The cost of one of the biggest capital projects in the Kenai Peninsula Borough and school district’s queue has gone up by about 62%, borough and school district staff said Monday.

The reconstruction of Soldotna Elementary School, which initially carried a $21.5 million price tag, is now expected to cost just under $35 million — a $13.5 million cost increase.

Kevin Lyon, KPBSD’s director of planning and operations, and John Hedges, the borough’s director of purchasing and contracting, were scheduled to present the specifications on school’s reconstruction during a Monday work session with the KPBSD Board of Education.

Instead, they explained challenges that have surfaced regarding the project and how those challenges are affecting other KPBSD projects included in a $65.5 million bond package passed last year.

The most expensive project in that package is the reconstruction of the elementary school. From an outdated heating system and broken insulation, to trees growing on the roof and wood paneling that falls off the building, the school is so old — built in 1960 — that repairs have become cost prohibitive.

Soldotna Elementary School reconstruction project stakeholders convened for a meeting to talk about the project specifications in mid August. The Clarion, which did not attend that event, was discouraged from doing so by Hedges, who said he didn’t want participants “to feel limited on discussion.”

Hedges told school board members Monday that the $13.5 million cost increase is forcing the borough to reevaluate its strategy for selling off bonds to pay for projects.

“It puts us in an unusual position in regards to the amount of bond proceeds that we’ve currently sold (and) the amount that we can sell,” Hedges said. “We did have a buffer in place to deal with, not only some contingency, but also with prioritization of some other projects. We were prepared for some escalation, but not to this level.”

Lyon and Hedges said the district is somewhat limited on how much it can reduce the school’s footprint as a cost-savings measure. Soldotna Elementary has more students in its special education program than other district schools — currently six classes compared to other schools that usually have one or two.

The school currently measures about 54,200 square feet, but school programming actually only occupies about 44,700 square feet of space. Initial plans for the reconstructed school described a school that is 38,000 square feet, but Lyon said they’ve worked that down to 35,000 square feet. Lyon said they “still have some budgetary concerns” about that smaller size.

“It’s clear that (special education) spaces tend to be less flexible and have less overlapping uses than general education spaces,” Hedges told school board members. “That has led to a kind of an inability for us to squeeze those areas down through compatible uses and that sort of thing.”

A project that goes somewhat hand-in-hand with the reconstruction of Soldotna Elementary School is the reconfiguration of Soldotna Prep School, which currently sits vacant.

As part of that reconfiguration, Soldotna Montessori Charter School, which currently shares a school with Soldotna Elementary, will be relocated to Soldotna Prep. Other programs KPBSD plans to move to Soldotna Prep include River City Academy, Connections Homeschool and the district’s administrative offices.

Hedges told school board members Monday that the borough originally estimated the reconstruction of Soldotna Elementary to cost $21 million and the reconfiguration of Soldotna Prep to cost $18 million, with the understanding that reconfiguration was “subordinate” to reconstruction.

“That $21 million was actually based on a limited program development that we did, when assessing the kind of general strategy, knowing that that might be a little bit erroneous, because it was kind of done in a vacuum,” Hedges said. “We structured it in that way so that we can prioritize the replacement of the school as opposed to the renovation of an existing (school).”

KPBSD Superintendent Clayton Holland on Monday proposed leaving KPBSD’s district offices in their current building as a way to potentially save money. Holland explained that it was the administration of former Borough Mayor Charlie Pierce that wanted the KPBSD offices relocated to help alleviate crowding in the shared borough and school district building in Soldotna.

“We did not initiative moving,” Holland said Monday. “That was not a request by us.”

Although the borough is moving forward with some of the other projects included in the bond package, Hedges said the effort spent on reconciling the challenges that have popped up with Soldotna Elementary reconstruction project is delaying work on others. The borough is also having to rethink its strategy for selling bonds to pay for the projects.

“We’re poised in a position with some of these designs that we’ve got in place to execute some of this work pretty quickly,” Hedges said. “We just don’t want to pull the trigger on that 85% of the value of that project until we’ve figured this one out completely, because it’s going to have such an impact on that bond funding.”

Lyon and Hedges said they hope to give an updated presentation on the status of Soldotna Elementary and the rest of the school bond projects during the school board’s Oct. 2 meeting.

Monday’s KPBSD Board of Education meetings will be available to stream on the district’s Board Docs page.

Reach reporter Ashlyn O’Hara at ashlyn.ohara@peninsulaclarion.com.