PORT TOWNSEND — The Port Townsend City Council has unanimously approved a Sequim company’s $2.3 million bid for the Water Street Enhancement Project.

Construction is set to begin Jan. 2.

That means a “major disruption starting in a couple of weeks,” in downtown Port Townsend, said Councilman Robert Gray on Monday, when the council approved the bid.

Businesses are expected to remain open and the project is planned to be completed by June.

Officials said the goal will be to keep at least one lane open downtown at all times.

The Water Street Enhancement Project will run from the Port Townsend ferry landing and along Water Street to Taylor Street, according to the project description from the city Public Works Department.

The largest part of the project will be underground. The 80-year-old sewer lines running under Water Street are due to be replaced.

The project also will put in infrastructure that will see overhead utilities such as power lines moved underground by 2020.

More visibly, the project will revamp the sidewalks along Water Street to bring them into compliance with the Americans with Disabilities Act.

The project will re-size parking spaces in downtown to make them more uniform and will transform the small parking lot at the end of Tyler Street into a pedestrian area with beach access.

Tyler Street on the south side of Water Street will be closed to traffic when the pedestrian plaza is constructed. Pedestrians will continue to have access.

City Engineer Dave Peterson told council members that Interwest Construction Inc.’s bid was under engineers’ estimated cost for the project. IT was one of six bids the city received. Seton Construction, Inc. of Port Townsend came in second and Nordland Construction NW, Inc. of Nordland came in third.

All the bids were due by Nov. 21.

Peterson told the council that most of the project is within the city’s budget. He said it includes “all of the hardscape” that the city funded with a $1 million bond.

The city also was awarded $690,000 from the state Transportation Improvement Board and has about $950,000 in funding available from the water, sewer and stormwater utility funds. The project budget is $2.7 million.

“All of the pieces of the project are within our budget, except the stormwater and we somewhat saw this coming,” Peterson said. “We have been able to put in basically all the enhancement we talked about with you before.”

City Manager David Timmons said that there are several funding sources that can’t be commingled for the project.

“The stormwater utility component is separate funding,” he said.

Calls to Timmons and Peterson were not returned Wednesday.

Timmons said that some of project isn’t included in the bid, such as adding bike racks and benches.

“We’ll buy those separately with funds from another source,” he said. “They are the last things going in anyway.”

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Reporter Jesse Major can be reached at 360-452-2345, ext. 56250, or at jmajor@peninsuladailynews.com.