assessed value of $25,090, according to the agreement. On Monday, Town Manager Michael Chammings clarified that the listed value refers only to the lot itself, not the farm buildings and home on the property.

The terms of the agreement require developers to add $4 million in property value by April 1, 2014, and $10 million by April 1, 2015. If those benchmarks aren’t met, the town has no obligation to pay into the company’s development account.

Chammings said the deadlines were established so the town could capture tax revenue from the project next year. The sheltered revenue is protected from state and local taxes for the next 15 years and will be used to repay debt service on a $13.7 million loan selectmen approved in April to finance the sewer project.

He estimated the town would pick up an additional $50,000 in tax revenue to repay the sewer project in 2014, if the value was added by the deadline.

“That’s why we put that in there,” he said. “We wanted to have that tax flow coming in to cover our debt service.”

In an interview at his Oxford office Friday, Joe Casalinova said Thurlow LLC was established by members of the extended Thurlow family, who collectively own as much as 500 acres around the Oxford Casino on Route 26.

The family established the company in order to protect its interests and advance its plan to develop holdings near the casino, Casalinova said.

The hotel project is a joint venture by Thurlow Family LLC, Casalinova Development Group and GIRI Hotel Management, a company based in Quincy Mass., according to a project development proposal submitted to the Town Office on Nov. 19.

The developers’ plan calls for GIRI to purchase 4.3 acres from Suzanne Hall, the managing member of Thurlow Family LLC, to develop a four-story, 100-room hotel with an attached 5,000-square-foot restaurant. The Crestholm Farm retail store will be relocated, according to the plan. According to the agreement, hotel construction is expected to create approximately 90 temporary jobs, while the hotel is expected to create 80 permanent positions.

According to a Nov. 26 letter to Town Manager Chammings, Kennebunk Savings Bank has a deal with GIRI to finance the project. Casalinova said bid requests for the project had been submitted, but he wouldn’t speculate on a groundbreaking date. He referred further inquiries about construction to GIRI. A representative from GIRI was not available to comment on the development Monday afternoon.

According to Casalinova, the hotel is the first phase in an 550-acre development “master plan” that envisions retail outlets, restaurants and residential units along Route 26. The plan also calls for growth of Crestholm Farm, including an expansion from a seasonal to year-round farmstand, he said.

Although the credit enhancement agreement is between the town and Thurlow Family LLC, its effective date is contingent on the dismissal of a lawsuit filed in Androscoggin County Superior Court against Casalinova’s late wife, Joy Casalinova, and several other parties by Mechanics Savings Bank in September.

Mechanics Savings Bank sued the Casalinovas, as well as their business associate, Brian O’Donnell, and several companies they own for failing to repay a $3.5 million loan. On Sept. 19, a court awarded $3.7 million to the bank in the case.

On Friday, Joe Casalinova said the two parties reached a settlement in the suit in October, but it has not been recorded with the court yet. An attorney representing the bank declined to comment on the case Monday.

According to a clerk at Androscoggin County Superior Court in Auburn, a court order to stay the case was issued on Nov. 18 on a motion from the defendant.

The single paragraph defining “effective date” is the only reference to Joe Casalinova or Casalinova Development Group in the 15-page credit enhancement document.

Chammings said the clause was included to address concerns about the repercussions the complaint could have on the project. Because the designated money is paid to the town from the hotel before it is reimbursed, however, the town is protected from any possible liability or lien that could affect the project, he said.

“If we financed it directly from the town, we’d have a liability,” he said, “whereas through a credit enhancement agreement, there’s no liability. If there’s no funds going in, there’s no funds coming out. It’s the developer’s problem, not ours — and that’s what really protects the town.”