Construction on the 1 million-gallon Kalifornsky Beach Road water reservoir is set to begin immediately.

Soldotna based Blazy Construction Inc. was awarded a contract by the City of Soldotna on Wednesday. Blazy was the lowest bidder of the five companies that submitted for the project in early June, City Manager Mark Dixson said.

Construction will include a welded steel tank, an open trench water main and a control pump building.

The project was initiated following the partial collapse of the roof on Soldotna’s 500,000-gallon reservoir in late 2012.

The five-acre parcel of land where the water tank will be constructed is within the Fox Trail of the Tsalteshi Trails system, Dixson said.

The parcel was originally purchased specifically for the installation of another reservoir, he said.

The new project will disrupt current use of Fox Trail, Dixson said.

The city is working closely with the Tsalteshi Trails Association to ensure minimal impact to the overall trail system during and upon completion of the project, he said.

The city received two non-matching grants totaling $3 million from the state, according to the ordinance requesting an additional appropriation of $1.15 million from the city’s utility fund.

The original engineer’s estimate was $2.5 million and the lowest bid was $3.4 million, according to a memo from the engineering department.

City Engineer Kyle Kornelis said even if the city held off on starting the project until next spring, it would not make a difference in the price.

“One of the reasons we needed the extra appropriation is that steel prices have climbed considerably since the original estimates,” Dixson said. “The current appropriation does have a contingency budget should we run into any other unanticipated factors which would affect the scope or costs of the project.”

Council member Pete Sprague said he had some reservations about appropriating $1.15 from the utility fund for the project.

Sprague said the amount was hard to swallow. His biggest concern was the difference between the estimate and the lowest bid.

Quelling his hesitation; however, was that most of the bids were generally in the same price range, Sprague said.

“We need to get going on the project,” he said.

The size and location works for the new reservoir for any future development and expansion of the city, Sprague said.

Kelly Sullivan can be reached at kelly.sullivan@peninsulaclarion.com