Building mitigation and renovations kick into high gear at Marco Polo

Dara Young spent July 7 chipping old tile off her kitchen floor to reduce costs for the upcoming renovation of her Marco Polo condominium.

Her unit was damaged a year ago today from water that firefighters used to battle ferocious, wind-swept flames engulfing the Kapiolani Boulevard high-rise — one of Hawaii’s most devastating fires, responsible for the deaths of four people and more than $100 million in damage.

“I had very minor damage compared to many people, but we are all living in a hyper-vigilant state,” Young said. “Every day, we have to deal with something until this whole thing is done. But we’re all trying to move forward, and many people are making additional investments. We all love this place and want to see the value return.”

The Marco Polo, at 2333 Kapiolani Blvd, was built in 1971, and the 36-story high rise also has a seven-story parking garage, but it had no fire sprinkler system. The fire damaged about 200 of the 568 units, destroying 30. The cause has been undetermined, and the 26th through 28th floors remain mostly decimated.

It was the 26th floor where the victims — Britt Reller, 54; his mother, 87-year-old Melba Jeannine “Jean” Dilley; and Joann M. Kuwata, 71 — perished. The fourth victim, Marilyn Van Gieson, 81, died Aug. 3 from fire-related complications.

Most of the building’s common areas must undergo abatement, forcing owners on every floor to move out for six- to eight- week periods. So far, about 289 of the 568 Marco Polo units have undergone the process and been returned to owners, according to Andrew Fortin, spokesman for Associa, which manages the building.

A year later, however, remediation still hasn’t started on the primary two floors where the devastation began. People in those units have been told that they have to remove their belongings starting July 22, and then the work can begin.

While she has been displaced, Young has had to pay rent in addition to her mortgage and maintenance fees. Luckily, most of those expenses have been covered by her personal insurance policy. Still, she is waiting to find out how much of the renovation will be covered by her insurer because Marco Polo’s building policy covers only dangerous conditions and to return damaged units back to their original 1971 condition.

Many of the residential owners weren’t adequately covered by insurance to cover rental and other expenditures while they’re displaced during repairs.

“For the owners, the greatest challenge is that many people don’t realize the value of their improvements or contents and what it would cost them to live somewhere else,” said Sue Savio, the insurance agent who sold the Marco Polo its building insurance policy. “In most condominiums, 50 percent or more don’t have adequate loss-of-use limits.”

Chipping tile is backbreaking work, but Young’s expenses have mounted since she moved out of her condominium on April 20 for floor repairs, the removal of asbestos and mold from drywall and ceilings, and the replacement of damaged carpets. A water-damaged wall in her kitchen and the ceiling of her bathroom also had to be taken care of.

The first wave of contractors for her unit drywalled over her bathroom’s recessed lighting and didn’t replace it because it was an upgrade from a prior owner. When contractors took out a kitchen wall, they also repaired the ceiling with an out-of-date textured finish. Unhappy with the state of her kitchen and bathroom, Young decided to pursue a full condominium upgrade — even if she has to go out of pocket.

Lasting impacts

Oahu real estate analyst Stephany Sofos said for residents the fire and its aftermath left lasting impacts that make moving forward difficult. But Sofos said the outlook is more straightforward for the property.

Until repairs are completed, Sofos said, most banks would consider the property worthless — making it hard for buyers to get loans or owners to refinance or take out home equity loans. Sofos said that’s probably a major reason that the pace of sales at Marco Polo is down from 20 sales in 2017 to only two cash sales in 2018. Also, prices are off about 10 to 15 percent, she said.

But Sofos anticipates demand will grow as news of the improvements spreads. She also expects buyers will respond positively to news that Marco Polo’s Association of Apartment Owners voted to install fire sprinklers and had enough in the building’s reserve fund to cover it.

“The building was dated, and right now there’s a bit of a stigma since people died there, but I think the building itself will be like a phoenix rising from the ashes. Everything is going to be new again, so it’s eventually going to become one of the diamonds of Kapiolani Boulevard,” Sofos said.

Savio said Marco Polo’s insurance coverage was adequate enough to guarantee full restoration of the building, and there’s already a claim filed in excess of $50 million.

“I think once the Marco Polo is done with a new fire alarm system, sprinklers and new common-area improvements, the values will skyrocket. It’s a great location, and it will be a brand-new building,” Savio said.

Visible progress

There are signs of overall recovery at the Marco Polo.

Outside of the building, some 10,000 gallons of water has been used to clean soot from the exterior, said Fortin. Inside, reconstruction teams have removed tons of debris and installed approximately seven miles of drywall sheeting. Some 66,300 square feet of carpeting has been ordered, and some 63 window panes have been scheduled for replacement, he said.

The Marco Polo owners association board of directors declined to be interviewed but provided this statement: “As we look back over the past year, we are thankful for the strength of our residents, the support of our rebuilding partners, and the generosity of the community. The progress at Marco Polo is more visible each day and we look forward to completing the restoration in the months to come.”

As recovery drags on, even those like Karin Lynn, who lives on the 27th floor and had generous loss-of-use insurance policies, could run out of funds.

“Unfortunately, the loss-of-use benefit typically expires after a year, so as of next month I and many others will be faced not only with the mortgages and condo fees (mine is $700 a month) on our unoccupied units, but all living expenses (rent, utilities, etc.) for somewhere else until we can return,” Lynn said.

Lynn said her unit wasn’t badly damaged, but because of its location, she has been displaced since the fire. She didn’t even get access to her belongings until November, after the conclusion of Fire Department and insurance investigations. How much longer she will have to wait will be determined in part by whether the city Department of Planning and Permitting requires complete gutting of floors 26 and 27 or if basically undamaged units can simply be repaired, she said.

“One of the most vexing and stressful issues has been the unknown, and lack of communication and information,” she said.

Although Young also has endured months of uncertainty, she knows that she is lucky. She wasn’t home when the fire broke out, and she didn’t sustain any injuries. The damage in her unit was minimal compared with what people experienced who lived closer to unit 2602, where the fire started. And, while her insurance policy hasn’t covered everything that she had hoped, it has provided more generous coverage than some of her neighbors have received.

“I know that I have been blessed,” she said. “I’ve also been forever changed. That’s part of why I decided to just go for it and renovate now. You never know what’s going to happen.”