State signals intent to keep DoL employees at Plywood Palace

The State of Alaska plans to continue leasing the troublesome Department of Labor and Workforce Development building in Juneau. The so-called “Plywood Palace” has had numerous structural issues over the past ten years, as well as problems with air quality and mold. Some workers blame the facility for their lingering health problems. KTOO’s Casey Kelly reports.


State Dept. of Labor building in Juneau. Photo by Casey Kelly/KTOO.

Earlier this year, it appeared the Parnell administration wanted out of the Plywood Palace. After mediated lease negotiations with the building’s owners – Juneau I, LLC – broke down, the state decided to seek new office space for the Labor Department’s 300 plus employees in Juneau.

But Chief Procurement Officer Vern Jones says the state only received four proposals. A committee reviewed them, and Juneau I successfully bid to keep 260 employees at the current facility. Mendenhall Mall owners, Salmon Creek, LLC, won the bid to house about 78 employees.

Jones says the Labor building will need significant work to meet minimum state standards.

“My understanding is that the building doesn’t meet the natural light requirements, so there’s going to have to be more windows,” says Jones. “The air handling and heating and ventilation system would have to be certified and my understanding is that would need to be replaced.”

In addition, carpets and other surfaces will need to be re-done, and Jones says the owners must prove there’s no mold in the building.

“Before we would sign off, you know, after the improvements are made, there would have to be competent professionals certifying that there isn’t any mold there,” Jones says.

The building’s owners did some repairs and mold remediation before the state pulled out of lease talks in March. Jones estimates the remaining work could take several months, during which time employees would continue to work at the building.

Kim Metcalfe is a Business Agent for the Alaska State Employees Association, which represents many Labor Department workers. She questions why the administration wants to keep leasing the facility considering its history of problems.

“We’ve been through this before,” says Metcalfe. “There was water damage. There were constant floods in the building for a number of years. And of course, that doesn’t help with the mold issue. They finally decided that they had to do some residing, and replace some windows. And our employees that are in the building were even more affected by the dust and debris from the upgrades.”

Metcalfe says many employees report headaches and cold or allergy-like symptoms when they’re in the building. She criticizes the administration for pulling support for a new state office building sought by Juneau’s legislative delegation.

“We need a safe place to house our employees,” she says.

Jones says a new building remains an option. That’s why the state included a shorter lease term in its request for proposals.

“It’s a five-year initial term, with five two-year options at the state’s discretion,” Jones says. “So, all we’re obligated for is initially five years. And that relatively short period was to allow for the possibility of a new building.”

Jones says the Mendenhall Mall space also needs significant upgrades.

Right now, the state has only issued a “notice of intent to award.” That triggers a 10-day “protest period,” during which other bidders can object. Jones says that will be followed by a negotiation period of a couple weeks before a final notice of award can be issued.

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