The parliament's current cost stands at £401m
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Scottish Office experts were initially opposed to Holyrood being the site of the new Scottish Parliament.
The inquiry into the rising costs and delays in the construction of the parliament has heard from Anthony Andrew, now head of estate services, Scottish Executive.
Mr Andrew was asked about the time when Holyrood first bcame a possible site for the parliament.
Until then, Calton Hill, based on an extension from St. Andrew's House, the headquarters of the Scottish Executive, was the front-runner.
He sent a hand-written memo which was shown to the inquiry comparing Holyrood to the three candidates - Calton Hill, Haymarket and Leith.
In it, he said Holyrood was not really an attractive option and in his view was not a contender because it was peripheral and had poor communications.
Views 'misrepresented'
Lord Fraser also heard concern that senior civil servants were misrepresenting the views of Historic Scotland, which favoured the option of building a parliament on Calton Hill.
Historic Scotland had supported the St. Andrew's House option providing important architectural features were retained.
In a memo, Richard Emerson, the agency's chief inspector, wrote that he was dismayed that what he called its "clear views" on the merits of the three sites were being misrepresented by civil servants.
The inquiry, led by Tory peer Lord Fraser of Carmyllie, is hearing evidence as to how the project cost has risen from £40m to £401m.
The hearing has adjourned until Monday 24 November.