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State Chief Procurement Officer Vern Jones said the state is conducting a third-party independent review of the facility for hazardous materials. The building contains asbestos floor tiling, and a preliminary review by the state said it could contain toxic mold and lead paint.

Jones said the state has not yet signed a lease proposal sent last month by the Ketchikan Gateway Borough.

Ketchikan Gateway Borough Manager Roy Eckert, however, said the third-party independent review of the building would be conducted by Tymatt Inc., a construction firm that currently occupies office space in the facility.

The Ketchikan Gateway Borough considered moving its own offices to the facility in 2003 but chose to stay in its building in downtown Ketchikan.

"The current plan is and has been for a while by the Assembly that should (the Alaska Marine Highway System) not move in there, the borough offices would probably move out to that facility, so it's not an unsafe building by any means," Eckert told the committee.

He said the asbestos tiling in the building does not pose a health hazard to workers, adding that many buildings in the state contain asbestos.

"They can either be taken out or covered over by carpet," Eckert said. "I don't believe they're probably in as bad a shape as the some in the State Office Building last year that had to be taken out there in Juneau. ... I think a lot of the buildings, even right across the street from where you're at, have similar problems but they still don't pose a health hazard, so we don't see that as a problem at this point."

Jones said the state Department of Law and the director of the Division of Risk Management are reviewing the lease proposal to make sure the state would not be liable for hazardous material abatement costs or liability associated with the building.

Jones also said the state does not yet have a tenant to move into the offices in Juneau that will be vacated when AMHS moves. Commissioner Barton said DOT holds a lease agreement for the space through 2014. That means the state will pay double rent until it finds someone to fill the office space.

Rep. Jim Holm, R-Fairbanks, said he feels comfortable with the move at this point, adding that he held the committee overview because AMHS employees were not consulted before DOT recommended moving ferry system offices.

"I think it pointed out that the administration didn't use the process that normally is used for including its employees," Holm said in an interview following the meeting. "And I think that's what the complaints were as much as anything. We just wanted to get some justification for why they did what they did, not to tell them that they did a wrong thing or a right thing but that people have the opportunity to see why we are moving the administration to Ketchikan."

Holm said DOT did not consult the Marine Transportation Advisory Board before recommending the move.

"I wonder if the advisory board is there why we would have it if we aren't going to use it," he said. "That was kind of what we wanted to get out of them is to say, 'Hey, next time you make these kinds of decisions make darn sure you let the people in there.' "