Preston - Visible demolition activities will resume soon at the former Norwich Hospital in Preston with funding from a combined $2 million low-interest state loan and a matching $2 million town bond approved by voters in December.

Sean Nugent, chairman of the Preston Redevelopment Agency, told the Board of Selectmen Thursday that asbestos and lead paint abatement has started on two buildings, along with mandated PCB testing in preparation for demolition. Actual demolition should begin soon, he said.

The combined $4 million in funding is expected to cover tearing down 12 buildings on the 393-acre former hospital campus owned by the town. Nugent said the agency's hired demolition contractor, Manafort Bros., had stopped working on the demolition at the end of June after other federal and state grants were depleted.

Work restarted with the new town bond and state loan. But while town money is now available, the first three-month installment on the state loan has not yet been received. Nugent said Friday the payment is expected any day now.

The town also hopes to receive another $10 million in grant money requested from the state - a $5 million Urban Act Grant and a $5 million grant through the state Bond Commission.

The town did learn, however, that it was turned down for a $500,000 Small Town Economic Assistance Program grant, with an explanation from the state Office of Policy and Management that there were too many applications for the limited funding.

The town also recently was rejected for a $964,000 federal Economic Development Administration grant. Nugent said PRA officials hope to meet with the state's congressional delegation and officials from the EDA soon to learn how to improve the town's future applications.

Nugent told selectmen some good news regarding the hospital cleanup. Stringent PCB testing and cleanup requirements by both the federal Environmental Protection Agency and the state Department of Energy and Environmental Protection were estimated last month to add up to $8 million in demolition cost at the hospital property. The town is required to test all buildings constructed after 1930 for PCBs in window framing, caulking and surrounding brickwork. But Nugent said early testing on the buildings has shown less PCB contamination than first anticipated. Full testing will be done by mid to late September.

"Early indications are it could be lower than $8 million," Nugent said.

c.bessette@theday.com