First order of business, a small moment of morning calm. Photo taken about 6:26 a.m. at Waialae Beach Park.
Now, after that morning of calm, here’s just a small question. I got an email from a friend. He refers to the recent Marco Polo fire as the “$100 million plus” fire. That’s a very scary number.
Could the total cost really exceed $100 million? And, if so, who will take the biggest hit? All apartment owners via special assessments? The insurers holding the master fire and liability policies for the condominium association? Individual owners of the damaged apartments?
What’s your guess?
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I wouldn’t want to comment on anything but the first question. I don’t think it’s crazy to think of this as a $100 million dollar (or more) incident given Hawaii’s cost of construction, likely exceptional challenges in REconstruction, loss-of-use to residents/owners, and (unless they retrofit with sprinklers – an additional cost), the decline in value for the apartments. Big numbers, scary math.
$100M looks high. There are 572 units, so a $100M cost impact would imply $175k per unit. It’s going to be expensive, but not that expensive. $20k per unit is $11.5M in retrofit costs.
In the short term, however, I doubt anyone will be able to sell a unit without taking a huge price cut, maybe 25%-35% under what they would have gotten before the fire.
Undoubtedly there have been other condo boards within the last 2 or 3 years that have considered sprinkler retrofits and decided they were too costly… I’m sure they are all reconsidering. Of course a $10k retrofit quoted earlier this year will probably be a $15-$20k retrofit since the phone is presumably ringing off the hook at the installation companies.
I have heard that too. I think it is right. Who will pay ? The master policy will restore to “as built ” after the property deductible which the unit owners need to cover. They should have the deductible set aside in reserves but if not they could be assessed. Then any improvements to each unit would need to be covered by the owner’s own HO-6 policy. That is also where the loss of use money comes from as well as money to replace furniture and clothing. There was a law passed a few years ago that gave condos the right to force place HO6’s on owners that refused to buy their own. So everyone should have personal coverage whether they got it themselves or it was bought for them ( and charged accordingly ) by the AOAO. In any event, my personal opinion is that this building is going to be just fine. The agent is Sue Savio with Insurance Associates. Ian, I’m sure if you called her she would be happy to talk with you regarding any questions you might have. I don’t know her myself but she is the number one agent of condos on Oahu and is often in the news talking about condo related issues. Hope this helps !