Preston — Voters rejected a proposed $8 million loan package to continue cleanup of the former Norwich Hospital property Tuesday, 319 to 261, effectively turning down a $4 million low cost state loan and a nearly $1 million federal grant that would have paid for the demolishion of nearly all the remaining buildings on the main campus.

Only 15.5 percent of voters cast ballots Tuesday.

Town officials who favored the project said they were surprised and disappointed, and attributed the 58-vote defeat to a late campaign against the project by four members of the Board of Finance.

First Selectman Robert Congdon anticipated that complaints will be made to the state Freedom of Information Commission and the state Elections Enforcement Commission alleging that the four held illegal meetings to plan the campaign and then distributed fliers urging residents to reject the package.

Longtime finance board Chairman Robert Maurice resigned abruptly Tuesday, citing frustration over the negative campaign by members Jerry Grabarek, Norman Gauthier, Ken Zachem and Andrew Bilodeau.

With the referendum defeat, Congdon said, all efforts to clean and develop the former hospital property will be "severely hampered," including the momentum the Preston Redevelopment Agency has built over the past three years in obtaining state and federal grants, the town's credibility in obtaining future grants and loans, and the effort to attract a developer.

With the rejection of the bonding deal, the town lost a $964,000 federal grant that needed the local matching loan.

"The voters have basically said 'put a fence around it,'" Congdon said.

But closing down cleanup operations still would leave the town with an estimated $165,000-per-year cost to secure and maintain the property, not including the cost of a security fence, estimated at $460,000. The current fence was erected by demolition contractor Manafort Bros.

"I hope the Board of Finance is satisfied," Congdon said.

Gauthier, who had distributed fliers and campaigned against the loan package, said it was the voters' choice.

"The Board of Finance turned the decision over to the voters," he said.

Preston Redevelopment Agency Chairman Sean Nugent said he was especially disappointed that few residents attended several public informational meetings the agency held to explain the loan package and the town meeting to discuss the package before the referendum. Instead, Nugent said, they received the negative information distributed by the opponents.

The agency will meet at 7 tonight at Town Hall to discuss "the path forward," Nugent said.

Over the past three years, the redevelopment agency has received $4 million in state and federal grants, and the town added $300,000 in matching funds. That money, nearly spent, has been used to clean and demolish 22 of the 58 buildings and portions of the extensive tunnel network that criss-crosses the 190-acre campus.

Most of those grants came in small $200,000 increments that took care of relatively small buildings — 38 percent of the buildings but 17 percent of the total square footage.

The loan package would have tackled the largest remaining buildings, including the Kettle and Lodge buildings that face Route 12. The cost to clean asbestos, lead paint and perhaps PCBs from the Kettle Building alone has been estimated at $2 million.

c.bessette@theday.com