Flood ripple effect drains businesses

By Ariel Hart 

The Atlanta Journal-Constitution

From the outside, it seemed Leanne Lee’s Douglasville salon escaped the 2009 flood unscathed.

Inside, her cash register tells a different story.

First she lost two days of business while closed during the storm. When she reopened, her own building was fine. But her customers’ property wasn’t, and neither was the road that leads them to her. Many customers were too busy cleaning muck out of basements to keep their appointments. Those who tried to make the drive ran into detour after detour, and still do. Appointment cancellations and postponements still roll in, and some patrons who make it are arriving late, meaning a splurge on a haircut and a color turns into just a cut.

Two weeks after the flood, officials in Douglas County, where Lee’s salon is located, say they still have 55 roads closed, and some may remain closed for months. Gnarled transportation routes cost businesses inestimable losses during the flood and the damage to roads remains a drain on revenue for many.

Lee’s revenues at Bliss Hair Salon and Day Spa the week after the flood were half what she expected. Altogether she thinks she lost well over $3,000.

“We spoke with our insurance company and they said they wouldn’t cover us,” Lee said. “The only way they’d cover is if we’d had physical damage to the building, which we didn’t.”

Estimates of the physical damage from the Atlanta flood emerged before the water had receded, ranging from $250 million to $1 billion. Indirect damage is difficult to calculate. Some researchers say it may cost more overall than the physical damage, though none would venture an estimate.

During the floods, each of metro Atlanta’s four Interstate highways shut down at one time or another. I-20, a major freight corridor, was closed , smack in the middle of a trucking center, for almost three days. A UPS hub on Fulton Industrial Boulevard was forced to call in help from other UPS facilities, and deliveries backed up for about a day and a half.

But the freeways are up and running. That’s not the case with many smaller roads that remain impassable, according to the state Department of Transportation. During the storm, hundreds, perhaps thousands, of smaller roads closed across several counties. Dozens of streets in counties like Paulding, Cobb, Dooly and hard-hit Douglas remain shut for repairs.

Douglas County’s school system has had to keep re-routing buses, meaning more drive time, paying for more drivers, and paying for more administrators to handle the re-routing, said transportation director Rodney Arrington. “I’m not sure how much it’ll be, we’ll find out,” Arrington said. He hangs on the notices from county officials who estimate how long roads will stay closed. “Some three weeks, some six, some it just says ‘prolonged,’” he said.

Delays in production, the loss of customers and suppliers, limited transportation and other indirect losses are costly problems wrought by natural disasters, said Marija Bockarjova, a researcher on valuing risk from floods at the VU University Amsterdam and a geological institute in the Netherlands.

Near Woodstock in northern Cobb County, Julie Rogers’ subdivision was marooned when the lone road in washed out. Stranded in the subdivision with her car and no Internet, she took an impromptu week of vacation. That means the vacation industry loses a week of her business this year. The last time she took a vacation, she paid for a cruise.

The traffic congestion alone, the extra time that people wasted behind the wheel in traffic backups in the rain, represented a huge loss.

Tim Lomax, an expert on congestion costs at the Texas Transportation Institute, put the value of the loss somewhere between $40 million and $120 million in lost time to Atlanta-area drivers, though reaching an accurate estimate would be almost impossible.

That loss is just time wasted, and doesn’t include whatever wages or business was lost because of that wasted time.

Though no expert would put a number to the total damage from these ripple losses from the flood, some believe those costs probably surpassed those of the physical damage.

“Oh, I would think it would be more,” said Bob Klein, director of the Center for Risk Management and Insurance Research at Georgia State University. Alan Pisarski, a Washington, D.C.-area commuting expert, guessed that they would likely be “much more significant than the physical damage.” Bockarjova said in an e-mail that she probably disagreed, but that the damages could still be significant.

Some individuals and businesses may be out of luck. The Federal Emergency Management Agency gives no grants to make up for the slowed flow of commerce, said state and federal spokesmen.

The Small Business Administration gives some aid to small businesses, but it has to be paid back. Some flood victims are eligible for federal disaster unemployment assistance. Someone who still has a job but is making less money, like a waitress, probably doesn’t have much recourse, said GEMA spokesman Buzz Weiss.

The deadline for small businesses to apply for the loans as a result of the Atlanta floods is June 24, 2010. “It’s set out further because the effects economically may not occur immediately,” said Matt Young, a spokesman for the Small Business Administration.

“What might not be obvious can still have an economic impact,” said Young.

To seek aid, call 800-621-FEMA. They can refer callers to the Small Business Administration.