NORTH MANKATO — The long-awaited first step in expanding Highway 14 to four lanes between North Mankato and New Ulm will move forward as scheduled despite costs rising by almost a third.

Minnesota Department of Transportation Commissioner Tom Sorel committed to completing the project in 2013, according to a state lawmaker and a North Mankato official who met with him Monday afternoon.

With Sorel’s commitment in hand, the North Mankato City Council unanimously approved $3.2 million in borrowing to pay its share of a new interchange at Highway 14 and Rockford Road (Nicollet County Road 41). The project will also include about two miles of new four-lane expressway west of the city.

“The project is moving forward and it’s moving forward on schedule,” said Rep. Terry Morrow, DFL-St. Peter, who has been pushing the state to finance the work throughout his five years in the Legislature.

Sorel didn’t tell Morrow and City Administrator Wendell Sande how MnDOT would proceed. The agency must decide by Friday whether to accept a nearly $24 million bid from LHS Constructors to do the work, which will need to begin in the spring to meet the late-fall 2013 goal for opening the new roadway and interchange to traffic.

The lowest of three bids, the LHS price tag was 31 percent above the $18 million MnDOT estimate for the work. A MnDOT spokeswoman said last week that the agency was looking at a variety of options including accepting the bid, rebidding the project, dropping the design-build approach and looking at new designs that might lower costs.

First, the agency was trying to decide if the $23.6 million bid was reasonable.

Morrow applauded the close examination MnDOT is giving the bid by LHS, a joint venture of Shafer Contracting, Lunda Construction and Hoffman Construction. But he’s also relieved that the project will move forward to improve a stretch of two-lane highway that’s been the site of several fatal crashes and provide an interchange to serve North Mankato’s fast-growing northwest side.

“My belief that the commissioner and MnDOT were going to do the right thing was confirmed,” he said.

The rising price of the project is also driving up the cost for North Mankato and Nicollet County, which will divide the 25 percent local share. North Mankato originally expected its share to be about $1.5 million, the amount the city included in a local option sales tax proposal approved by the Legislature and local voters.

The new obligation, based on the LHS bid, is $3.2 million, and the council approved a bond sale for that amount at Monday night’s meeting. City resident Phil Henry encouraged the council to reject the borrowing, citing the soaring cost and questioning the need for a third Highway 14 interchange on the city’s hilltop.

“A lot of people say they don’t really even see the need for the interchange when there’s another one just a mile down the road,” Henry said.

But council members said it would be a mistake to kill the project after finally persuading state officials to fund the bulk of the work.

“We’ve been working on 14 for a lotta, lotta years,” Councilman Bill Schindle said. “I’d hate to see us walk away from it now.”

Mayor Mark Dehen noted that the state financing might not be offered again anytime soon.

“It probably would be 20 years before it would come back to us,” Dehen said.

The project also has value for the momentum it might bring to the four-lane expansion to New Ulm, a priority for area transportation advocates for decades, Sande said after the meeting.

A meeting with MnDOT a year ago set a tentative goal of following up the work in North Mankato with future projects that would bring a new interchange at New Ulm in 2018 and the extension of the four-lane segment from west of North Mankato to Nicollet — either before or shortly after the New Ulm project, Sande said.

While the council unanimously approved the borrowing, Schindle asked that the council schedule a workshop to discuss dedicating more of its half-percent sales tax revenue to paying off the highway bonds at a quicker pace. Currently, the sales tax must be shared with park projects and economic development, but the city could seek legislative approval to change the distribution.