Cooper predicts the legal battle will take until late next year to resolve, which means the damaged building that last housed Washington Federal Savings at Fifth Avenue and Capitol Way won't be restored until about 2006.

Virginia-based Colony Insurance Co. contends the policy covers $1.66 million in repairs. Cooper argues that Colony should pay about $3.7 million for renovation and income lost from the building, which has sat nearly vacant for two years.

"I'm 100 percent convinced of the correctness and the rightness of what we're doing," said Cooper, who filed the suit Oct. 9.

Colony must respond no later than 40 days after the filing date, he said.

Craig Bennion, a Seattle attorney representing Colony, said the company fulfilled its obligation by paying the $1.66 million outlined in the policy.

"We will respond to the allegations ... in the lawsuit," Bennion said.

He declined to discuss the case further.

Repairs on the ornate, 90-year-old building will run about $3 million, Cooper said, and Colony's claims adjuster agreed with the estimate.

Although Colony insists that it's liable for only $1.66 million of the renovation costs, the policy cap isn't that clearly defined, Cooper said.

Aside from repairs, the company owes $700,000 for lost income, bad faith and miscellaneous costs, Cooper contends.

The building has been without an anchor tenant since Washington Federal moved to west Olympia in December 2001.

The bank building, opened in 1914, was designed by the Beezer Brothers, a Seattle architectural firm. Cooper said he is sure that Joseph Wohleb later designed the annex.

Cooper co-owns the building with his wife, Bobby Jo, and Mike and Kelly Reid.

He recently removed the scaffolding that for months had stood atop the two sidewalks merging at the building's corner.

When restoration begins, the scaffolding will return, and the activity might prove disruptive to neighboring merchants, Cooper said.

"It'll be like the bridge -- it won't be without some difficulties," Cooper said, referring to the Fourth Avenue bridge project.

A portion of the building now houses a few tenants, including Wovie, a digital media company.

"It's unfortunate Steve is having to file a lawsuit," said Anne DeMarcken, Wovie co-owner. "It's going on three years, and it's ridiculous that it's taking a lawsuit to do what's right."

Colony should pay for the repairs, rather than trying to delay a settlement, DeMarcken said. In her view, the insurer is dragging out the case in the hope that Cooper will give up -- something he won't do, she said.

The building's damage doesn't affect Wovie, though she's glad the scaffolding has been cleared away from the area near the storefront, she said.

The main section is safe to occupy, but some businesses would be hesitant to move into a building slated for heavy remodeling, said Connie Lorenz, coordinator for the Olympia Downtown Association.

As for the blue tarp cloaking the building's marred upper portion -- it has become a normal part of the downtown landscape, she said. "I don't notice that anymore."

Joe Mount, who co-owns nearby Bartel's Men's Store, said he would like the tarp removed.

With the holidays approaching, the owners should wrap the roof in something with more of a Christmas feel, Mount jested. "Maybe they should put a red tarp on it."

The prospect of peering at the damaged building across the street for another two years doesn't thrill him, he said.

Bartel's also overlooks the former Skookum Bay store, another building thrashed in the earthquake.

Developer Sandy Desner has begun converting it into a retail center that will resemble the building's original 1896 look. He also wants people to drop the Skookum Bay reference and call it the Harris Dry Goods Building.

Both the buildings are in the heart of downtown, so it's important they don't detract from the aesthetics that merchants work hard to achieve, Mount said. "A lot of people put a lot of effort in the window fronts."

Michael Nutter, who recently bought Talcott Jewelers, said the damaged bank building next door doesn't bother him.

Anybody who knows anything about Olympia knows that an earthquake rattled the town, so a lingering scar or two should be no big deal, Nutter said. He doesn't foresee the bank building's repair work disrupting his store.

"They've got to get it fixed," Nutter said. "I don't think it's going to affect business."

Scott Wyland is a business reporter for The Olympian. He can be reached at 360-357-0748 or swyland@olympia.gannett.com.