Hawaii County police have opened an arson invstigation into a fire that broke out early this morning at the old Uncle Billy’s Hilo Bay Hotel, which was vacant and on track to be demolished.

Police said the cause of the fire is believed to be electrical in nature and may be due to tampering with an electrical junction box.

Police, during a sweep of the property, found a 29-year-old man, who was wanted on an outstanding bench warrant and was allegedly in possession of drugs. He was arrested on the warrant, drug and drug paraphernalia charges and criminal trespassing.

He is being held in police custody on the bench warrant, but was not arrested in the arson case.

Two others were also cited for criminal trespassing.

Firefighters responded to a 1:41 a.m. alarm and were on scene at 1:46 a.m. They brought it under control at 3 a.m. and extinguished it at 4 a.m.

A total of 14 units with 26 personnel and an additional 12 others from different agencies responded. They found flames from the bottom floor on the east end of the hotel lobby had extended up the entire four floors of the building, and had spread to the north wing of the building.

Firefighters searched the building and found no occupants, but discovered evidence to support reports of squatters frequenting the premises, the fire department said in a news release.

The fire department estimated the fire caused $2,025,000 in damage to the $7 million building.

The Department of Land and Natural Resources’ Land Division has jurisdiction over the hotel property and and other properties on Banyan Drive.

DLNR said it has been pursuing demolition and redevelopment of the property, but plans were put on hold because the agency lacked funding for demolition and litigation unrelated to DLNR.

An interim security contract lapsed in December, and DLNR said it continues to look for options to secure the property.