Montgomery County officials plan to spend $105 million over the next seven years to lure business and development to local communities, particularly to struggling towns such as Norristown, as part of a sweeping economic program.

Government leaders hope the package of grants, loans and capital will position the county to get money that may soon flow from Washington as part of President-elect Barack Obama's stimulus plan.

"If you want companies to relocate into the boroughs, if you want the companies that are there to stay, they have to see that kind of investment by the county government - that we are placing our bets on the future of the boroughs," said Commissioners Chairman James R. Matthews Jr.

The largest chunk, $40 million, will help bring major redevelopment projects to the most distressed towns.

The program was supported by a 2-1 vote, with Matthews and Commissioner Joseph Hoeffel III in favor, and Commissioner Bruce L. Castor Jr. opposed.

That tally reflects the frequent outcome of commission votes since Matthews, a Republican, forged a power-sharing agreement with Hoeffel, a Democrat, freezing out Castor, who is also a Republican.

Yesterday, Castor said it was foolish for the county to take on the debt associated with a $105 million program during a recession.

"It's stunning," he said. "If you ran your house the way we ran the county government, you'd be in bankruptcy."

Montgomery County is often portrayed as a land of rich and poor, as it is home to wealthy suburbs, big pharmaceutical firms, shopping destinations like the King of Prussia mall - and also to long-suffering communities such as Norristown and Pottstown.

The Strategic Economic Development Policy Task Force, which included government officials, business people, labor leaders, planners and others, began work in April. It sought to come up with a means to frame decisions about how and where to spend in order to spur growth.

"The county wanted to have a more integrated strategy," said county Director of Policy Steven L. Nelson, "and also have more influence in some of the economic-development decisions. That means demonstrating we've got the commitment, the resources, the funding, to help projects."

For instance, he said, the county contributes $5 million a year toward the revitalization of 20 towns. But that money, split 20 ways, isn't enough to sway the settlement of a project that may be worth $50 million.

County officials are watching as Obama and congressional leaders work on a plan to pump $650 billion or more into the economy through government spending.

"If and when the stimulus package is done, we've got our strategy in place," Nelson said. "We're really well-positioned to take advantage of what's coming down the pike."

The program's eligibility requirements, application guidelines and criteria for selection are yet to be established. For instance, it was not immediately clear what would constitute an economically challenged community, though Norristown and Pottstown have suffered for decades following the decline of major manufacturing industries.

Specific plans include:

$12.5 million in matching grants and low-interest loans to expand revitalization programs for older communities.

$15 million in matching grants and low-interest loans to improve parking and rehabilitate buildings in the downtowns of communities such as Jenkintown, Abington and Lansdale.

$40 million in matching grants and low-interest loans to assist in the construction of big commercial, industrial and residential developments in the neediest towns.

$9 million in low-interest loans as incentives to draw businesses to struggling communities.

$5 million in matching grants to support the planning of specific projects.

$10 million in low-interest loans to encourage reuse of existing commercial space.

$6 million in matching grants and low-interest loans to help municipalities better market themselves.

$7.5 million in matching grants to train and place workers.

The first $20 million, to be spent next year, would come from county coffers.

"We're not going to do anything that could compromise us getting our share of federal dollars," Matthews said. "It can only help us that we've demonstrated we're ready to do something. All eyes are going to be on Washington. The kind of money they're printing down there, everyone wants a bucket of it."

Contact staff writer Jeff Gammage at 610-313-8110 or jgammage@phillynews.com.