Bonding will be pursued while $16.9 million project budget continues to be debated.

POULSBO — Plans are marching forward on Poulsbo’s new city hall project despite its undetermined budget. The council voted unanimously Wednesday night to go ahead with bid acceptance for the project’s first phase and to initiate the bonding process. Costs are shaking out to an estimated $16.9 million for the project — a number the full council has yet to agree on.

Phase one, which includes demolition, excavation and shoring of the Moe Street and Third Avenue site. The work is expected to begin this fall, so a dry site can be created and preserved through the wet winter months.

City Finance Director Deb Booher said the city plans to pay for the project’s first phase with allocated reserve funds, and a small revenue stabilization loan that won’t affect the city’s ability to go out for bonding would be available if more is needed.

“It does look like the cash will carry us through,” she added.

While the start of construction was agreed upon easily, much discussion went into the project’s cost, due especially to rising economic troubles.

“I am not comfortable with pieces of this financing package and I am not comfortable with the price of this building,” Council Member Becky Erickson said. “I’m not saying no to a city hall — we need a city hall. … I do not want to stop this process. On the other hand, I want to make sure we’ve explored every avenue.”

Erickson said she’d like to see the city’s hired firm, Lewis Architecture, review the building plans and find potential cost saving solutions. She expressed worries that the city’s funding plan, which includes the sale of three of its properties and a yet-to-be formed interlocal agreement with the county to continue housing a district court resulting in a possible $100,000 annually, may not come together in a timely enough manner, leaving the city in a financial bind.

Council Member Linda Berry-Maraist expressed her concern that the project’s price tag has recently risen 35 percent — it was originally expected to cost less than $13 million. With the troubling economy, Berry-Maraist brought up the idea of building to the city’s short-term needs, and waiting to add expansion room for another time.

“How much expansion space do we need to build right now?” she asked. “In a period of economic uncertainty, is it financially prudent to increase our city hall budget by 35 percent without stopping to reevaluate that?”

She mentioned the update needs for Poulsbo’s police station and storm water system, as well as city hall building designs that could potentially be superfluous, such as a 16-square foot-engineering department lobby.

Other council members championed the current budgetary plan.

“Simply, the answer is yes, we can afford it,” said Council Member Ed Stern. “We can even afford it at present, without even the sale of property.” He said the goal should be to bring the project on an even trajectory with the cost estimates for the 10th Avenue plan, which was abandoned after a citizens advisory vote in 2006. City Council Member Dale Rudolph has presented numbers they say show the project is making that aim, considering cost inflation.

“The best use of the taxpayer money is to … create the space at the present time to allot for that expansion,” Stern said, adding meeting short-term needs would be a “poor use of the taxpayer dollar.”

Council Member Kim Crowder spoke out on the schedule — which has a move-in date slated for early 2010 — saying it needs to be kept.

“At this time we need to move forward on this project to keep honoring the citizens’ vote,” she said, saying city employees who work in the current city hall’s downstairs sometimes even have trouble breathing. “It’s very important that we move this forward for the people that work for us, the city.”

Despite the debate, clarity was the most sought issue, and it was made clear as crystal an agreement to begin the bonding process wouldn’t mean an agreement on the budget.

“It is not a commitment to the overall budget,” Rudolph said. “It’s a commitment to start the process.”

He added cost-saving options are usually a part of the designing process, and the two should be done in parallel. The city is currently about three weeks out from a final cost estimation.

Booher said the city will go out for bonding not to exceed $9.5 million. Talks with bond attorneys and agencies can begin without a final cost decision, which will not be needed until early fall, she said.