As announced last week, construction officially began this week on the Palace at Washington Square, a condo building with ground-floor restaurant space that will occupy the former Pagoda Theatre site at 1731 Powell St., near Columbus Ave.

A worker told us on Wednesday that old walls and utility lines are being dug out, and the entire site will be taken down to 15 feet below grade to allow for underground parking. The deep hole that was used for removal of tunnel boring machines for the Central Subway construction will be filled in up to 15 feet.

Last year, former District 3 Supervisor Julie Christensen and District 8 Supervisor Scott Wiener announced they would urge the city to buy the Pagoda land for a future North Beach subway station, but the deal did not go through.