Construction costs for Sitka's planned floatplane base have more than doubled from $15 million to $34 million, forcing the city to decide by year-end whether to increase local funding or dramatically cut the facility's scope.

Public Works Director Michael Harmon presented the cost update to the Assembly on Wednesday. The city's local match has also doubled to over $2 million. The project has been in development for more than 20 years and now faces a critical decision point as it reaches the 35 percent design milestone.

"We've brought in the— at this stage, you bring in a professional cost estimator. That's required by FAA to make sure we're getting the cost right. And through that process, you can see right away on this slide, now we're sitting at a construction estimate of $34 million, which puts the CBS match at over $2 million," Harmon said.

The cost increase stems primarily from inflation since the COVID-19 pandemic, rather than design changes. The project scope has remained largely unchanged from what the Assembly approved in 2021. Market conditions have driven construction costs to levels Harmon described as unlike anything he has seen in his career.

"The real significant change that we are seeing in the cost is a little bit twofold. More minorly so is inaccuracies that you'll get not having a professional cost estimator, not having the design engineers detailing everything out, but more so is inflation. Just unprecedented what we're seeing," Harmon said.

The city now faces two options: increase the local match to $2.1 million to build the full facility, or reduce the scope to fit within the original $15 million construction budget with a $1 million local match. Cutting costs to meet the original budget would eliminate the plane pull-out ramp and working yard on the upland portion of the facility. It would also reduce transient moorage to just two slips on the water side. The Federal Aviation Administration would not allow further cuts to permanent moorage based on the project's business case.

"That's the biggest cost increase I've seen in my career. What do you do with that? It's a pretty dramatic cut to the project, and we have a small match, so it's not— I don't see it as an easy decision when you look at the amount that you will give up for that extra million-dollar match," Harmon said.

The city must finalize its funding decision by December 31 to meet a state deadline for acquiring the upland property needed for the facility. Missing that deadline could force renegotiation of the land purchase agreement with the State of Alaska. The property acquisition, valued at just under $1 million, can be reimbursed through federal grants and may potentially count toward the city's local match requirement.