PROVINCETOWN — The 65 apartments being built on the site of the former VFW building at Jerome Smith Road are now projected to cost $37.8 million, The Community Builders Inc. (TCB) told the select board on Monday. That represents a 70-percent increase from the bid price of $22.3 million, with nearly all of the increase coming from a doubling of the physical construction costs.

The two prices aren’t completely comparable because the original bid was for 57 units. After discussions with town staff, TCB added eight more, currently projected to be restricted to the 60 percent of area median income bracket.

The increase in units doesn’t appear to be the main driver of the cost increase, however. The per-unit cost was $256,000 in the original bid from 2021. The per-unit cost is now projected to be $405,000.

“These cost increases were more about these extenuating circumstances,” said TCB project manager Lindsey Gael, citing inflation in construction materials, labor costs, and interest rates. Increased financing costs were responsible for $2 million of the $15-million increase.

Gael told the board that TCB expects to offset nearly the whole increase with federal and state dollars, including upcoming state allocations from the American Rescue Plan Act. A supplemental spending bill that is currently under consideration would earmark $200 million for median-income housing projects on the Cape and Islands and in the Berkshires, Gael said.

TCB asked the town to increase its “local commitment” from $500,000 to $3 million, however, which the select board readily agreed to do. At $3 million and 65 units, the town’s contribution would be $46,000 per apartment — only slightly above recent averages.

Town Manager Alex Morse pointed out that TCB had taken on the purchase of the adjacent parcel at 55R Captain Bertie’s Way. That half-acre lot expanded the project area to 1.8 acres and allowed a fourth building to become part of the plan, increasing the overall unit count.

Gael did not disclose the purchase price of the parcel, and the transaction had not yet posted at the registry of deeds at press time — but a line in the presentation labeled “acquisition cost” gave the number $1.42 million.

“The select board encouraged town staff to pursue 55R Captain Bertie’s,” Morse said, “and that cost shifted from the town to TCB. If TCB hadn’t moved forward with that, we would have attempted to negotiate it for a similar cost.”

Gael told the board that, based on community feedback, TCB had removed the driving egress to Captain Bertie’s Way, replaced it with a pedestrian and bicycle path, and added 10 more parking spaces. “We did review this plan with the fire dept. and got their initial sign-off,” Gael said.

“You checked all the boxes,” select board member Leslie Sandberg said. “It’s really fantastic.”

“Can we start it sooner?” joked select board member John Golden.

TCB is applying for state funding in the January 2023 round, Gael said, in which case construction could begin in 2024 at the earliest.