I'm waiting to meet Jeff Okrepkie near a melted swing set in Coffey Park, the middle-class neighborhood in Santa Rosa that was obliterated last fall by fire.
It is early August and there are signs of renewal. In lots scattered about the charred landscape, the frames of new houses are rising. Developers are opening model homes, enticing refugees to rebuild.
Okrepkie, 39, parks his car and we shake hands. "It is hard to comprehend what happened," he says. In the early morning hours of Oct. 9, 2017, Okrepkie hastened to evacuate his family as the Tubbs fire rained hot embers onto his lawn. He triaged, grabbed a fire safe stuffed with documents and left photo albums behind.
In the aftermath of disaster, Okrepkie and his burned-out neighbors formed Coffey Strong, a resource group for those hoping to rebuild. As an insurance broker, Okrepkie is able to help others navigate the complexities of dealing with developers who smell a bonanza.
"Coffey Park is a paradise for developers," Okrepkie says. Santa Rosa and the utility companies are restoring damaged infrastructure—parks, roads, electrical, water and sewage services—at no cost to builders. There are public funds for debris removal. But the survivors are mostly on their own. This is America: no socialist freebies here.
For Coffey Parkers who own a burned lot, there is the possibility of rebuilding—if there is enough insurance money left over after paying off the home loan. Mortgages survive fires, even if homes don't.
Santa Rosa permitting data and interviews with construction, insurance and banking experts reveal that more than half of the burned-out Coffey Park residents are not likely to return.
Some homeowners have sold their ashen lots to land speculators in order to avoid the emotional hassle of recreating hopes and dreams. Some sell and migrate to cheaper housing climes because their homeowner's insurance does not cover the cost of rebuilding—costs which have ballooned in the wake of disaster. Renters? Long gone.
Sonoma County–wide, about 5,300 structures were lost to the fire, with about 1,400 houses carbonized in the area of Coffey Park. The city of Santa Rosa lost about 3,000 homes. The California Department of Insurance calculates the county's fire losses at $8 billion.
That is a lot of money, but it is not enough to repair the damage. Two-thirds of Coffey Park homeowners are "underwater" on their insurance coverage.
What happens when an insured house goes up in flames? Standard contracts ensure that the mortgage will be paid off before a homeowner palms a dime. Whatever cash is left over can go toward the cost of rebuilding, relocating—or feeding a slot machine at the Graton Casino.
Homeowner policies limit the cost of materials and labor for rebuilding. The dollar cap is often set decades prior to a disaster. Emily Rogan of the consumer advocacy group United Policyholders, says that many people neglect to update the cap out of ignorance that it matters, or because raising it increases their premium. And, after all, fires are what strike other folks.
If the cost of rebuilding a home purchased in 1998 was $100 a square foot, an owner would be shocked to learn that it costs four times that amount to replace it. The reason is twofold: The price of materials and labor has increased over time with inflation, and a sudden demand for local construction services in a disaster zone causes unregulated prices to explode.
The low end of a Coffey Park rebuild pencils out at $280 per square foot, and that is likely to produce a smaller house than what was there before. Replacement is reaching as high as $400 per square foot, more if a homeowner wants the Italian marble.
The good news is that many rebuilders are taking out bank loans to cover the gap between insurance proceeds and costs. Interest-only rates on construction loans are about 6 percent, but after the house is built, owners can refinance into a 5 percent mortgage.
The bad news is that local lenders such as Poppy Bank, Exchange Bank and Redwood Credit Union require a minimum down payment of 20 percent cash, and it can be much higher. There go the college funds, the pensions and the cookie jar.
In fact, there goes the neighborhood.
Santa Rosa permitting data shows that about 300 houses are under construction in Coffey Park. Citywide, about 600 houses are under construction, and 500 are flowing through the permitting pipeline. That is about one-third of the 3,000 homes incinerated inside city limits by the Tubbs fire. It will take years for the community to recover; meanwhile, construction firms, land speculators and bankers are riding a boom.
A few Coffey Park developers are offering custom-designed, pricey homes; some are marketing cheaper, cookie-cutter houses. All of them want your money locked up in an escrow account before they will pound a nail. The tightly controlled escrow process is supposed to be overseen by neutral third parties who are mandated by law not to favor any party in a transaction.
And therein lies the gravamen of our tale.