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Tea Fire: $500M and counting

By   /   Saturday, November 22nd, 2008  /   Comments Off on Tea Fire: $500M and counting

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The embers are out, and investigators have disclosed that Santa Barbara County’s Tea Fire was the result of a foolishly abandoned bonfire.

But for the owners of 210 lost homes in Montecito and Santa Barbara, life will never be quite the same. And with damage claims expected to reach half a billion dollars or more, reconstruction will take years.

For the rest of the South Coast, economic fallout from the Tea fire is expected to be minor. Travel and tourism will largely be unaffected by the blaze, but some small-business owners who already have been struggling will feel a temporary impact.

Over the longer haul, contractors, real-estate lawyers, landscapers and others will benefit as the long, slow process of rebuilding begins. Here’s a closer look at the impact of the Tea Fire, which burned a total of 1,940 acres and injured 25 people before being fully contained Nov. 18.

THE ECONOMICS

Bill Watkins, executive director of the University of California, Santa Barbara, Economic Forecast Project, said he “wouldn’t be at all surprised to see a $500 million loss” once all claims are in.

His logic is that the homes in Sycamore Canyon are worth an average of $2 million each, with the dollars vectoring upward once personal property is factored in. “Some of these homes had furniture that’s worth more than my house in Ventura,” he said.

“Those are the really high-end homes, so those are millions and millions of dollars a home up there,” agreed Randy Kinsling, managing member of TWIW Insurance services. “If you assume that the average house up there is $3 million, that’s a fairly good-sized loss,” he said, adding that “in the scheme of things, that’s not like the catastrophes that happened down south,” where fire-related losses in San Diego and other counties have tallied into the billions of dollars in past years.

Wealthy residents who stay away could provide an economic sting. With many homes in the Santa Barbara area serving as second homes, their owners won’t return to the region full-time until the homes are rebuilt.

Watkins sees an upside for high-quality builders, building suppliers and vendors of luxury kitchen and bath appliances. That’s good news for the construction industry, which, Watkins noted, “has been hurting big-time right now.”

Longer term, Watkins said he doesn’t expect a negative impact on home prices because of the fire, an assumed risk in most of California. In fact, Watkins said, because of a slightly diminished supply of homes, prices might actually rise somewhat in the short term.

Of greater concern, he said, is the impact on Santa Barbara County finances, where there will be a decline in property tax revenue, plus the added cost of fighting the fires, $5.7 million and rising at press time. The sliver lining for local governments is help from the state and federal government.

Although the homeowners have suffered deep emotional losses, the local economy will eventually get back to normal. “Santa Barbara and Montecito are extremely desirable locations, and there is a worldwide market for their properties,” said Watkins, who estimated that most of the damage would be repaired within “a couple of years.”

ONE VICTIM’S STORY

“One minute we were eating dinner, and the next thing you know the fire was there, just looming on the horizon,” said Doug Crawford, a Santa Barbara man whose home on Las Alturas burned down in the Tea Fire. “We had maybe a half hour to pack up a few boxes and get out. At 10:30 Thursday night, I watched my home burn down.”

Crawford said he’s determined to stay and rebuild. Most of the estimates he’s received placed the cost at approximately $300 per square foot, making it “most likely upwards of $1 million to rebuild. It’s a wonderful place, so we’re going to try to make it fire retardant when we do rebuild. We’re definitely going to rebuild.”

Karin Perissinotto, executive director of the Santa Barbara Contractors Association, urged people to take their time when looking for someone to help rebuild or repair damage.

“There’s no reason not to be thorough,” she said. “This is how a lot of people get scammed. Get proof that the person you’re working with is licensed by the state. Get at least three bids before starting and a written contract detailing the work that needs to be done. This is already a long process, so there’s really no harm in double-checking before you start.”

“There are probably three [insurance] companies that are up there that probably have a significant number of the policies,” TWIW’s Kinsling said. “Fireman’s Fund and AIG and Chub, and then I’m sure State Farm and Auto Club probably have some up there, too.”

Crawford, who is active in the Navy League and entrepreneurship organizations, said he’s appreciated a tremendous outpouring of support from the community.

“My State Farm agent called us before the house even caught fire,” he recalled. “I know he insures a lot of homes in the Riviera, so the call was really appreciated. I feel bad for the people who didn’t have anyone to walk them through the whole thing.”

As news of his loss spread, the calls kept coming, Crawford said. “Every member of the city council literally hugged me and told us they’d do everything in their power to facilitate a rapid permitting process.”

THE TOURISM INDUSTRY

Kathy Janega-Dykes of the Santa Barbara Convention and Visitors Bureau said that while some tourists canceled reservations when news of the fires broke, many of the empty rooms quickly filled at a discount with fire evacuees.

Janega-Dykes said the fire erupted just a few weeks after the bureau had launched its winter advertising campaign. As the campaign progresses, she added, potential visitors will get a clear message that the Santa Barbara County tourism industry is open for business.

“While many homes were lost and a number of people displaced, ironically, the media coverage of the fire enhanced Santa Barbara’s brand image as a place inhabited by celebrities that also is one of the world’s most beautiful resort destinations,” Janega-Dykes said.

Although Santa Barbara has experienced three major fires in the past two years, Janega-Dykes said visitors don’t always change their long-term travel plans based on the possibility of a fire. “The largest amount of our visitors come from Southern California, and they have experienced or heard about fires in other locations as well.”

Janega-Dykes said she’s not too concerned with the impact of the fires. She has shifted more advertising to the Southern California market and is hammering the idea that it doesn’t take a trip across the ocean to experience a world-class destination or a good deal.

“We have asked all of our hotels to upload a lot of their special values that they’re offering from November to March,” she said.

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