VASSALBORO — Selectmen agreed Thursday to support a local businessman’s application for a grant that will help him enlarge his building and make it more energy efficient.

Brent Dugal of Sidney, owner of DP Industries on Gray Road, intends to apply for a Community Development Block Grant to help replace his oil-fired boiler with a larger biomass boiler and to enlarge his building and install additional equipment.

Dugal estimated the total project cost at around $900,000. He hopes to qualify for a $150,000 grant for the equipment, based on his plan to create five new jobs within the first two years after the work is done.

Gail Chase, Community Development Manager for the Kennebec Valley Council of Governments, explained that the basis for the type of grant Dugal seeks is $30,000 for each job created.

More than half the jobs must be filled by people defined as low or moderate income, she said. The program defines someone with low or moderate income as making less than 80 percent of the average Kennebec County income, with adjustments for family size.

Chase said the town applies for and receives the grant on Dugal’s behalf.

Assured that even if things don’t go well for Dugal’s business, the town will not be at financial risk, selectmen voted unanimously to sign a letter of intent to apply for the grant.

Chase said after the state Department of Economic and Community Development accepts the letter of intent, she and Dugal will fill out the 37-page grant application for selectmen to sign.

Voters must approve the application, too, Chase said. She provided Town Manager Mary Sabins with appropriate wording for an article to be included in the warrant for the June town meeting.

DP Industries is entering its 25th year in business and has about 20 employees, more than half from Vassalboro and most of the rest from China and Waterville, Dugal said.

The two major product lines are horticultural supplies, like stakes, labels and ties for nurseries to mark plants, and stir sticks for paint. DP also makes wooden and plastic products for other, smaller markets. Almost all DP’s customers are out of state.

Dugal said he used to import components, but with foreign prices rising he is making more and more things in Vassalboro, a main reason for the expansion. He does not plan new products right away, but within the next three to five yeas he might add products and more employees.

In other business Thursday, Sabins said the Planning Board has scheduled an April 3 public hearing on amendments to three town ordinances requested by the East Vassalboro Water Company.

The purpose of the amendments is to make sure company officials are notified of and allowed to comment on applications for building, business and subdivision permits in the area around the company’s three wells on the east side of Outlet Stream in East Vassalboro.

Ann Dube and four other Mudgett Hill Road residents asked selectmen Thursday to put their gravel road on the list for paving as soon as money can be found.

Road Commissioner Eugene Field has done an excellent job of keeping the road graveled and graded, they said, but it is still so muddy in the spring that even four-wheel-drive vehicles can’t always get through and dusty all summer.

Board Chairman Philip Haines said Field has encouraged paving Vassalboro’s remaining gravel roads, but he cannot see the 2012-13 budget allowing for Mudgett Hill Road.