Atlanta faces hit to rep from snowstorm fiasco

Traffic is snarled along the Interstate 285 perimeter north of the Atlanta metro area after a winter snowstorm Jan. 29, 2014, in this aerial photo. AP Photo/David Tulis

The snow that paralyzed Atlanta this week could also chill the city's business climate.

The epic traffic jam that stranded motorists for up to 20 hours risks damaging Atlanta's reputation as a good place to host major events, said Rajeev Dhawan, a professor and director of the Economic Forecasting Center at Georgia State University.

"If someone wanted to plan the Super Bowl or another big event, they may look at the snowstorm this year and say we're going to avoid Atlanta," he said. "That's the kind of loss that could play out in the future. Atlanta and Georgia definitely suffered a hit to their reputation. How that's going to play out over the long run we just don't know."

 Snowstorms can do serious damage to local economies. A 2010 study of previous blizzards in 16 states by research firm IHS Global Insight found losses ranging from roughly $60 million to, in the case of the storm that pounded the Northeast that year, as much as $700 million. Insurance costs resulting from damage to homes, vehicles and other property can raise the price-tag into the billions.

The biggest hit is typically to hourly wage-earners prevented by bad weather from going to work. In Atlanta, that would include the many restaurant workers who were either stranded in traffic or who wisely opted not to report in. Retailers, gas stations and department stores also may have lost sales that they are unlikely to be made up later.

Meanwhile, the loss of income and business can mean less tax revenue for state and local governments, while any health or vehicle-repair expenses can be "quite large," according to IHS.

 The direct economic costs in Georgia are likely to be fairly minor if only because, compared with what other states in colder climates routinely experience, Tuesday's snowfall was more of a dusting than a storm. Snow accumulation was less than three inches. Weather-related losses also tend to be temporary and can even benefit some businesses.

"One sector will lose and one will gain," Dhawan said. "Restaurants will lose money, but if you're a local hotel and all these people are coming to take shelter, that means extra money."

For Atlanta, perhaps the more serious problem centers on questions about the basic competence of state and city officials. Gov. Nathan Deal on Thursday acknowledged that the state was unprepared for the storm. The head of the Georgia Emergency Management Agency also admitted fault this week, saying he had made a "terrible error in judgment" in dismissing the severity of the situation even amid scenes of jack-knifed trucks and abandoned cars.

Atlanta mayor Kasim Reed added to the mea culpas on Friday, saying in a speech that he is "deeply sorry" to anyone who was adversely affected by the storm, according to the Atlanta Journal-Constitution. 

atlanta-storm-cars-ap338190759481.jpg
Karen Hurst, left, carries a gas can as she helps Ann Batsun recover her car on Interstate 75 Thursday, Jan. 30, 2014, in Atlanta.
AP Photo/John Bazemore
 
One local resident attributed the mayhem in part to a failure by city officials to move decisively as the storm moved in early Monday morning and the National Weather Service warned that it could disrupt the region.

"No schools were closed, no actions taken," said Lou Whiteman, who lives in North Decatur, northeast of downtown Atlanta. "If schools would have closed, there would have been no school buses to get stranded, and think of all the parents scrambling to find daycare who wouldn't have made it to work and wouldn't have been on the roads. Some businesses would have given in as well. Things would have been better."

Cathy Gillen, managing director of the Roadway Safety Foundation, a non-profit group that works to reduce motor vehicle crashes, said the chaos in Atlanta that followed the snowstorm shows the importance of being ready.

"We understand some states usually don't have these types of snow emergencies, but you still have to be prepared for them and have procedures in place so that you're ready," she said. "You should plan for the best and prepare for the worst."

If Deal and Reed have come under fire, one local company has emerged from the crisis with its reputation enhanced. Atlanta-based Home Depot (HD) became a refuge for many motorists who had abandoned their cars, keeping 26 stores open in Georgia and Alabama open through the night.

Chris Waits, regional vice president at Home Depot, told Bloomberg News, "It just seemed like the right thing to do to open our stores up to be shelters."

  • Alain Sherter On Twitter»

    Alain Sherter is an award-winning business journalist who has written for The Deal, MarketWatch and Thomson Financial Media.

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