Santa Rosa, Sonoma County poised to get $300 million in PG&E settlement

Sonoma County and its largest city are poised to receive about $302 million combined later this year from PG&E, their share of the $1 billion deal the utility struck last year with local governments to settle claims for damage caused by wildfires in 2017 and 2018.

Nearly $60 million of the settlement with the city of Santa Rosa and the county is set to go directly to attorneys and litigation costs, leaving the city and the county with roughly $240 million combined - and some significant decisions to make about how each will spend its money.

Both have announced they will vote in favor of the settlement, which is expected to be supported unanimously by local governments that struck the deal with PG&E in June 2019. However, approval lies in the hands of a federal judge reviewing PG&E’s plan to emerge from bankruptcy.

The San Francisco utility has proposed paying $11 billion to insurers and $13.5 billion to individual wildfire survivors in Santa Rosa and elsewhere. The latter settlement has drawn fire from individuals concerned that half of the money would be in the form of PG&E stock, which rose in early 2020 but has since fallen back to near where it was at the start of the year.

Fire victims are scheduled to vote on the settlement later this month and in early May. A vote to reject the agreement wouldn’t necessarily kill Santa Rosa’s deal, but the federal judge overseeing the bankruptcy case will be weighing the outcome of both votes, said John Fiske, an attorney with Baron & Budd, a law firm that has represented Santa Rosa.

“We are all connected, as we always have been and always will be,” Fiske said. “People need to take their votes very, very seriously.”

Santa Rosa expects to receive about $90 million from PG&E, after nearly $28 million in attorneys fees and litigation costs.

The money could go a long way toward easing Santa Rosa’s budget woes, as it doesn’t come with any strings or earmarks on its use. Santa Rosa’s shortfall from the loss of economic activity associated with the coronavirus pandemic and resulting social shutdowns is estimated at $20 million in the next few months and more than $70 million in lost revenue through mid-2025, according to a recent consultant’s study.

The city’s initial claim or estimate of damages is confidential, a city spokeswoman said. Fiske noted the settlement was reached through a mediation process that required confidentiality about the making of the deal, though not its end result.

Current city data estimates the cost of more than two dozen projects to recover from the 2017 wildfires to be about $70 million, with at least $30 million of that approved by the Federal Emergency Management Agency to date. That doesn’t include about $17 million in infrastructure projects that FEMA already has denied nor the relocation and rebuilding of a permanent Fountaingrove fire station, which is estimated to cost between $15 million and $18 million.

The City Council would decide how to spend any money Santa Rosa receives in a settlement with PG&E through a public process. Councilman Chris Rogers, in a Facebook post, noted that some of the money would include funding for roads in Coffey Park and Fountaingrove that were damaged by both the fire and the debris removal process.

“We know we still need to fix those roads, and if we cannot get FEMA to budge, those dollars will need to come from the City’s General Fund,” Rogers said, noting that the council also could use the money on non-fire related costs, such as paying down pension costs, building or repairing homeless shelters, and housing or road projects.

The settlement and PG&E’s overall plan to emerge from bankruptcy, if approved, by are expected to become effective in August. The payment to Santa Rosa could come as late as December - more than three years since the Tubbs fire killed 22 people and destroyed more than 3,000 homes in Santa Rosa.

Sonoma County and a handful of county agencies are set to receive about $150 million, excluding $34 million in attorneys’ fees and costs, according to a Press Democrat analysis.

Together, the city and county agencies, along with their attorneys, are set to receive more than 70% of the $415 million settlement PG&E struck with governments in the North Bay for the 2017 fires.

Virtually all of the remainder of the $1 billion settlement will go toward local governments in Butte County hurt by the 2018 Camp fire, which nearly destroyed the town of Paradise.

The county’s share of the settlement will be split between the county and several agencies, including the Sonoma County Water Agency, the Sonoma County Agricultural Preservation and Open Space District, the county Community Development Commission and the Sonoma Valley County Sanitation District.

“If approved by the Court, the settlement is important as it ensures that PG&E and not local taxpayers bear the burden to the damages caused to County and City property and infrastructure,” County Counsel Bruce Goldstein said in a statement.

Santa Rosa estimates it will receive its proceeds from the settlement in late 2020. Fiske said this timetable was “actually on the relatively quick side,” with other similarly massive lawsuits taking five years or more.

PG&E’s plan, which is dependent on approval from the federal judge overseeing bankruptcy proceedings and the California Public Utilities Commission, could still win approval without unanimous support from all the groups of entities or people who have filed claims.