POULSBO — The new city hall project at Poulsbo’s Third Avenue and Moe Street caught a fortuitous break last year, when a competitive bidding climate meant construction costs came in lower than expected. As the 30,000 square-foot building nears completion, city officials say that same climate planted a few odd challenges too.

Three subcontractors closed their businesses while the project was underway, said city Public Works Director Barry Loveless.

Time spent replacing subcontractors, combined with design changes, have slowed progress on the building. City staff will likely not move into the building until September, a month later than expected, Mayor Becky Erickson said.

The project began to lose subcontractors early in the process. First, Silverdale-based Premier Concrete closed its doors, then, two months ago, AK Steel of Olympia folded. Last month a hired drywall subcontractor — Wall Design of Poulsbo — also left the project, said Project Manager Richard Potter. In each situation time was lost while Seattle contractor JTM Construction found replacements.

“It’s not normal, and it’s just a matter of the economic times,” Loveless said. “Some people don’t have enough resources to keep it going, not just because of this job, per se. They probably didn’t have enough other work.”

The city inked an $8.3 million contract with JTM Construction in April 2009 after the company’s bid came in more than $1 million — or 14 percent — lower than expected. Loveless said several other bids were received, many of them almost as low in price.

Kathryn Quade, the city’s mayor at the time, called the deal “our own little economic stimulus package.”

Construction started a month later.

“We got a very good price because of the bidding climate and the competition and the desperation for work at the time,” Loveless said. “When you get that really low price there’s not a lot of margin for error for a lot of the subcontractors. It makes it more tenuous for them.”

JTM Construction absorbed any increased costs due to replacing a subcontractor, and in each case a replacement was quickly found, Loveless said.

Other setbacks have included modifications the city has made to the parts of the building that will be leased, he added. The grounds also include a public plaza and parking garage, built for a total cost of $15 million.

The project, seen as a potential boon to the downtown economy, has so far made a mild difference, business owners say.

Half a dozen construction workers pick up coffee or lunch each day at Hot Shots Java, said owner LeAnne Musgrove.

The impact hasn’t been huge, but new daily customers are a plus, she added.

Same goes at Poulsbo Woodfired Pizza House, where a handful of workers buy a slice for lunch, said employee Yoselin Carl.

Neither reported complaints from other customers due to the construction.