Four affordable housing lots in Chilmark that became available this year are drawing interest from Island residents. The lots are grouped together on four acres off South Road on a parcel that includes six acres owned by the Martha’s Vineyard Land Bank. Each lot will be leased for 99 years at a cost of about $25,000.

The town has handed out about 20 applications for the lots since Sept. 16, when selectmen and housing committee members presented an overview of the project and application process to a room full of potential applicants. Most people in attendance appeared to be in their 30s or 40s.

The 32-page applications are due back to the town by Oct. 14 at 5 p.m. The housing committee will review the applications and forward them to the selectmen on Nov. 7. The selectmen will hold a final lottery on Dec. 5.

Negotiations to swap the town-owned Hollis Burton Engley house on Sarah Brown Lane for the 10 acres on South Road began in 2002, but stalled around 2009 when the Howard B. Hillman family, which owned the 10 acres, could not agree on the terms of an agreement it had signed in 2007 with the town and the land bank. The town filed a civil complaint last year, and in January the superior court ruled in favor of the town, allowing the deal to go forward. Following the selectmen’s receipt of the applications on Nov. 7, the Hillman family will have 15 days to review the applications and raise any concerns. Each one-acre lot will be limited to households earning less than $132,000 per year, or 150 per cent of the area median income. While there is no minimum income requirement, executive secretary Timothy Carroll pointed out on Sept. 26 that applicants will need to supply a pre-qualifying letter from a bank showing they can afford to build a house.

“You may want to build a $150,000 house,” he said. “But the likelihood here is, it’s two hundred to three hundred thousand for anything, especially if you don’t build it yourself.”

The lottery will be open to all Island residents, but selectman William Rossi said last week that preference will be given to people who live or work in Chilmark. “But at the end of the day it’s a lottery,” he said. “The most important process is being deemed eligible, and everyone gets thrown into a hat.”

A public workshop at town hall on Oct. 25 will help guide applicants through the process. Town officials, including members of the housing committee, will be present to answer questions. David Vigneault of the Dukes County Regional Housing Authority will offer a brief presentation, and others will discuss financing and the costs associated with developing the sites.

The selectmen picked up the issue again on Tuesday, when fire chief David Norton raised concerns over the need for an adequate water source in the area. He said it was his understanding that subdivisions of four lots or more require at least a 10,000-gallon water tank and a well to replenish it. A nearby pond would also serve the need, he said.

In the past, small developments have sometimes gone in without nearby water supplies, Mr. Norton said. “But then there has been development after development, and before you know it you’ve got 50 houses.” He said the fire department’s master plan aims to establish water sources throughout Chilmark, including use of its streams and ponds.

Selectmen supported the idea of having a water source near the Nab’s Corner lots, but Mr. Rossi said the issue would need to be handled by the planning board. Mr. Norton plans to speak with the planning board in October.

Selectman Warren Doty pointed out that the planning board has already approved the Nab’s Corner project and did not require a water tank. He was reluctant to slow down the application process, but suggested finding a water source that could serve the general area and not necessarily take up space on the 10-acre property.

“I don’t think the town would balk at the expense if it served firefighting for that whole area of town, and if we could figure out some place to put it that’s not far from South Road,” Mr. Doty said. He estimated that a 10,000-gallon tank with a well would cost about $40,000.

In other business Tuesday, the selectmen revisited a proposal from the Martha’s Vineyard Refuse Disposal and Resource Recovery District, which serves Chilmark, Aquinnah, Edgartown and West Tisbury. The district hopes to expand its drop-off center in Edgartown to include a new road and garbage shack, and a second scale for weighing trash. The goal would be to improve traffic flow and accessibility for residents and businesses. A second phase of the project is also in the works.

District manager Don Hatch has asked the selectmen in town to support the project, which is estimated to cost about $2.4 million. On Sept. 10, the Chilmark selectmen asked that the proposal be revised to include a tighter budget. The proposal presented on Tuesday included a reduced contingency fund and changed the wording of a proposed town meeting warrant article to ask for “up to” $2.5 million. The revised budget incorporates the second trash scale at $144,000.

About half the cost of the project will be for asphalt and concrete, and half for construction. The asphalt and concrete would come from Island sources, Mr. Hatch said.

“I think this is a great improvement,” Mr. Doty said on Tuesday. The selectmen agreed to add an article to the warrant for the upcoming special town meeting on Oct. 20, asking for town funds to support the project.