DANVERS — The town and local businesses pulled together funding just in time to buy a parking lot on Hobart Street for $1 million.

The town signed the deal last week with the Massachusetts Bay Transportation Authority, which owns the downtown property at the intersection of Hobart and Charter streets.

Local businesses are splitting the bill with the town for the $1,022,000 property.

"There was a tremendous outpouring of support for this," Town Manager Wayne Marquis said.

"Money's very, very tight with cuts in state aid and all the other priorities, and yet this is an important project too."

The MBTA will receive half the money up front, and the rest will be paid out during the next five years until the town fully owns the lot in 2011. Last month, officials worried the money wouldn't come through by June 30 — the deadline before the MBTA would put the land on the market for public sale. But businesses kicked in the necessary money.

"This is an excellent example of what can be done here with a public/private partnership," Marquis said.

The old MBTA property, which is overgrown in spots, will have 100 parking spaces once it is cleared and paved and will continue to be used by residents, downtown businesses and churches.

"This fall we'll do basic work, probably in the range of $30,000 from state grants, to remove scrub brush and fill potholes with gravel," Marquis said.

The town plans to pave the lot next year. Crews will also remove a concrete platform that dates back to when trains ran there.

The Maple Street Congregational Church paid $200,000 toward the purchase, and the Cherry Street Fish Market contributed $150,000 — marking the two largest donations for the project. Marquis said various other business owners, banks and individuals either contributed or pledged contributions to the cause. The Board of Selectmen will recognize all the donors at its Aug. 2 meeting.

Marquis praised the Downtown Improvement Committee for rallying local businesses to donate, as well as Sen. Fred Berry and MBTA General Manager Daniel Grabauskas for helping to craft the sale into a five-year lease-purchase agreement.

"Originally (the MBTA) wanted all the money up front, which was extremely difficult," Marquis said. "I certainly want to credit (Berry) for interfacing with the MBTA and (Grabauskas) was instrumental as well in showing some flexibility."