Capital Region businesses grapple with the impact of Baton Rouge’s worst natural disaster ever
As the Capital Region guts, cleans up and begins the arduous process of trying to recover from the historic flood of 2016, so begins the difficult task of trying to assess the toll the disaster took on individuals, businesses and the economy.
It’s still too soon to put an exact dollar figure on the devastation, but the early estimates are staggering. More than 53,000 homes and 3,800 businesses in East Baton Rouge Parish alone were flooded, officials say. As many as 80% of all properties in Livingston Parish were affected. Across the region, more than 100,000 individuals have applied for disaster assistance.
“The waves of challenges are going to be many. This is a disaster that affects all parts of the region and will affect at the state level as well.” —Adam Knapp, president and CEO, Baton Rouge Area Chamber
The total economic impact will be somewhere in the many billions of dollars. Though experts cannot say how many billions, they’re already calling it the worst natural disaster in the U.S. since Superstorm Sandy in 2012.
Unlike Hurricane Katrina in 2005, which shut down the entire city of New Orleans for several months, the recent flood wasn’t absolute in its destruction of the Capital Region. But where it hit, it hit hard and didn’t discriminate, affecting affluent neighborhoods as well as low income areas. Its victims included doctors and bank presidents. One of its 13 casualties was Bill Borne, founder and former CEO of Amedisys, a home health care services company with a strong national presence.
Full recovery will take at least a year, maybe more, according to LSU Economist Jim Richardson. The challenges are staggering. At least 70,000 families are without a home, which has already led to a housing shortage and a workforce crisis for local companies. Where will everyone live while they determine whether they can afford to rebuild?
Those determinations won’t come easy. Fewer than 30% of flooded property owners on average had flood insurance. They never thought they’d need it. Even those who do have insurance are finding out that the program isn’t as generous as they had hoped and won’t make them whole.
For small businesses, the flood was particularly devastating. The area’s major retail centers and large employers were largely spared, and the national retailers that were affected have the resources to rebuild quickly. Some big box stores have already reopened.
“In the short term it will be really bad. But then you are going to see a lot of spending as recovery dollars come into the area.” —Loren Scott, LSU economist
Independent retailers, on the other hand, don’t have many options. The majority of them don’t have flood insurance, and business interruption insurance excludes floods. Many of these mom-and-pop operators, particularly in hard-hit Livingston Parish, have lost everything—their shops, merchandise, employees and customers. Can they afford to cobble together Small Business Administration loans, grants from organizations like the Baton Rouge Area Chamber and Louisiana Association of Business and Industry, and conventional financing to reopen? Or is it easier to cut their losses and move on?
It’s a very real concern among elected officials. What happens to communities like Central and Denham Springs if too many of their small businesses and residents pack up and go elsewhere?
“I’m worried about where some of these people are going to go,” says Central Mayor Jr. Shelton, who estimates 90% of his town was affected. “You’ve got entire subdivisions that are decimated.”
Local governments will also take a hit. Those thousands of flooded properties will be reassessed in the coming weeks, their values diminished if not totaled. While that will mean lower property tax bills for flood victims, it will also have a direct impact on property tax collections early next year—and on the revenues they generate for schools, libraries, fire departments and other vital municipal services.
There are some costs of the flood we will never really know. How much productivity was lost in those initial days and weeks? Even after employees returned to work, how much were they really getting done? How much have local companies eaten into their bottom line setting up employee assistance programs and making donations to other needy organizations in the community? It’s the right thing to do, but it comes at a price.
The extent to which the flood will detract from efforts to address the area’s many unmet needs is another hidden cost of the disaster. How does an already struggling state address issues like transportation infrastructure, education and workforce development now that disaster has been heaped on top of everything else?
“The waves of challenges are going to be many,” says BRAC President and CEO Adam Knapp. “This is a disaster that affects all parts of the region and will affect at the state level as well.”
To be sure, there will be winners in the aftermath of this flood. Companies, both locally and from out of state, that have been able to meet the demand for cleaning and building supplies will thrive, as will the retailers that have been able to reopen quickly. Home sales will boom in areas that didn’t flood. The feared glut of units in the multifamily sector has already evaporated, and demand exists for still more apartments. Contractors and their subs will be busy rebuilding for months to come.
“In the short term it will be really bad,” says LSU Economist Loren Scott. “But then you are going to see a lot of spending as recovery dollars come into the area.”
Long term, however, the impact is unclear, and much will depend on what kind of temporary housing assistance becomes available and how much recovery aid the state’s congressional delegation can wrangle out of the federal government.
Much has been said of the spirit of unity that emerged during and after the flood. A divided community that was raw and hurting after a summer of tragedies came together in the face of disaster, putting race, class and political differences aside to help one another. It is gratifying to see humanity at its best while under duress.
But it’s too soon to interpret the spirit of community on display of late as a sign of healing. Floods don’t make problems go away. They only exacerbate them.