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A preview of fire insurance relief coming to California wineries, vineyards this fall

A “last chance” option allowing wildfire-battered wineries to be insured, when a battered Napa Valley tourism shakes off the pandemic and recapping a mayoral career known in part for flood, fires and an earthquake highlighted the North Bay Business Journal’s Impact Napa virtual conference Wednesday.

Insurance: ‘Preventing a financial catastrophe’

It’s been almost a year since massive wildfires were raging in Napa and Sonoma counties, and many local vintners and wine grape growers were getting alarming news that their property insurance would either go away or cost far more because increasing risk of such conflagrations.

Fast forward to today, with the 2021 wine grape harvest barely getting started and fire danger rising, there’s some help coming from Sacramento to ease the situation.

Ryan Klobas, J.D., is named Napa County Farm Bureau policy director in September 2017, and he was quickly promoted to CEO. (NAPA COUNTY FARM BUREAU)
Ryan Klobas, J.D., CEO of the Napa County Farm Bureau, hopes to see fix allowing wineries to get insurance coverage can be in place by fall. (Napa County Farm Bureau photo)

On July 23, Gov. Gavin Newsom signed Senate Bill 11, which unlocks the statutory shackles have prevented the state’s insurer of last resort from writing fire policies for winery and vineyard buildings and infrastructure.

“SB 11, at the heart of it, was about preventing a financial catastrophe that had consequences far beyond Napa County, far beyond California,” said Ryan Klobas, CEO of Napa County Farm Bureau, at the conference.

The most obvious part of the problem was access to coverage. For example, a local farm bureau member used to pay about $300,000 a year for wildfire insurance now pays over $1 million dollars annually for 15% of the coverage, Klobas said, adding other members had their coverage dropped.

The key problem was the California FAIR Plan Association, a pool of basic coverage, was barred by law from underwriting “farm risk,” which included not just commodities that could be covered by crop insurance but also agricultural infrastructure. The fix was first introduced on March 1 and made it to the governor’s desk in just 144 days with bi-partisan support and no opposition.

The FAIR Plan administrators have until Oct. 21 to submit forms and rates for the new coverage to the Department of Insurance. A fix to overall availability of commercial property coverage will have to await regulatory action by the department, Klobas said.

The trade group and state Sen. Bill Dodd, D-Napa, were key proponents of the legislative change in SB 11.

Tourism: When do the dollars return?

Napa Valley’s tourism industry — the second-largest employer in the county — is showing signs of recovery, but it also is plagued by one of the biggest challenges facing the business world.

Linsey Gallagher, president and CEO, Visit Napa Valley (Robert McClenahan photo) May 6, 2019
Linsey Gallagher, president and CEO of Visit Napa Valley, said some data suggests recovery is projected to take between two and three years before getting back to 2019 levels. (Robert McClenahan photo)

“In addition to the looming threat of wildfires and its impact, we're challenged by the ability to staff back up and provide service levels that are expected of our luxury destination,” said Linsey Gallagher, president and CEO of Visit Napa Valley, noting the situation is not unique to the region. “But for us, that's going to be what has the greatest impact on our ability to fully recover and return both revenue and economic contributions to what they were prior to the pandemic.”

Gallagher at the conference presented data going as far back as 2018 — the most recent available — that point to how Napa Valley’s tourism industry performed before the pandemic, the decline during last year’s shutdowns and recovery projections going forward.

In normal times, Napa Valley annually sees 3.85 million visitors — 80.8% coming from within the country and 19.2% from around the globe. Of those visitors, 64.5% come for the day and 35.5% stay overnight, Gallagher said, citing data from Destination Analysts, a San Francisco-based market research firm. But it’s the overnight visitors who spend the most, with nearly 70% contributing to Napa’s economy, she noted.

Visitor volume last year in Northern California’s Wine Country, which includes Sonoma County, declined by 44%, with recovery projected to take between two and three years before getting back to 2019 levels, Gallagher said, referring to data from the San Francisco Travel Association and Tourism Economics, a Wayne, Pennsylvania-based firm that tracks travel trends around the globe.

Visitor spending in the region declined last year by 62%, largely driven by the loss of international travelers, Gallagher said, adding that it’s expected to take between four and five years to get back to 2019 revenue levels.

"But based on what we've seen over the course of the past summer as we've safely returned to welcoming guests once again, I do believe that Napa Valley is going to track ahead of these projections,” Gallagher said.

Napa Mayor Jill Techel recounts challenges and successes for the city over her time in office, speaking at North Bay Business Journal's Impact Napa conference on Tuesday, Aug. 20, 2019, at The Meritage Resort & Spa in Napa.
Jill Techel served as mayor on the Napa City Council for 15 years before retiring last December. (Jeff Quackenbush / North Bay Business Journal) Aug. 20, 2019.

Beyond just 15 years as mayor

Mayor Jill Techel’s “Impact” on Napa may be seen everywhere.

The Upper Midwest small-town girl worked her way up into public service, putting down roots in Napa, which she viewed as being similar to her hometown.

“Napa felt like home to me,” she said during the interview by Napa attorney Richard Mendelson.

Techel, who served as mayor on the Napa City Council for 15 years before retiring last December, talked about the city’s landmark $800 million Napa River-Napa Creek Flood Protection Project.

The 6-mile project that runs from Butler Bridge on State Route 29 north to Trancas Street has protected the town from devastating storm water incidents and eventually laid the “key” groundwork to Napa’s future as a “walkable”city. The project represented a departure from the U.S. Army Corps of Engineers’ standard answer to flood control — walls and dredging.

In 2005, the same year she captured the mayor’s seat, an El Nino-spawned series of storms over New Year’s Eve inundated her Napa County city. The small-town mayor found herself in front of a CNN camera this time. The spotlight captured the attention of then Gov. Arnold Schwarzenegger, who she recalled asked her on the phone: “What can I do?”

Jill Techel
Jill Techel

But strength through adversity is something Techel knows all about. During the 2014 South Napa earthquake that rocked the North Bay on Aug. 24 at a magnitude of 6.0, killing one person, injuring 200 and causing more than $300 million of damage. Techel was encouraged by the camaraderie of the residents, saying “neighborhoods came together” without “waiting for government” to act.

A University of North Dakota graduate, who grew up in Grand Forks before receiving her degree in social work, Techel landed in Napa from Grand Forks, both towns similar in nature to her and without the hustle and bustle of San Francisco’s multiple “lanes of traffic.”

Working for the Napa-Solano Girl Scout Council shortly after she arrived in Napa in 1971, she took the seat as the first chairwoman with the city’s Parks and Recreation Commission and served six years on the Napa Valley Unified School District.

Her two children have also paid attention to how active their civics-driven mother has remained over the years. Instead of playing house, Techel recalled how one of the siblings acting out mommy “go to meeting” play.

The conference was sponsored by Dickenson, Peatman & Fogarty, a Napa law firm, and Novato-based Bank of Marin. Major sponsors were Ghilotti Construction of Santa Rosa and American Ag Credit, also of Santa Rosa.

If you missed the event, you can find out how to watch it at nbbj.news/napa21.

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