The key obstacles the business community and local economy faced this year were familiar: lack of affordable housing for most workers, unforgiving property insurance market and recruiting employees in the tightest labor market in decades.
However, businesses and consumers learned something new in 2019: do not take uninterrupted electricity for granted. PG&E’s planned power outages took a financial and personal toll on many people and companies.
Yet, the overall economy remained relatively strong with limited layoffs — outside the cannabis sector — and entrepreneurs continued to take risks on new ventures, even in competitive areas such as wine and craft beer.
Here are Sonoma County’s top 10 business stories in 2019:
1. PG&E power shut-offs caused major disruption
Bankrupt PG&E intentionally cut power to tens of thousands of residential and business customers multiple times in the North Bay to try to avoid its power lines sparking fires.
Sonoma County sustained $50 million to $70 million in economic losses from the first shut-off, according to the county Economic Development Board. Businesses had to grapple with all the ramifications of the electricity cuts, such as buying generators for backup power, finding satellite space to continue operations and for many losing money during temporary closures.
For example, Russian River Brewing spent $73,000 for a temporary generator to make sure its beer did not spoil. Wineries scrambled for generators to finish the grape harvest.
PG&E filed for Chapter 11 bankruptcy protection in January, under the weight of an estimated $30 billion in wildfire claims in 2017 and 2018. The state legislature this summer passed legislation that would stabilize the energy marketplace and create a wildfire insurance fund for investor- owned utilities. Under the new law, PG&E must resolve its wildfire claims and exit bankruptcy by June 30, 2020 with a reorganization plan neutral to customers.
Amid PG&E’s troubles and the expectations of greater frequency of fires, interest grew in alternative power options. Some entrepreneurs are developing an electrical microgrid that could operate independently of PG&E, while more local government officials have called for turning PG&E into a customer-owned utility.
2. Home insurance malaise worsens
The insurance issues lingering since the 2017 wildfires worsened this year. Most property insurers declined to extend coverage for temporary living expenses beyond the 24 months required by law. Therefore, fire survivors who were not yet in new homes had to pay out of pocket monthly rent for temporary housing.
Sonoma County residents living in fire-prone areas are bracing for higher annual homeowner insurance premiums. Also, insurers started canceling policies in areas where they think they have an overexposure to fire risks. The Department of Insurance did take action in December to block for one year more policy cancellations of customers in or near recent fire zone areas, including the Kincade fire, to give lawmakers more time to work on related legislation next year.
Gov. Gavin Newsom signed legislation into law that forces insurers to give homeowners a longer advance notice before canceling their policies, increasing the minimum time notification from 45 days to 75 days. The change goes into effect in July 1, 2020.
3. Navigating a home affordability crunch
Although single-family home sales volume and prices declined compared with the overheated market in 2018, the housing affordability crunch remained in place. Owning a home remains out of reach for many in the county. After home prices reached a record median of $700,000 last year, prices of single-family homes retreated this year to the mid-$600,000 range. Apartment construction added much-needed units to the rental market, with some projects targeting below- market monthly rents for middle-class workers and low-income individuals and families.
