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Spending surges post-storm - Odessa American: Business

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Spending surges post-storm

Growth follows millions of dollars in damages

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Posted: Sunday, July 16, 2017 11:53 am

The baseball sized hail ripped into the roof of Rebecca Stanford’s house on Cole Drive in northeast Odessa. It knocked holes in a screen and ravaged a backyard Jacuzzi and pummeled three of her family’s cars, meaning thousands of dollars in mounting repair costs.

For Stanford, like thousands of others who suffered property damage in the June 14 storm considered the most expensive in Odessa history, stress filled the weeks that followed as she learned to file insurance claims for the first time and sought help from a slew of contractors.

“Life hasn’t been fun for me lately,” Stanford said outside her home this week, as a pair of workers installed a new window. “But I’m sure it’s a business boom for the people who have.”

People like Stanford say they will not reap much of the benefit, even if her burden is mitigated by insurance companies. But the post-storm spending should still grow the Odessa economy.

Along her street, contractors’ signs stand in the yards outside homes, many with roofs in various stages of repair just over a month after the storm hit. In many neighborhoods in the hardest-hit areas — the 79762 and 79765 zip codes — a dozen signs advertise different contractors.

They are among a range of construction companies that emerged to repair and replace the damage left in the wake of the storm that ripples through the local economy. The last several weeks have been marked by a surge of sales, spiking labor demand and rising material costs. In the end, repair costs city wide could amount to $480 million, the Insurance Council of Texas trade association estimated.

A natural disaster like a major hail storm will boost an area’s economic output when economists calculate gross product, because they do not subtract damage from new spending, said economist Ray Perryman, “although you could clearly argue that the affected would be better off if the event never occurred.” (Perryman, who lives in east Odessa, was one of those people).

“We will see a temporary stimulus over the next few months as millions of dollars of construction money will come into the area from the outside,” Perryman said. That money will flow through various businesses, he said, such as car rental companies, various suppliers and restaurateurs. Public coffers also stand to benefit from growth in sales tax revenue.

San Antonio, which was home to a hail storm in April 2016 that was declared the costliest in Texas history, saw job growth in the months that followed, led by sectors such as construction and auto maintenance that boomed after the hail storm, the Federal Reserve Bank of Dallas reported.

Claims from insurance companies inject much of the money flowing into the community. Insurance companies take a hit, but they consider such weather events in setting rates before and after the storm, said Mark Hanna, spokesman for the Insurance Council of Texas.

“It’s hard to look at it as ‘Oh great, we had a bad hail storm; it’s going to benefit our economy’,” Hanna said. “But it’s true, this is what happens.”

The shock delivered to Odessa’s economy by the hail storm comes after months of growth.

By May, before the storm hit, the Odessa economy had grown for seven straight months since the bust following the oil price crash of 2014, according to a Thursday report from Amarillo economist Karr Ingham, who studies the area.

“The recovery is gaining momentum,” Ingham found, pointing to continued general spending growth and auto sales.

Construction of new houses continued to see sharp growth in May, while the recovery in larger commercial projects lagged behind.

The storm brought in a flood of construction workers, like George Loewen. Loewen regularly worked in Odessa before the storm, traveling from his home in Seminole for a range of construction jobs, from installing windows to siding and patio covers.

At first, Loewen said he was going door-to-door but soon found himself inundated with calls including from past customers or friends they had referred.

“It’s a lot of calls; it’s hard to keep up,” Loewen said, as he finished caulking windows at a house on Conley Avenue. It was the sixth house he had patched up since the hail storm. “Now it’s crazy — but it’s good.”

The homeowner, Kenneth Largent, said work on his house included installing six new windows and repairs of his roof, the fiberglass over his patio and a skylight. Some of the windows Largent decided to replace weren’t broken, but he opted for the new installations after never having major work done on his house in the more than 10 years of living there.

Loewen did everything but the roof, but brought in contractors he works with in Seminole and oversaw it. Loewen was one of several solicitors that came by after the storm, Largent said. “I don’t know that I got a better price out of him; I just know that I got a whole lot more work and he’s done a really, really good job,” Largent said.

Next, Loewen said he planned to begin work on six or more damaged rental houses. There’s plenty of work to go around, he said.

“Tons of companies, they come from far,” Loewen said. “It surprises me that some people go with those out of town people, because if you have issues with your roof, are they going to get taken care of?”

Pflugerville- based Alden Roofing had opened a new location in Odessa a couple months ago, before the storm. It’s one of six locations across Texas and the company has routed workers here to help with hail.

“It does help to get started in a market with a hail storm,” said Melanie Knox, an owner of the company. “... We definitely need more help, we’re hiring. It’s just the volume is so insane.”

Construction workers that come into town spend money in Odessa and stay in Odessa hotels.

The Residence Inn, Courtyard and Homewood Suites hotels at the Parks Legado Town Center were booked this week, continuing to ride a trend of increased demand after the hail storm that brought increased rates, said Ben Acosta, senior director of sales at MCR Development, which owns them. Rates climbed across the city to as high as $399 during weekdays since the storm, he said.

“It’s been a good thing for us,” Acosta said, even though hotel occupancy was already growing amid more oilfield activity. “We’ve been pretty steady since then.”

The downside, besides hail damage, was some regular customers going elsewhere when rooms filled and prices increased, Acosta said.

Alex Singh, who owns two La Quinta hotels on Faudree Road and another hotel at JBS Parkway and I-20, hopes to recover quickly enough from the hail storm to take advantage of the spike in demand for hotel rooms.

“We took a bad hit on all three of our locations, and a really bad hit one of our locations,” Singh said. Hailstones pummeled roofs and stucco and broke windows of that hotel, one of the La Quintas, forcing Singh to close the rooms for repairs. He said he loses money by not renting out the closed rooms for weeks, but the demand spike could help blunt that loss.

“In the short run there is a lot of damage on the commercial side,” Singh said. “In the long run we do expect that there will be a lot of construction crews in town.”

Roofers, glass workers and auto shop repairmen reported months of work. The Lubbock-based workers with Safelite AutoGlass who replaced Stanford’s windshield on Cole Drive said they were booked into October.

Other local businesses anticipate increased sales in the coming months.

One was auto dealer Collin Sewell, who said hail damaged every vehicle at his company’s Odessa Ford-Lincoln dealership, about 700 total vehicles. They were insured, and in some cases people still purchased cars with minor dents at a discount. But the storm also meant repairing and replacing inventory at a time when people with totaled cars start shopping for them.

“You have this whole entire replacement process that people have to go through, and we’ve seen that,” Sewell said. “Everybody can look at a problem as a problem, or they can look at it as an opportunity.”

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