Wildfire areas have high poverty and small tax bases. Will that affect future construction?
Some credit rating agencies say the frequency of unpredictable wildfires is increasingly a concern that could undercut cities' creditworthiness. Smaller rural counties may be particularly vulnerable due to their size, analysts say.
While much of
More than one-third of the most destructive fires in state history occurred in the last three years, according to the
Analysts from
They said it will be less of a concern if government support and private insurance continue to offset losses in tax revenue.
But
"Rebuilding could be slower and more challenging than last year due to these rural counties' smaller economies and tax bases compared to the suburban counties affected by 2017's wildfires," Hoffmann said.
But
Money used to fund some infrastructure projects rely heavily on selling bonds to banks and investors to finance new construction, with the promise that their loans will eventually be repaid. But when wildfires roar through cities and towns, economies are impaired and communities may struggle to refinance their bonds.
After a fire, credit rating agencies examine the state of city and county finances and determine the ability of municipalities to pay back their lenders. If the report is unflattering, those areas might have a hard time finding investors willing to buy their bonds in the future -- at least at a low interest rate.
Areas in
"The demand for housing and the rebuilding pace in that community is just likely to be faster than a more limited and isolated community in
Some electric utilities, such as
"At least for the fires we're seeing now, it's too early for authorities to get a good sense, as we don't know the scale of the damage and partially because it's not contained," said
The Carr Fire tore through several neighborhoods in the western part of town, prompting the evacuations of thousands, but stopped short of Redding's downtown.
Maxwell said the city of about 92,000 residents could see a drop in property tax revenue but believes emergency funding from the
"I'm going to assume our sales taxes from people purchasing lost things due to the fire, building materials and all of those things, hopefully, that will be an offset," Maxwell said. "It's really hard to know."
Statewide, more than two million homes are at risk for wildfires, according to a recent study by insurance data provider
In
"We don't borrow," he said. "We keep a very tight budget and we try to stay in the black." As a result, infrastructure projects have stalled, he said.
The massive Mendocino Complex Fire has destroyed more than 100 homes in
"All of those taxes come into the general fund, and that general fund has gone down by several percent," he said, adding that the county is losing about
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