The latest in a long, fitful series of efforts to salvage Ukiah's historic Palace Hotel has hit a snag.

The state Division of Occupational Safety and Health has halted construction work on the Palace Hotel over concerns about asbestos and lead contamination.

Work cannot continue until the hotel's owner hires a licensed asbestos contractor to oversee removal of asbestos inside the building, Cal/OSHA spokesman Peter Melton said Wednesday.

"We want to protect the employees," he said.

The problem is expected to be remedied within 30 days, said Norm Hudson, a Windsor contractor who began overseeing work on the building two years ago.

It's not the first time work on the hotel has been stalled.

Marin County real estate agent Eladia Laines, first with partners, then on her own, has been promising to restore the 122-year-old landmark for more than two decades.

But the hotel has been vacant and in decline since Laines and her former partners bought it in a 1990 bankruptcy sale for $115,000. The nearly 60,000-square-foot, three-story building takes up most of a city block and has been a scourge on downtown improvement efforts.

Laines periodically has made repairs and promises. In 2009, she announced plans to build shops on the ground level and condominiums above, a plan she still hopes to pursue with the help of yet-to-be-located investors.

The city, meanwhile, has spent more than $100,000 in staff time and on studies for the hotel, including feasibility studies and an appraisal. One study found the hotel may be worth less than the cost of tearing it down.

Officials hoped the studies would stimulate progress, possibly a sale of the building, but little happened.

Following years of failed effort to gently prod progress, the City Council two years ago ordered Laines to take steps toward rehabilitating the building or face having the city seize, and possibly demolish, the structure, which was declared a nuisance.

Since then, Laines has been required to give regular updates to the council, showing that progress is being made.

On Wednesday night, the council gave her another reprieve.

So far, nearly 125 tons of water-damaged wood and lathe plaster have been removed from the hotel, Hudson said. He's also taken steps to halt rain from entering the building.

There's a long way to go, but Hudson is hopeful.

And he's not alone. Hudson said some 6,000 people have been following progress on the hotel through photos posted online on Flickr.

Hudson wasn't always optimistic. He initially turned down requests to work on the hotel

"I said 'I'll be dead before that's done, I'm not interested,'" he recalled.