WOODINVILLE, Washington (Reuters) - Three multimillion dollar homes in a Seattle suburb were destroyed in a fire on Monday, and authorities were investigating a sign found near the scene that raised suspicions a radical environmental group might have set the blaze.

The FBI, the Bureau of Alcohol, Tobacco, Firearms and Explosives and local law enforcement are investigating the fire, which also damaged two other homes in the "Street of Dreams" development, a showcase for luxury homes, as a possible act of terrorism, according to a FBI spokesman.

A hand-painted sign, which carried the initials of the Earth Liberation Front, a band of radical activists blamed for several arsons in the U.S. Pacific Northwest in recent years, denounced rural developments and "McMansions," a derisive term for similar-looking homes in newly formed communities.

The sign, shown on local television, read "Built Green? Nope BLACK! McMansions + RCD's r not green. ELF." RCD is an acronym for rural cluster development.

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Authorities would not comment on the authenticity of the banner.

In advertisements, developers of the destroyed homes touted their "Built Green" standards such as super-insulated walls and windows to save on energy costs and products made from recycled materials.

No one was living in the furnished homes, which are used by developers to show off the latest in luxury housing, design and landscaping.

The Earth Liberation Front, who the FBI has designated as "eco-terrorists," has claimed responsibility for a firebombing in Vail, Colorado, in 1998 against the expansion of a ski resort that the group felt would encroach on a lynx habitat.

It also said it was behind the burning of an Oregon car dealership that sold sports utility vehicles.

(Reporting by Daisuke Wakabayashi; Editing by Mary Milliken and Cynthia Osterman)