The Oak Bluffs affordable housing committee has hired a contractor for a project to convert the old town library at the corner of Pennacook and Circuit avenues into a mixed-used commercial building with a pharmacy and affordable housing.

Although project backers had hoped to hire an Island contractor to build the project, the lowest bid of $957,369 came from the Haynes Group of South Easton. The next two bids were $1,016,320 from John Jones, and $1,435,271 from Coastal Engineering, both local contractors.

In August the town hired the nonprofit company The Resource Inc. (TRI) to manage the project after the first round of bids came in substantially higher than expected.

Because the project involves grant money and Community Preservation Act funds, the town is required to use state-approved contractors.

“It dismays our committee to no end that we can’t hire a local contractor,” said selectman Ronald DiOrio, also chairman of the affordable housing committee.

The comments were made on Monday at a meeting of the town Community Preservation Committee, when Mr. DiOrio submitted a request for $400,000 to create a new town affordable housing trust.

Mr. DiOrio said the low bid surprised him.

“It amazes me someone can come from off-Island, pay for the ferry boat, house the people and feed them — and still do the work for less money then someone here on Island. I think that’s a larger problem that eventually we will have to deal with,” he said.

He said the town is negotiating with Conroy Apothecary of West Tisbury to open a pharmacy on the first floor of the building.

Alice Boyd, a grant writer who helped secure a $445,000 grant from the Housing Development Support Program for the library project, and who also founded TRI, said the Haynes Group has a strong reputation. “They are a good company, a very solid company. They will do a great job. And they will try to use as many Island subcontractors as possible,” she said.

Construction is expected to begin sometime next month with a planned completion date of July 1.