The road to recovery
Doyle Scholarship back; housing, job market, wine industry improve
Published: Sunday, December 30, 2012 at 4:01 a.m.
Last Modified: Sunday, December 30, 2012 at 8:54 a.m.
It was a year of recovery in Sonoma County, as the economy in 2012 slowly improved. Local employers added workers to their ranks, single-family homes were sold at a faster pace, and foreclosures dropped throughout the county.
A near-perfect North Coast harvest pleased wineries and grape growers alike, and many wineries and vineyards changed hands, as proprietors retired or escaped the lingering effects of the recession.
Here's a look at some of the biggest business stories of the year.
Exchange Bank resumes scholarship
Exchange Bank announced it would resume the Doyle Scholarship for incoming Santa Rosa Junior College Students in 2013, restoring a beloved community program that was on hold for five years.
The bank had been prevented from paying dividends by the U.S. Treasury Department, which loaned it $43 million under the Troubled Asset Relief Program. But the Treasury Department sold its Exchange Bank shares, freeing the bank to resume paying dividends.
"The Doyle's back in business," an ecstatic Frank Chong, president of SRJC, said at the time.
The dividend would provide about $850,000 a year to the scholarship fund, far less than the $5.3 million the college received from the trust in 2007, the last year of full dividends, but surpassing the $668,000 the college awarded since 2009 under its "Bridging the Doyle" program.
"It's deeply satisfying to us as residents of Sonoma County," Exchange Bank CEO William Schrader said at the time. "It's something we're very proud of."
Housing market: Sales on pace for 7-year high, foreclosures drop
Sonoma County homebuyers snapped up properties at the fastest pace in seven years, and fewer homes were sold through foreclosure.
At the bottom of the market, three out of every four home sales involved foreclosures or short sales, where the price is less than the amount owed on the mortgage. But in August, 62 percent of the transactions involved sellers with equity.
"This is what recovery looks like," said Rick Laws, vice president of Pacific Union International.
The trend continued through the fall, when only 8 percent of the 480 single-family homes sold in October were bank-owned foreclosure properties. During the same month in 2008, half of the sales involved homes that had been lost through foreclosure.
In July, 500 single-family homes were bought, a sales total up more than 20 percent compared to a year earlier, according to The Press Democrat's monthly housing report compiled by Pacific Union International.
Job market improves
Employers added a steady stream of jobs throughout the year, and the unemployment gradually inched down, falling below 8 percent to its lowest level in nearly four years.
By November, the county had added 8,300 jobs over the past year.
"This is as steep a descent (in the jobless rate) as we've had in recent memory," said Rob Eyler, who heads the Center for Regional Economic Analysis at Sonoma State University. "The signs are good. They're broad-based. There's not one industry pulling us along, but it's certainly better now than it was 18 months ago."
The manufacturing and construction sectors, both hit hard during the recession, were among the strongest sectors, with manufacturing adding 1,600 jobs and construction adding 1,000 jobs during the year.
"The manufacturing growth is pretty amazing," said Ben Stone, executive director of the Sonoma County Economic Development Board. "Manufacturing probably has the highest multiplier effect, so it's a real boost to the economy."
Harvest: Largest crop in 5 years, grape prices strong, wine prices start to rise
Near-perfect weather and ideal growing conditions led to the largest grape crop in five years, a welcome change for wineries and growers alike who suffered through grape shortages and economic calamities in recent years.
"What a season it's been. I don't think we could have asked for more perfect conditions this year," said Mick Schroeter, director of winemaking at Sonoma-Cutrer. "The weather was just terrific."
Grape prices were strong, thanks to smaller than expected crops in 2010 and 2011, low bulk wine inventories and a growing demand for California wines.
To deal with the higher cost of grapes, some wineries began gently raising prices, and consumers who traded down to cheaper wines during the recession proved they were willing to pay more, according to a report by Moody's Analytics. Wine prices increased in July for the first time in 31 months, climbing 0.3 percent compared with the previous year, Moody's said.
Winery deals: Ascentia Wine Estates sold off in pieces, Constellation buys Mark West brand for $160 million
Ascentia Wine Estates, the Healdsburg company established in 2008 with ambitions to restore local ownership to some of Sonoma County's most prominent wineries, was sold off in pieces.
Its Geyser Peak Winery was sold to Australian-based Accolade Wines. At its peak, the portfolio produced more than 1 million cases of wine per year and employed 270 people, creating one of the largest wine companies in Sonoma County. But the company struggled when a financial crisis shook Wall Street and the economy tumbled into recession.
The company was one of many wine enterprises changed hands in 2012. Purple Wine Co., the Graton wine company led by Derek Benham, sold its Mark West brand to Constellation for $160 million, one of the largest local wine label sales in recent history.
Foley Family Wines, the growing Healdsburg company, bought Lancaster Estate, an Alexander Valley winery; Langtry Estate & Vineyard in Lake County; Sawyer Cellars in Napa Valley and other properties.
F. Korbel & Bros. sold Valley of the Moon and Lake Sonoma Winery to West Coast Wine Partners, to sharpen its focus on its sparkling wine brands.
Ken and Diane Wilson were active buyers, acquiring Pezzi King Vineyards and Blackstone Winery.
Orrin Thiessen files for bankruptcy
Orrin Thiessen, the bankrupt developer who built Windsor's Town Green Village, surrendered the remaining vestiges of his once-extensive real estate holdings to clear away debts that once totaled nearly $22 million.
When the case is completed, Thiessen and his wife, Terri, will have given up nearly three dozen properties, most of them near the Town Green.
"All his real estate is gone," said Michael Fallon, a Santa Rosa bankruptcy attorney.
At one point, Thiessen said, he owned about $70 million worth of real estate and owed lenders about $35 million. But the economic downturn wiped him out.
This spring and summer, business owners in the Town Green Village bought 17 shop spaces and investors purchased an additional 23, and the vast majority of the sales involved Thiessen's properties.
"If there's any silver lining to the foreclosure crisis downtown, it's that people who couldn't afford to buy their storefronts originally can buy them now," Windsor Mayor Debora Fudge said. "They're in control of their future now."
Santa Rosa Plaza eliminates free parking
After offering free parking for 30 years, Santa Rosa Plaza Mall began charging shoppers who park for more than 90 minutes, causing dismay in shoppers — who said they would just shop elsewhere — and merchants, who said they lost up to 20 percent of their business since the gates were installed.
Mall managers argued that the change would help prevent employees of other downtown businesses from hogging the best parking spots all day long. But the unpopular move became more of a fiasco when several shoppers were struck in the head by the long mechanical arms as they walked through the exit gates.
The mall held "Gates Up" days to allow unlimited free parking on Black Friday and through most of December, giving everyone a break from the drama.
Coddingtown Mall gets long-awaited makeover
A sparkle of hope returned to Coddingtown Mall, where new chandeliers, updated entryways and plush seating areas were installed. It was the continuation of a makeover to the aging mall, which began in 2010 with the addition of Whole Foods, as the mall struggled with empty storefronts.
BJ's Restaurant & Brewhouse opened, moving into a space created by the eviction of longtime tenant Narsi's Hof Brau. Demolition crews tore into the former Gottschalks space to make way for a Target store that's expected to open in 2014.
"For us as a company, this is a monumental milestone for the future redevelopment and revitalization of Coddingtown," said Kirstie Moore, property and development manager of Codding Enterprises, which built the mall and now owns 50 percent of it with partner Simon Property Group.
Santa Rosa Chamber, local governments launch Sonoma County BEST
In a bid to reverse the loss of nearly 22,000 jobs during the Great Recession, local business and government leaders launched an effort to attract and retain employers in Sonoma County.
Sonoma County BEST, which stands for Building Economic Success Together, is a $3.25 million public-private program that seeks to generate 4,100 jobs during the next five years.
The group plans to interview executives from 100 companies in 100 days about roadblocks and opportunities for growth.
This spring, a Chapman University professor reported that Sonoma County was the 10th worst place in the U.S. for job growth since 2000, raising concern.
"We can't just sit back and read the paper and say, 'Good, the economy's improving,' " said Anthy O'Brien, president and CEO at Top Speed Data in Petaluma, who serves on a BEST committee.
REACH sold to Bain Capital subsidiary in $245 million deal
With its acquisition by Bain Capital subsidiary Air Medical Group Holdings, the largest air medical transport company in the world, REACH, has become part of a growing empire.
The iconic red helicopters have flown Sonoma County skies for 25 years since a local doctor decided rural residents needed quicker care.
Local executives are hoping the influx of cash from Air Medical Group will enable them to replace aging equipment and upgrade their fleet of aircraft, which they couldn't afford to do under local ownership.
Bain Capital, the private equity giant founded by Republican presidential candidate Mitt Romney, became a flash point for debate during the 2012 campaign.
But the REACH board, seeking new owners, found Bain to have a strong reputation among the medical companies it acquired.
"We got to a point where we believed that to ensure the success of the company in the future, we needed an owner that could provide more resources," said Sean Russell, a 21-year veteran at REACH who was named president after the sale.
REACH's board of directors wanted a buyer that would enable the company to improve without sacrificing the level of care it provides, Russell said.
(You can reach Staff Writer Cathy Bussewitz at 521-5276 or email@example.com.)
All rights reserved. This copyrighted material may not be re-published without permission. Links are encouraged.