A Hamilton County tourist town of 400 broke ground on a $4 million project Wednesday that they say will bring in big business. Our Andrew Sorensen explains Inlet's new makeover and how they hope it will clean up the town.

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INLET, N.Y.--The Town of Inlet has been dealing with limited and failing septic systems for years.

"We had an issue with wells that were contaminated and we needed to remedy that," Town Supervisor John Frey said.

Town officials say they needed a major update to protect their water, their environment and their businesses.

"Putting on ultraviolent, UV filtration and chlorinators was one answer, but we realized that the use had changed over the last 30 years," said Frey.

Now they have the solution: A $4.1 million sewage system officials say takes care of most of their issues. The abundance of water in Inlet keeps you coming back year after year, but it's also one of the biggest sources of this problem: No land.

"We're up against the channel that goes between Fifth and Fourth Lake, so we're limited on where our sewer can go so this is going to help us tremendously," local business owner Ted Christoder said.

As owner of Inlet's combination flower and bike shop Pedals and Petals, Christodero knows how limiting the current situation has been to businesses. It's even stopped new businesses from coming here.

"A couple of buildings couldn't sell because the health department wouldn't grant a permit for use because the parcel was so small that you couldn't get a separation from well and septic," said Frey.

Officials say a wastewater system takes care of the space and separation problem by pumping the water out of town to treat it and it would allow for varied use like more restaurants. But how will the town of 400 pay for a $4.1 million project?

"The Environmental Facility Corporation is providing a little over $1.7 million in grant. We are also loaning them a little over $580,000 at zero percent interest," EFC President and CEO Matthew Driscoll said.

Town residents told us they expect to pick up the rest of tab with new sewage fees which will replace what they paid for septic services. But they say the growth they expect from the project is worth it.

Officials in Inlet say residents and tourists can expect some disruption during the construction period. They hope the project will be up and running in May.