With Jesusita Fire damage set to exceed $120 million, business owners and residents across the South Coast are wondering what the longer-term impacts of the blaze might be.
The fire, still not fully contained at press time, has cost more than $15.5 million to fight and the value of the 78 homes destroyed in the Santa Barbara foothills could easily could reach $109 million.
But the fire also suppressed sales and tourism. Even though some businesses beyond the flames’ reach actually benefited, the blow came when it was least needed – amid a sluggish overall economy that’s dragged down hotel bookings and spending.
It’s tough to pin down an exact property damage estimate because home prices in the burn areas range from about $800,000 to $2 million or $3 million, with a few houses listing as high as $6 million, real estate experts said.
If all the destroyed homes were valued at $1.4 million, the average of experts’ estimates for the area, the damage would stand at $109 million — a figure that’s far less than the damage from more than 200 high-end homes destroyed in the Tea Fire last fall.
Bill Watkins, executive director for the University of California, Santa Barbara, Economic Forecast Project, said it’s a safe bet that the homes in the Jesusita Fire area listed for more than the Santa Barbara’s March median home price of $735,000 but added that a $109 million damage figure would include building lots that retained some value after the houses on them burned.
In addition to homes lost, the blaze damaged 22 more houses and damaged or destroyed 136 outbuildings. A more exact home damage estimate will have to wait until officials complete a tally – a task made difficult because officials still haven’t reached some burned areas.
“Santa Barbara is a very eclectic community when it comes to real estate,” said John Thyne, a Santa Barbara real estate broker. “You can have a $3 million house next to a $900,000 house. We’re not Malibu.”
Capricious flames also make estimating damages difficult.
“I have a listing [in the burn area] that’s $4.9 million, and it survived,” said Gary Goldberg, a Montecito-based broker. “The house right next door – 50 to 75 feet away and also a $4 million house – did not survive.”
The firefighting price tag of $15.5 million on May 13 is likely to grow because the fire stood at 80 percent contained. The county is already facing financial problems, economist Watkins said, and even though Gov. Arnold Schwarzenegger’s declaration of a state of emergency will help mitigate some costs, “I can’t imagine that the county ends up completely made whole.”
A few small benefits glimmer in the ashes, Watkins said. For one, insurance money means new construction in Santa Barbara, which has already seen a boost in contracting business as homeowners rebuild from November’s Tea Fire, which blackened part of Montecito.
“Losing so many houses in a small market provides something of a break in the decline in house prices relative to other places,” Watkins said. But he was emphatic that a catastrophic fire “is not an economic development strategy. It helps some individuals, but the overall cost is to society is negative.”
Aside from property lost, the Jesusita Fire also blanketed many of Santa Barbara’s busy mid- and downtown business district in evacuation warnings and orders. Hoteliers are predicting that May business might be down 50 percent from the year before because of the fire, said Shannon Brooks, communications manager for the Santa Barbara Conference & Visitors Bureau.
Brooks said hotels saw cancellations during the fire but relatively few de-bookings for later in the season. She also said hotels in Santa Barbara filled up with evacuees but added that revenue was expected to be down because many hoteliers offered discounted and even free rooms for those displaced by the fire.
“We learned that the hospitality industry is important to the community beyond just revenue and jobs,” Brooks said, noting that bookings look strong for this summer. “It’s our job to get the word out that Santa Barbara didn’t burn down despite the dramatic headlines.”
High-end dining suffered, too. Flames and smoke don’t put diners in a celebratory mood, said Mitchell Sjerven, owner of Bouchon and Seagrass, two upscale downtown Santa Barbara restaurants. His business for the Mother’s Day holiday – a big weekend for restaurants – was down as much as two-thirds.
“It was a disaster,” Sjerven said. “I lost every single private dining party I had between Wednesday and Sunday. It’s kind of like a seat on an airplane. Once the plane is off the ground, there’s no recovering that revenue.”
Though exact tallies weren’t in, a cruise ship bound for the American Riviera stopped in Santa Barbara on May 10, providing a boost to downtown shops. And some businesses thrived on the displacement of as many as 30,000 Santa Barbara residents.
“It was our busiest five days ever,” said Jennifer Rose, whose family owns the Hollister Brewing Co. in Goleta’s Camino Real shopping center. “We equate much of that to people getting away from the ash and relocating to the Goleta area.”
The glitch in Santa Barbara’s sales comes at a bad time, said Jim Armstrong, Santa Barbara’s city administrator. The Jesusita Fire worries him less than sales tax revenue that was down 11 percent in the last quarter of 2008 and bed tax revenue was down 20 percent in February and March.
“When we have had other fires such as the Gap Fire, the Zaca Fire and the Tea Fire, we didn’t see huge blips,” Armstrong said. “The overall economy has much more influence than a week like this.”
Watkins, the UCSB economist, concurred, adding that California’s tattered budget could hit a university town hard.
“The potential falloff in tourism because of the economy and the effect on government and the university because of state budget issues, I would say, are all bigger problems,” Watkins said.