HAMPTON -- Smuttynose Brewery was recently awarded a $250,970 federal grant from the U.S. Department of Commerce to aid the company in its efforts to construct a brewery in Hampton.

Town Manager Fred Welch said the economic development grant will be used to pay for sewer line extensions for its proposed facility on Towle Farm Road.

"The town sponsored the grant for the company last year," said Welch. "The law requires that a town or city government apply for these grants. All we did is handle the paperwork from an outside party — to us — to the federal government."

Welch said its a 50/50 grant and Smuttynose will have to come up with the additional $250,975 for the project.

While the initial grant application included funding for a water line extension on Towle Farm Road, Welch said the Department of Commerce refused to include that because it involved a private water company.

Welch said the improvements will not only benefit Smuttynose, but the town as well.

The installation of sewer extensions will close a looped system along Towle Farm Road.

"It will be a benefit to the town because it will tie systems together," Welch said. "Right now you have dead-end systems."

The town is under a state-ordered sewer moratorium, but the Department of Environmental Services has approved the connection of Smuttynose.

Smuttynose is building a pre-treatment system on site to handle the daily 20,000 to 40,000 gallons of water and waste flow.

Smuttynose is currently located at 225 Heritage Ave. in Portsmouth in a 25,000-square-foot facility.

The 14-acre Hampton lot will be the site of a 42,000-square-foot brewery.

Owner Peter Egelston decided to move the brewery to Hampton to expand its operations after failing in previous bids to relocate the brewery to sites in both Portsmouth and Newmarket.

Egelston appeared before the town's Planning Board last month with plans to scale down a restaurant included in its brewery plan.

The original plan was to convert a large barn on the property into a 280-seat restaurant.

The new plan is to relocate the farmhouse on the property and use that as 120-seat restaurant.

The company is scheduled to go before the Planning Board again Oct. 6.

Egelston started the company in 1994. In 2006, the company produced 15,000 barrels — the most in its history, upgrading the company from a "micro brewery" category to "regional independent brewery" status.