THE SOUTHLAND FIRESTORM : Tallying the Losses : Little Long-Term Economic Impact Expected Despite Loss of 600 Homes

The fires sweeping Southern California should have minimal long-term effects on the region’s beleaguered economy, although there could be a brief falloff in tourism to Laguna Beach and a small boost in home construction jobs.

Moreover, though televised images of destruction may invoke memories of past riots, earthquakes and fires, economists believe that California’s image as a place to invest or visit will not materially change--assuming the fire damage does not increase appreciably in the days ahead.

“We see really very small or minimal impact on the economy,” said Adrian Sanchez, regional economist at First Interstate Bancorp in Los Angeles.

Yet the fire did throw some local real estate markets into turmoil and had the utilities working overtime to repair damage. And, of course, the toll is especially heavy for owners of nearly 600 homes damaged or destroyed by the blazes, which have blackened more than 115,000 acres in six counties so far. Unofficial damage estimates were in the hundreds of millions of dollars.

Also affected were local merchants in fire-ravaged communities such as Laguna Beach, which was virtually cut off from outside traffic Thursday. And real estate values in burned areas could be affected as potential buyers have second thoughts, at least in the short term.

President Clinton declared five California counties disaster areas, qualifying them for federal recovery aid. As of late Thursday, the pace of destruction was slowing as the weather turned more favorable.

The fallout from the fires should pale in comparison to that of past California disasters.

The April, 1992, riots in Los Angeles resulted in 53 deaths, more than $1 billion in damage, destruction of or damage to thousands of small businesses and a resulting loss of jobs and income.

Similarly, the Oakland Hills fire, which occurred just over two years ago, resulted in 25 deaths, the immolation of nearly 3,000 homes and damage amounting to $1.75 billion, the most destructive fire in state history.

“This is not anything close to the damage they experienced up there,” First Interstate’s Sanchez said, adding, “These things tend to be very temporary, causing a short-term dip, but things come back fairly quickly.”

In Oakland, the fire was arguably a net boost to the local economy, as some burned-out homeowners won generous insurance settlements, pumped money into construction jobs, upgraded their homes and saw their property values climb as new utilities and infrastructure went in.

But here in Southern California, the rebuilding is likely to do little to boost employment in the moribund construction industry. Industry experts expect nearly all of the homes to be rebuilt over the next two years at a replacement cost of between $200,000 and $500,000 each.

The value of furnishings, landscaping, clothing and other personal items that victims will have to replace should double the spending, said Esmael Adibi, director of the Chapman University Center for Economic Research. Cleanup companies are also expecting a rush of new business.

Rebuilding should create as many as 1,200 on-site construction jobs over the two years, said Ben Bartolotto, an economist and research director of the Construction Industry Research Board.

That would boost Southern California’s construction work force of about 236,000 carpenters, roofers and other tradesmen by about half of 1%.

The fires threw a shadow over hundreds or even thousands of pending real estate sales in areas affected by the blaze. Escrow firms were overwhelmed with calls from buyers and sellers who wanted to know how the disaster would affect their transactions.

“It’s been an absolute zoo,” said Sheryl Moore, a receptionist at Lockwood Escrow Corp. in Pasadena.

Agents in the Altadena area canceled their usual Thursday morning tour of new listings in the neighborhood “because too many of the roads are still blocked off and some of the homes we were supposed to tour aren’t there anymore,” said Ray Wells, assistant manager of Keeler/Dilbeck Realtors in Pasadena.

But home builders and marketing specialists in Orange County said they do not expect the fires to depress home sales or land prices.

At Coto de Caza, the gated canyon community where home builder William Lyon has a palatial $21-million estate, marketing director Tom Martin said the Ortega Highway fire that was burning “one canyon over” on Thursday should not matter to future buyers.

“People may wonder whether they want to live in Southern California, but they are not going to get specific as to which valley or canyon they would avoid,” he said.

The effects on tourism should be localized.

Laguna Beach, which considers hotel-based tourism its biggest business, was already bracing for a falloff of visitors as the arty beach community enters its off-season.

On Thursday, as police cordoned off the area, most shops, restaurants and businesses in the normally bustling village center were closed, said Joe Orsak, president of the Laguna Beach Chamber of Commerce and Civic Assn. Many business owners were helping with the cleanup.

Fortunately, most structures in the historic village have escaped fire damage so far. An exception was Laguna Beach Lumber, which lost a milling shop containing several hundred thousand dollars’ worth of sophisticated machinery.

For now, the city’s biggest hotels are accommodating evacuees, fire personnel and others at reduced rates.

The 65-year-old Hotel Laguna offered free rooms and food to fire victims and canceled several meetings, including a charity wine auction Thursday night, general manager Claus Hjortkjaer said. Because of a police blockade, he had to park several miles away and walk to the hotel.

Once the fires are out, lingering images of destruction and fears of subsequent mudslides could keep tourists away.

But beyond Laguna, the fire publicity probably won’t result in major cancellations of major meetings or conventions. So far, none have been received, said Michael Collins, senior vice president at the Greater Los Angeles Convention and Visitors Bureau.

A sign of how short-term bad publicity can be: Hotel occupancies in downtown Los Angeles are actually up about 20% from the previous year as memories of the riots fade. Moreover, now that the new Los Angeles Convention Center is open, about 20 national associations have scheduled meetings through 1994, Collins said.

On Altadena’s main shopping strip on North Lake Avenue, only a few blocks down from the fire lines, stores were open for business as usual, said Leatrice Gloria Erlander, president of the Altadena Chamber of Commerce and Civic Assn.

In Pasadena’s Old Town shopping district, the tony Il Fornaio restaurant closed its patio because of smoke from nearby Altadena, and lunch trade was down about 5%, said manager Franco Micalizzi.

For their part, Southern California utilities were busy restoring service to thousands of customers and were still assessing fire damage Thursday. Most predicted paying significant overtime to employees. No dollar figures were available for damages or extra labor costs.

GTE California reported that fire melted a fiber-optic cable near Redlands and another on Laguna Peak in the Santa Monica Mountains--but both were replaced Thursday.

The disaster has been “pretty expensive” so far for Southern California Edison Co., which is operating 10 “storm centers” around the clock to dispatch repair crews, spokeswoman Millie Paul said.

By midday Thursday, the company had replaced 45 power poles and 19 transformers and had identified 59 other power poles in Altadena, Yucaipa and Laguna Beach and a power distribution circuit in Ojai that needed to be replaced, she said.

Times staff writers Nancy Rivera Brooks in Los Angeles and James Granelli, John O’Dell and Chris Woodyard in Orange County contributed to this report.

* SCAM TIME: Fire victims should beware of con artists and fraudulent contractors. D3.

Economic Impact of the Fires

Despite the spectacular nature of the fires, their impact on the overall economic life of Southern California is not expected to be major.

* Construction: All of the nearly 600 damaged or destroyed homes expected to be rebuilt within two years. Rebuilding efforts to create up to 1,200 new construction jobs.

* Real estate: Prices in fire-ravaged areas expected to drop temporarily, then recover in a few months as the rebuilding effort gains steam. Some pending sales will probably be thrown into limbo as buyers try to back out and sellers push to close.

* Insurance: Claims expected to top $200 million--not enough to seriously damage profits of large insurers. No increase in homeowners’ rates expected.

* Utilities: While no damage estimates are in, cost of repairing or replacing dozens of poles and transformers and miles of telephone and electric cable will run into the millions of dollars.

* Cleanup: Business at rubbish-disposal and trash-hauling companies is already soaring, as government agencies and homeowners start to remove debris. Orders for commercial-size trash bins already backing up.

* Tourism: No long-term impact expected, though a brief drop in visitors is predicted for Laguna Beach.