The $2.25 million Chiltern Placemaking Project is set to be one of the biggest developments to happen to the small town.

Northern Victoria MLC Jaclyn Symes visited on Friday to announce a $300,000 grant towards creating paths from the industrial precinct to cycling and rail hubs, shared paths alongside the watercourse, public art sites and an enhanced main entrance from the Hume Freeway.

The council, which will commit $649,103 itself, had originally asked for $438,897 from the state government and still has a $975,000 application pending from the federal government’s building better regions fund.

Ms Symes encouraged the federal government to stump up its share, which would also fund the redevelopment of Martins Lane as a “town centre”.

“It’s a great gathering spot for the community. I understand it’s going to have a coffee pop out window and it’s just going to connect the industrial centre to the main town and be a focal point for the community,” she said.

“It’s a perfect opportunity for Chiltern, you’re perfectly placed to benefit off the back of the Logic terminal and industrial estate … economic opportunities are just going to thrive from this investment.”

Mayor Jenny O’Connor welcomed the funding, saying the whole project would provide a $12 million boost to the town’s economy from up to 42 jobs.

Chiltern Tourism and Development Association president Kevin Mayhew said an upgraded town would leave a legacy for future generations.

“It is important to individual people, but not only that, it’s important to the whole community,” he said. “We’re not looking for a free ride or anything like that, we’re looking to create our own future just as our pioneers did.”

Another $300,000 will be provided to upgrade the Gooramadda Road bridge, which is a major transport route, but had always been unsuitable for super B-double truck combinations.