POULSBO — The city of Poulsbo is optimistically crunching the numbers on a new city hall at Third Avenue and Moe Street, even as the project’s price tag nears $17 million.

Council member Dale Rudolph reported Wednesday night the new building, parking structure and site development on the downtown parcel could be completed to the tune of $16.9 million. Original budgeting was set around $12.4 million, and the structure alone now boasts a preliminary cost of $12.8 million. Despite the increase, Rudolph said the price is adding up as it should.

“We’re basically in the ball park in terms of scope and budget,” he said. “We do believe we can afford it.”

Poulsbo Mayor Kathryn Quade agreed, saying this cost projection is more conclusive than others in the past.

“We feel we have the complete bottom line budget and we’ve figured out a way to afford it,” she said. “It’s being very conservative in our projections.”

To fund the project, the city is looking at taking $9.2 million in bonding, much lower than its roughly $13 million debt ceiling.

Finance director Debbie Booher said previous budgeting for the project was pushing the city’s debt capacity, but because of increased assessed value and paid debt, its borrowing capabilities have grown.

And while in the past repayments have ordinarily been viewed in 20-year terms, Booher said because many city budgets are strained, stretching out payments to up to 30 years is becoming par. The city is now looking at various finance scenarios, with options ranging from a 20-year, 25-year and 30-year loan term.

“The good news is that we feel comfortable we’ll be able to afford it,” she said.

Rudolph outlined updated projections and their relation to the cost of the city’s original plan, which aimed to build the civic structure on a 10th Avenue site. That plan was scrapped after a November 2006 citizen advisory vote called for a downtown — not uptown — city hall. Stopping the process for that vote alone “had a price tag,” Rudolph said.

Now, the city faces the task of finalizing a financial strategy and debt payment structure, which will verify the city’s budgetary ability.

The $16.9 million estimate was reached after calculating a 15 percent increase in construction costs and adding in sales tax, equipment and various fees to the current square footage price, as well as insurance, contingency and the $480,000 project oversight by the Kitsap County Consolidated Housing Authority. Rudolph said in late July or August, when design planning is complete, a more detailed estimate should be available.

For now, the newest numbers are moving to the Finance/Administrative Committee. There, Rudolph said, committee members will dissect the budget, discuss bonding and make sure payments can be made. The council has previously discussed the sales of some of its properties — including the undeveloped Mitchusson property and the current city hall site on Jensen — to also help offset the cost. Booher said some remaining debt proceeds will also go toward the project.

The council has until fall to complete the task; Rudolph said construction bidding is slated for November or December, while building demolition and site excavation and shoring will be done through a separate contract this summer. By the end of October, the site should be ready for construction, with three of its sides shored with concrete walls and plastic placed to keep it dry through winter.

Move-in is planned between January and March 2010.

For more information on the project, visit www.cityofpoulsbo.com and click on the “City Hall Project” link.