The fire insurance report and claim settlement for repair or replacement of the Spring Street Landing building has moved to the “potential litigation” stage for discussion at the Friday Harbor Port Commission, and the commission began the process to have some or all of the building demolished.

Meeting in executive session before its Oct. 23 meeting, the commission and Port Director Marilyn O’Connor discussed with port attorney Frank Chmelik preliminary reports of what port insurer Enduris Washington and excess insurance carrier Lexington Insurance Co. would pay on fire insurance claims for the building on the Friday Harbor waterfront that housed Downriggers Restaurant and other marine businesses.

O’Connor said the port has received no offers of settlement from the insurers and had not discussed costs to repair or replace the building.

One problem is that the cost of “code upgrades” required by the Town of Friday Harbor had yet to be determined by Lexington, but O’Connor said that such upgrades would be covered by insurance.

“If the port were to disagree with the proposed settlement, it could be contested,” she said.

The top floor of the two-story Spring Street Landing Building, former home of Downriggers, was gutted by an early morning blaze that erupted in the kitchen of the popular waterfront restaurant Aug. 17. Investigators determined the fire broke out inside a kitchen wall, where electrical wiring had likely been exposed by rodents gnawing on the wires.

In addition to Downriggers, three businesses on the ground floor of the building were displaced by the fire.

O’Conner also said no decision had been made on rebuilding or replacing Spring Street Landing, although Commissioner Mike Ahrenius has stated his preference for replacement. O’Connor said no decision would be made until after a settlement offer has been received and the commission evaluates its options.

Regarding businesses displaced by the fire, the commission directed port staff to meet with former tenants to define the amount and types of spaces needed along the waterfront. O’Conner noted in an e-mail to the Journal that available space is limited, and that the primary function will be to allow pedestrians to make reservations and obtain information from the businesses at kiosks or small counters.

The commission states that the spaces would be only for displaced tenants at this time.

In addition to insurance coverage for repair or replacement, the port has coverage for loss of rents from the building, according to O’Connor.