American Airlines passengers deplane at the Charles M. Schulz Sonoma County Airport, Thursday, Dec. 13, 2018 in Santa Rosa. The airline has announced flights to and from Dallas DFW and Los Angeles LAX, beginning next year. (Kent Porter / The Press Democrat) 2018

Top 10 Sonoma County business stories in 2018

The top 10 business and personal finance stories during a turbulent year The immense home and commercial rebuilding effort in Sonoma County reverberated through the local economy this year.

The immense home and commercial rebuilding effort in Sonoma County reverberated through the local economy this year.

It warranted the most coverage because it affected virtually all of the local business sectors - and beyond. It presented an array of challenges, from lack of affordable housing to inadequate home insurance to further retail upheaval.

The brightest spots for the county economy in 2018 came from two of its staples, the acclaimed wine and craft beer enterprises.

Here are Sonoma County's top 10 business stories for 2018:

1. Rebuilding after the 2017 wildfires

Chalrie Edwards, left, and Shane Lyons, with Ron Davison Construction, work on rebuilding a home along Parker Hill Road, in the Fountaingrove area of Santa Rosa on Monday, April 23, 2018. (CHRISTOPHER CHUNG/ PD)
Chalrie Edwards, left, and Shane Lyons, with Ron Davison Construction, work on rebuilding a home along Parker Hill Road, in the Fountaingrove area of Santa Rosa on Monday, April 23, 2018. (CHRISTOPHER CHUNG/ PD)

The majority of people whose homes were burned in the fires haven't rebuilt their houses or applied for building permits. Of the 5,334 homes destroyed across the county, 57 percent of the property owners - a total of 3,064 - have yet to apply for a building permit. A few fortunate fire victims were able to move into new homes by the first anniversary of the October 2017 blazes.

Next year will be key. Fire victims will have to decide whether to stay or go, given that rental assistance provided by their home insurers ends for many in October. Getting into their new residences by that deadline will be a challenge because the shortage of available construction laborers.

2. Home sales slowdown

Mirroring a national trend, prices of local homes dropped sharply this year, and they took much more time to sell. The median sales price in Sonoma County reached a record $700,000 in June, then started tumbling monthly to $615,000 by November. During that month, there were over 900 houses listed for sale, 77 percent more than were on the market the same month in 2017. Realtors said the housing market softened as the rush to buy homes after last year's wildfires subsided and buyers became more discerning.

3. Tide going out for the local wine industry?

The 2018 North Coast grape harvest yielded a bumper crop, yet wineries held off on buying excess grapes - contrary to past years. Those grapes, including from some of Sonoma County's most prestigious brands, were turned into wine on the bulk market. The year ends with vintners fearing a slowdown coming on retail wine sales.

Deals got done this year, despite the market challenges. The most high-profile acquisition was Duckhorn Wine Co. buying Sebastopol's Kosta Browne in July. Duckhorn has increasingly become a bigger player in the premium North Coast wine market under its ownership of TSG Consumer Partners, a private equity group based in San Francisco.

4. No insurance relief for fire victims

Joshua and Sharlene Nix say goodnight to their daughter Hannah, 2, at their new home in Santa Rosa, California, on Wednesday, March 21, 2018. The Nix Family experienced an insurance shortfall when they tried to rebuild their home in the Larkfield neighborhood burned down in the Tubbs fire. (Alvin Jornada / The Press Democrat)
Joshua and Sharlene Nix say goodnight to their daughter Hannah, 2, at their new home in Santa Rosa, California, on Wednesday, March 21, 2018. The Nix Family experienced an insurance shortfall when they tried to rebuild their home in the Larkfield neighborhood burned down in the Tubbs fire. (Alvin Jornada / The Press Democrat)

Many fire victims in the North Bay found themselves severely underinsured when it came time to get a check from their home insurers to rebuild. The insurance industry's influential lobbying overwhelmed efforts by state lawmakers to provide retroactive relief to North Bay residents.

State Sen. Mike McGuire, D-Healdsburg, this summer pulled his legislation that would have required insurers to pay at least 80 percent of the maximum limit of homeowners' personal property coverage without itemizing their losses. A bill sponsored by state Sen. Bill Dodd, D-Napa, and signed by Gov. Jerry Brown gave disaster victims a few benefits. Effective Jan. 1, 2019, they now will get three years of rental assistance instead of two years, and their carriers will have to guarantee home coverage for two years after a property claim from a disaster before canceling their home coverage.

5. Low unemployment lingers

Job seekers get the opportunity to hand out resume and talk to potential employers at the Sonoma Media Job Fair at the Graton Resort & Casino in Rohnert Park on Thursday. (John Burgess/The Press Democrat)
Job seekers get the opportunity to hand out resume and talk to potential employers at the Sonoma Media Job Fair at the Graton Resort & Casino in Rohnert Park on Thursday. (John Burgess/The Press Democrat)

The county's jobless rate dropped to 2.4 percent in September, the lowest level since December 1999. It bumped up to 2.5 percent in November, which still presented local employers a tight labor market from which to hire people. It also put pressure on companies to boost wages and benefits to compete for a small group of available workers.

The county's total workforce of 217,900 workers included 4,600 more employees in November compared with the same month in 2017. The vast majority of job growth - 3,300 more jobs - came from hiring in construction and manufacturing. The local unemployment rate for the county is much better than for the state and the nation, which posted unadjusted rates of 3.9 percent and 3.5 percent, respectively, at the end of the year.

6. Russian River Brewing Co. expands with second location

The new Russian River Brewing Company brewery and brewpub in Windsor. (Christopher Chung/ The Press Democrat)
The new Russian River Brewing Company brewery and brewpub in Windsor. (Christopher Chung/ The Press Democrat)

The popular craft brewer opened its $50 million brewery, brewpub and restaurant in Windsor in October, and its fans flocked to the sprawling complex located off Highway 101. The second site will more than double Russian River's annual production next year to about 40,000 barrels, mostly for distribution in California.

The new brewery also offers $15-per-person guided tours that allow a behind-the-scenes look at how its Pliny the Elder is made, plus free self- guided tours. Even with the ballyhooed Windsor opening, Russian River's Fourth Street Santa Rosa brewpub didn't experience a dent in its business.

7. New day for cannabis

Stormy Knight, left, and Marc Harris of Santa Rosa shop for cannabis products on the first day legal recreational marijuana sales in Sonoma County at SPARc/Peace in Medicine in Sebastopol on Monday morning, January 1, 2018. (photo by John Burgess/The Press Democrat)
Stormy Knight, left, and Marc Harris of Santa Rosa shop for cannabis products on the first day legal recreational marijuana sales in Sonoma County at SPARc/Peace in Medicine in Sebastopol on Monday morning, January 1, 2018. (photo by John Burgess/The Press Democrat)

The state legalized recreational pot use on Jan. 1 to allow a new group of consumers to enjoy it openly. Some dispensaries, such as Sebastopol's Soulful, discovered the new law further eliminated the stigma over the plant to attract more customers using it for medical purposes. There remain problems, though, in a still-unregulated market for marijuana growers in the Emerald Triangle. Emerald Grown, a Humboldt-based cooperative of cannabis growers, estimated only 20 percent of California's growers are regulated by the state because they are overly burdened by high tax rates, restrictive local ordinances and no options for traditional banking.

Topical judge Ray Arias exhales a cloud of smoke at Willie's Stash during the Emerald Cup at Sonoma County Fairgrounds in Santa Rosa, California, on Saturday, December 15, 2018. (Alvin Jornada / The Press Democrat)
Topical judge Ray Arias exhales a cloud of smoke at Willie's Stash during the Emerald Cup at Sonoma County Fairgrounds in Santa Rosa, California, on Saturday, December 15, 2018. (Alvin Jornada / The Press Democrat)

Those hurdles, however, could not stop other notable companies outside the sector from dipping into the multibillion-dollar cannabis market. Lagunitas Brewing Co. forged a partnership with Santa Rosa's CannaCraft to make a non-alcoholic drink available at dispensaries. Also, Francis Ford Coppola established a business, the Sana Co., for cannabis outside of his wine-and-hospitality operations and produced a limited edition of three different cannabis flower strains.

8. Retail tremors disrupt strong commercial property market

The local commercial property market strengthened, even though demand for warehouse space eased as anticipated needs from cannabis operators never materialized.

Meanwhile, office vacancies stood at 12.7 percent during midyear, according to the real estate firm Keegan & Coppin, compared with a much higher vacancy rate of 22.3 percent five years ago. Industrial space had a much lower vacancy level of 4 percent, a big improvement from the 11.5 percent level during the same five-year period.

The local retail sector, however, continued to shrink this year as more consumers shop digitally rather than at brick-and-mortar stores. Santa Rosa Plaza is losing its Sears department store, and the future of its Macy's store - the mall's other anchor tenant - is in doubt. Other notable closures in 2018 included Orchard Supply Hardware and Toys R Us.

9. Tourism prospects improve

American Airlines passengers deplane at the Charles M. Schulz Sonoma County Airport, Thursday, Dec. 13, 2018 in Santa Rosa. The airline has announced flights to and from Dallas DFW and Los Angeles LAX, beginning next year. (Kent Porter / The Press Democrat) 2018
American Airlines passengers deplane at the Charles M. Schulz Sonoma County Airport, Thursday, Dec. 13, 2018 in Santa Rosa. The airline has announced flights to and from Dallas DFW and Los Angeles LAX, beginning next year. (Kent Porter / The Press Democrat) 2018

Sonoma County residents are getting new airline flights from the local airport, and new downtown hotels are underway. Yet the question remains: Will tourists return at the same levels as before the October 2017 wildfires?

The good news: American Airlines, the world's largest airline, will expand its service from Charles M. Schulz-Sonoma County Airport next year with direct flights to Dallas-Fort Worth International and Los Angeles International airports. That followed the announcement by United Airlines that it would add direct flight service to Denver International Airport on March 8.

In addition, Hyatt Regency Sonoma Wine Country in Santa Rosa completed an 89-room expansion to make it the largest in Sonoma County. Developer Hugh Futrell's 71-room Empire Building hotel project in Old Courthouse Square is expected to open in May. The latter is one of the most anticipated local hotel openings in years, and it should provide a boost to downtown retailers. In the nearby Railroad Square area, construction soon will start on an AC Hotel by Marriott.

Server Mario Alvarez checks a wine glass for spots behind the bar at Healdsburg's SHED on Tuesday. Owners Cindy Daniel and Doug Lipton announced they will close the eclectic eatery/retailer at the end of the year. (photo by John Burgess/The Press Democrat)
Server Mario Alvarez checks a wine glass for spots behind the bar at Healdsburg's SHED on Tuesday. Owners Cindy Daniel and Doug Lipton announced they will close the eclectic eatery/retailer at the end of the year. (photo by John Burgess/The Press Democrat)

But a jolt for tourists occurred in December when Healdsburg's foodie destination SHED Modern Grange said it would close on Dec. 31 and become an online operation. Owners Doug Lipton and Cindy Daniel cited a difficult year in the aftermath of the wildfires. Others in the hospitality industry said they fear that there may be other such closures in 2019.

10. Ameritech Financial student loan debt relief scandal

The website of Brandon Frere, CEO of Ameritech Financial.
The website of Brandon Frere, CEO of Ameritech Financial.

The saga of Brandon Frere, 41, came out of the blue as most locals were unaware of his student loan financing firm in a Rohnert Park office park. But federal regulators were on his case as they alleged in December the Sonoma County native had attempted to bilk tens of thousands of student loan borrowers out of the $60 million through Ameritech and his two affiliate businesses. Early this year, he faced a civil claim from the Federal Trade Commission, but refused to settle. Then in November a federal judge stripped him of management control of his business empire.

Frere ended up getting arrested Dec. 5 boarding a plane for Mexico at San Francisco International Airport and charged with a single count of wire fraud for allegedly stealing company funds for his personal use. He was released from jail on $3 million bail and confined to his parents' Sebastopol home, pending a trial.

You can reach Staff Writer Bill Swindell at 707-521-5223 or bill.swindell@pressdemocrat.com. On Twitter @BillSwindell.

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