How Two Businesses Are Bouncing Back From California's Most Destructive Wildfire
Business as usual came to a halt a year ago this week.
Family-owned Paradise Ridge Winery has been a fixture in California’s Sonoma County for more than two decades, hosting community events, wine tastings, and weddings on its grounds in the hills on the edge of the city of Santa Rosa.
But business as usual came to a halt a year ago this week, when the Tubbs Fire, a devastating conflagration driven by powerful winds, swept through Santa Rosa. The fire began on Oct. 8, 2017, and by the early morning of Oct. 9, it had reached the winery’s 155-acre property.
Co-owner Sonia Byck-Barwick describes her husband, Dan Barwick, jumping in the car to race to the winery from their home, 15 minutes away. “My husband’s the winemaker, so he was trying to get to his wine,” she recalls. But “by that point, the fire was burning across the freeway, so he couldn’t get down there.”
No one in the family was harmed by the fire, but Paradise Ridge was ravaged: Six outbuildings, the combined tasting room and events center, and the winemaking building were all lost, along with three rental homes on the property. And the wines that had just been set aside after the harvest were gone.
Situations like Byck-Barwick’s would be a catastrophe for any business. But as Santa Rosa marks the anniversary of the Tubbs Fire, business owners in much of California and elsewhere in the West are preparing for the possibility that such events could become much more commonplace. California suffered another wave of unusually destructive fires this summer, and Byck-Barwick describes listening to an acquaintance talk “about her fear when she started smelling smoke again, and how she was wondering if she should pack up her car.”
“This is the new normal,” Byck-Barwick says. “The fires and this sense of unknown, [of] fear.”
Wildfires could get bigger, and costlier
While California, like much of the West, is historically wildfire-prone, the fires that swept through it late last year were among the most damaging it has ever seen. The Tubbs Fire in particular, which barreled through Napa and Sonoma counties for about three weeks in October 2017 before being fully contained, was the most destructive in state history, according to the state agency Cal Fire, taking down 5,636 structures (including everything from homes to commercial properties). By comparison, the second most destructive fire—1991’s Tunnel Fire, commonly referred to as Oakland Hills—destroyed 2,900 structures.
The Tubbs fire was just one of many that impacted California last October. Insurance claims from that month alone totaled more than $10 billion, with more than $1 billion of those losses affecting commercial property, according to the California Department of Insurance. While Tubbs hasn’t yet been matched, there have been plenty of potent fires in the ensuing 12 months: Cal Fire’s data indicates that July’s Carr Fire is among the 10 most destructive in state history. That blaze, along with the Mendocino Complex fires, topped $845 million in fire insurance claims.
Many insurers and public-safety officials see fires like Tubbs and Carr as a taste of worse things to come—something to which businesses and consumers alike may have to adapt. California’s Fourth Climate Change Assessment, a compilation of research released by state agencies this August, cited a study that projected that the average area burned statewide each year could increase by 77% by 2100. Those areas with the highest risk of wildfire could see residential insurance premiums rise 18% by 2055.
Officials are concerned about similar issues across the U.S., thanks to a drier climate and the increased number of homes and businesses built “in the wildland-urban interface,” according to Impacts of the 2017 Wildfires in the United States, a statement by the president and chairman of the International Association of Fire Chiefs to a U.S. House subcommittee.
In some ways, the fires that hit California last October were outliers. “Wildfires tend to be in more rural areas,” says Janet Ruiz of the Insurance Information Institute, an industry association. “But we saw last year the wildfires come into Santa Rosa,” a city of approximately 175,000 people, affecting “hotels, large chains, a big block store and smaller businesses.” Thirty-four businesses within the city’s limits were destroyed, while 11 were deemed damaged, according to data from the City of Santa Rosa.
Some businesses have since started rebuilding, shuttered themselves permanently, or chosen to relocate—either to other neighborhoods, or in some cases, different towns. But all the businesses that have survived are rethinking how they’ll operate in a world where fire is a growing threat.
Rebuilding costs more than expected
Byck-Barwick and her family opted to rebuild. While Paradise Ridge’s buildings were lost, an outdoor sculpture garden was spared, and though the vineyards were damaged, they were generally left in good, productive shape, Byck-Barwick says.
But like many smaller businesses, Paradise Ridge found itself underinsured for the kinds of catastrophic losses that a wildfire can inflict. The total payout for its buildings, Byck-Barwick says, will be $5.4 million. Rebuilding the tasting room and events center—the only business facility the family currently plans to replace—is expected to cost just above $5 million, she notes, and such costs do not include “architect and planning fees, tree removal, fences, restoring the electrical and water.”
Progress on the rebuilding will be slow, given the daunting size of the repair bill relative to the winery’s revenue. Paradise Ridge, which has a second tasting room in nearby Kenwood, saw total sales of around $3 million in 2016, the year prior to the fires. About half of that revenue came from its tasting rooms and wine club—out of that, $750,000 came from the tasting room in Santa Rosa, now out of commission.
The new tasting room and events center—which the family hopes to begin rebuilding this month—will be made using fire-resistant materials, such as fiber cement siding, plaster and metal panels on the building’s exterior, according to Bryan Wright, the vice president of Wright Contracting, which is working on Paradise Ridge. Elevated terraces will no longer be made of wood, while tempered glass and smaller vents will also be used for fire resistance.
Paradise Ridge has moved its winemaking offsite, Byck-Barwick says, so it’s unlikely to rebuild that facility as it formerly was; there may instead be a smaller building with barrel storage and some offices. And her father is rebuilding one of the homes that burned on the property—an added expense, though the homes’ debris removal was paid for via a program under the Federal Emergency Management Agency.
Keeping track of final expenses, and determining which ones will and won’t be covered by insurance, is confusing, Byck-Barwick notes: “You never know if those things are going to be approved or not approved.”
Still, despite the destruction, Paradise Ridge has kept cash coming in the door. The winery’s staff returned to harvesting grapes about three days after the fire, and the business reopened after about 10 days. The Kenwood tasting room survived the fires and stayed open, and the business is still selling small amounts of wine wholesale. Tastings have continued by appointment, while the sculpture garden is open on weekends. A $3.1 million business interruption insurance policy, Byck-Barwick says, should be “just enough to cover us until we are back up and running.”
Helping staff who lost their homes
Ron Nersesian, CEO of Keysight Technologies, can measure the impact of the Tubbs Fire in what his company had to haul away: 1,400 tons of ash and debris, 126 tons of electronic waste, 1,200 smoky cubicles, and 370,000 square feet of flooring.
Keysight, a company that was originally part of Hewlett-Packard, is headquartered in Santa Rosa. The Tubbs Fire inflicted a total estimated loss of around $130 million on the company. An elementary school on Keysight headquarters property burned down, as did two smaller buildings there, and smoke damage rendered some of the rest of the site unusable.
Keysight employs about 1,500 people on the site, manufacturing electronic measurements products used by a wide range of businesses in industries from commercial communications to aerospace defense. Helping those employees cope with their lives’ disruption became one of the company’s biggest challenges. Keysight donated $10,000 to everyone who lost a home. (Among employees, 119 homes were lost, Nersesian says; in all, about 3,000 housing units were lost in Santa Rosa’s city limits.) It also set up temporary housing and allowed colleagues to donate money or vacation time to those who needed it. Crisis counselors were added to the mix, along with legal counseling. Many employees didn’t know “where to start,” Nersesian says.
Still, the fire did not result in any lost business. Keysight brought in $3.2 billion in revenue during fiscal year 2017, up from $2.9 billion the previous year. During this year’s third quarter, it reported a record revenue of $1 billion. The fire broke out Oct. 8, and Santa Rosa was evacuated on Oct. 9. But by Nov. 1, manufacturing was “up and fully functioning,” Nersesian says, and everyone had returned to work at headquarters by about Aug. 1.
Nersesian says the company’s insurance was able to cover a high percentage of Keysight’s costs. However, not every business can afford such extensive coverage. “Small business is usually the more vulnerable,” and may not want or be able to afford “to spend money on extra coverages,” says the Insurance Information Institute’s Ruiz.
Ruiz says the industry tries to encourage companies to plan for catastrophe by evaluating their risks, assessing every area from employee safety to its supply chain, as different businesses may require different types of insurance—for instance, vineyards may need crop insurance.
And increasingly insurers, along with city planners and lawmakers, are looking more closely at how to manage in areas vulnerable to wildfires. Organizations like the Insurance Institute for Business and Home Safety are heavily involved in researching how to fortify communities against fires, including enabling property owners to reduce the vulnerability of features like decks and skylights by using flame-resistant materials, and in the case of decks, routinely removing debris.
Preparing for what comes next
At Keysight, the removal of 1,750 fire-damaged trees around the perimeter of headquarters has created a bit of a spatial break between any future fire and the company’s buildings. The main buildings are built with a type of concrete on the outside, which is why they survived, Nersesian says, and the large parking lots around the buildings should also serve as a firebreak.
At Paradise Ridge, in addition to changing building materials, the ownership intends to take precautions like installing fire hydrants. “We’re hoping if this ever does happen again, that we will be in a better place,” Byck-Barwick says. “There’ll be something left at least.”
The Santa Rosa fires have had a lasting emotional impact on the community. Wright, Byck-Barwick’s builder, lost his own home, which he plans to rebuild, even as he works on reconstruction of area schools and businesses. “It’s been a learning process—it gives you a different perspective and outlook on things,” Wright says. “Others are probably in worse situations, [and] I know there are people who have had to move out of the area…. But everyone’s trying to help everyone. That’s the best thing about it.”
Byck-Barwick says she’s been sad to see some of her neighbors and other businesses pack up and leave. And looking at photos from before the fire can hurt—even more than when she first saw what remained after the blaze—because that’s when “you see what you’ve lost,” she says.
Nonetheless, Byck-Barwick looks at the rebuild as a fresh start. Future plans include the likelihood of making a little less wine, moving to an appointment-only visiting model, and keeping the sculpture grove open to the public. There may be fewer weddings and events to have “more calm,” Byck-Barwick says, though she intends to keep a “beloved” weekly fete that features live music and food trucks.
“It really does give you that extra energy you need,” she says of the support she’s getting from neighbors. “On those days you don’t really feel like doing it, somebody’s like, ‘I’m so glad you guys are rebuilding.’” When she hears that, Byck-Barwick says, she thinks, “OK. OK, I can do this.”
This Story Originally Appeared On Fortune