State ends lease talks for 'Plywood Palace'

Labor Department employees to get new home this summer
About 300 people work in the Alaska Department of Labor & Workforce Development building, commonly referred to as the Plywood Palace, in Juneau.

The state has given up trying to reach a deal to continue leasing the “Plywood Palace,” home of the Department of Labor & Workforce Development, and will move to a new location as soon as this summer, officials said.


The state Department of Administration ended negotiations with the Juneau 1, LLC, the building’s owner, on a new lease and will soon seek bids on replacement space, said Vern Jones, state procurement officer.

He said Juneau 1 wanted the state to commit to 10 years in the troubled building, while the state sought to extend its stay there for just a few years while it explored its options.

The state has twice in recent years considered and rejected plans for building new office space to house employees.

Jones said the current lease ends June 30. He acknowledged there would not be time to find, lease and move into new space by then.

“It’s going to take us a little more time than that,” he said.

State contracts allow for extended stays in such instances, he said. It may take a few months past the end of the lease, he said.

The current building is about 68,000 square feet, but Jones said he didn’t yet know what size space the state would be seeking.

A request for proposals is currently being drafted, he said.

All the employees may not even be moved to the same building, he said, although that was the state’s preference.

There appears to be adequate office space in Juneau to absorb the building’s employees and it is even possible it will get a good deal, Jones said

“We’re hoping to get a very competitive rate,” he said.

The Plywood Palace is located at the downtown end of the Juneau-Douglas Bridge on Eighth Street. It is about 30 years old, and has been plagued with water infiltration and mold problems, according to state reports.

Employees have said they have suffered numerous ill effects from the mold, with some so severe they were unable to continue to work there.

Members of the Juneau legislative delegation praised the decision to move employees out of the building, and said they’d continue to push for a new state office building downtown.

State officials had spent substantial time attempting to negotiate a lease extension with the building’s owners, negotiations that included using a mediator.

• Contact reporter Pat Forgey at 523-2250 or at


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