Economist: North Bay wildfires should not have long-term effect on local economy

The October wildfires will not cause long-lasting damage to the North Bay economy, which is strong enough to withstand the effects of the worst natural disaster to strike the area in the last 100 years, a top local economist predicted Friday.

Despite the destruction of nearly 5,300 homes in Sonoma County, the region's economy is on track to continue growing this year, said Robert Eyler, director of the Center for Regional Economic Analysis at Sonoma State University.

“We have to separate the idea that we have the tragedy we can't forget, but we have to make it more of a memory than an on-the-spot issue, recognizing that it is not as big of an impact on the overall economy,” Eyler said.

If every single person who lost a home in the wildfires decided to leave Sonoma County and their homes were never rebuilt - the worst-case scenario, Eyler said - the area would lose $750 million in annual consumer spending and 5,600 jobs, according to his forecast.

While those numbers are large, they amount to a fraction of the county's $24 billion economy and its 220,000 payroll workers. In Napa County, the same scenario would erase $333 million from the county's $9 billion economy and eliminate 2,450 of its 80,000 jobs, Eyler forecast.

“The context is really good in terms of supporting what we need to do here - as long as we get off the dime and get it done,” Eyler said during the keynote speech at SSU's annual Economic Outlook Conference. The event, held at the DoubleTree Hotel in Rohnert Park, was sponsored by the North Bay Business Journal.

Eyler's conclusion fits with a new study prepared for the county by Los Angeles-based Beacon Economics, whose founder, Christopher Thornberg, frequently speaks at annual economic events in Santa Rosa.

While not minimizing the enormous hardship and suffering caused by the fires, Beacon concluded “natural disasters appear to have a limited impact on the county economy in the short run, with presumably limited or no negative impacts on its long-run health.”

Beacon based its findings on a review of assessed property valuations, taxable sales and personal income for a variety of wildfires since 1999, including the 2003 Cedar fire in San Diego and the 2015 Valley fire in Lake County.

Efforts to rebuild from the fires can actually help to stoke the region's economic growth, Eyler said.

For instance, every $1 billion spent on rebuilding in Sonoma County translates to 5,270 construction jobs and another 3,930 support jobs. That spending, in turn, provides $536 million in additional business revenue as well as $68 million in additional state and local taxes. In Napa County, $1 billion spent on rebuilding would result in $428 million in additional revenue and 8,190 total jobs.

“We have a lot of gains once we ignite all of this,” Eyler said.

The industries that stand to benefit the most from the rebuilding will be retail, health care, hotels, restaurants and wholesalers, Eyler said.

Given the enormity of the destruction, the region will be challenged to find enough construction workers to rebuild quickly. Sonoma County will need at least 5,500 workers for rebuilding, Eyler said. “If we could train 3,500 workers, it would at least fill some of that needed gap,” he said.

While it would be preferable to hire locally, Eyler said the focus has to be getting workers in place as soon as possible, no matter where they come from.

“It's all going to depend on the economics of doing it locally versus to just importing the workers and getting it done,” he said.

Local officials have conceded some construction workers will likely come from out of state and are grappling on where to house them. Already some local recreational vehicle parks have served as temporary housing for workers in debris removal efforts. Even outside-the-box ideas are being explored.

“Do we rent a barge, like they use on oil rigs?” said Jennifer Gray Thompson, executive director of Rebuild Northbay Foundation, a new public-private nonprofit group seeking to help guide recovery efforts throughout the region. The group was founded by Sonoma developer Darius Anderson, managing partner of Sonoma Media Investments, which owns The Press Democrat and North Bay Business Journal.

The conference also featured two local business leaders who are rebuilding after the fires.

Sonia Byck-Barwick, co-owner of Paradise Ridge Winery in Santa Rosa, said her family has already hired a local builder and architect with a goal to reopen the winery by the end of 2019. The winery will attempt to hold a fundraiser this summer on its site in Fountaingrove.

“We knew we had to come back in some form,” Byck-Barwick said.

The Mountain Mike's Pizza near Coffey Park that also burned down is scheduled to reopen by the end of this year, said Sonu Chandi, president of the Chandi Hospitality Group, which owns the restaurant. In fact, Chandi said his family is so bullish on rebuilding it is exploring opening a hotel project within Santa Rosa.

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

EDITOR'S NOTE: This story has been revised to correct a financial figure. Every $1 billion spent on rebuilding is expected to translate into $536 million in additional business revenue in Sonoma County. A previous version of the story said $536 billion.