Businesses Incur Losses After Chemical Spill

Charleston Gazette
10 May 2014
By Jonathan Mattise, The Associated Press

Restaurants and storefronts are buzzing in Charleston again, but many still haven’t filled a financial hole after chemicals sullied their running water and forced them to close several days in January.

The Jan. 9 chemical leak left 300,000 people without safe drinking water for four to 10 days, spurring health departments to shut down businesses that depend on clean water, from eateries to salons. Public fear reverberated weeks and months afterward, prompting many restaurants to keep cooking with and serving only bottled water. Some still haven’t switched back.

A Marshall Unicersity study estimated the nine impacted counties took a $61 million economic hit.

Businesses have sued companies tied to the spill, tried to collect insurance claims, sought government loans and pursued other avenues. But the options available have left some businesses little confidence of recovering what’s been lost.

“I don’t foresee ever recouping it,” said Deno Stanley, owner of Adelphia Sports Bar & Grille in Charleston.

Among the tree-lined cluster of small businesses on Capitol Street, springtime foot traffic is up at Adelphia. Stanley said out-of-towners are back, and so is customer confidence.

It’s a welcome change, Stanley said, after Adelphia started the year by losing $38,000 in sales over eight days due to the spill. Other costs also built up, like buying bottled water for patrons and changing filters in soda and ice machines, as officials required. Bottled water is still served, he said.

Adelphia quickly filed a lawsuit after the spill, now one of more than 60 civil actions targeting the companies involved. Freedom Industries, the company at the center of the spill, and West Virginia American Water, the regional water company, are named in most of them.

Freedom, whose aging tank leaked coal cleaning chemicals into the Elk River, quickly crumbled into bankruptcy on Jan. 17. The move deflated hope for many suing the company, since it temporarily froze their legal actions and has left them watching the company’s financial resources dwindle from the sideline.

Lawyers for small businesses have admitted any recovered money will be a drop in the bucket, since Freedom has hundreds of groups it owes money and limited cash.

American Water Works, the profitable parent of West Virginia American Water, vowed on its latest earnings report to “vigorously contest the lawsuits.” Its West Virginia revenue dipped by $5.9 million in the first quarter amid the spill.

Adelphia’s insurance policy wouldn’t pay out a claim, either, Stanley said. Across the area, it was hit or miss whether policies would cover interruption of business losses from the spill, said Matthew Ballard, president/CEO of the Charleston Area Alliance, a local chamber of commerce.

Public grant money wasn’t made available for businesses that took the financial hit.

The Federal Emergency Management Agency, which provided meals and water after the spill, eventually approved West Virginia’s request to cover some costs after the state appealed FEMA’s denial. The aid only included some costs incurred by public agencies and nonprofits that responded to the crisis.

State and federal officials lauded two types of low-interest loans to help out. But neither lent any money to impacted West Virginia businesses.

Last legislative session, which started three days before the spill, officials reacted by creating a short-term, low-interest loan program for small businesses during declared emergencies. Some businesses asked about the aid, but couldn’t get any because lawmakers didn’t put any money into the program, said Department of Commerce spokeswoman Chelsea Ruby.

Instead, the state referred people to the federal Small Business Administration, which set up economic impact disaster loans. Ten businesses applied; six withdrew their applications, and four were denied, said administration spokesman David Hall. The names of businesses that applied and reasons they were denied are confidential, Hall said. But credit history and ability to repay the loans are taken into account.

David Fazio, whose restaurant Fazio’s has been a Charleston staple for 35 years, said a loan is not what the crisis warranted, anyway.

“That’s money I lost and didn’t deserve to lose,” Fazio said. “Neither did anybody else.”

Fazio’s insurance would not cover his restaurant’s losses, either. Signs at the Italian eatery still assure that they’re cooking with bottled water. It’s a commitment that Fazio said has cost $10,000 over four months in extra bottled water and ice.

The public wasn’t only concerned about eating or drinking the water. Pauline’s House of Curls, located in Danville, was closed for eight days in January. For a short while after, some customers still feared using the water for hair styling, said stylist Paula Miller.

Workers who lost hours because of the spill did get some reprieve. Through Feb. 21, United Way of Central West Virginia distributed about $112,000 in donations to 625 workers near minimum wage whose businesses closed, said local United Way President John Balangee.

State tourism officials think they found reason for optimism, however.

In an independent survey funded by the state, only one-third of residents in various surrounding markets mentioned the spill when asked what they had heard about West Virginia recently. Of those who were aware of the leak, just one in three said it made them less likely to visit.

Only one closed business, a Charleston restaurant, publicly linked its shutdown to the spill.

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