Rebuilding Efforts Ease Recession, But South Florida Troubles Persist

THE Homestead Furniture Company looks like one more business victim of Hurricane Andrew.

Windows are boarded up; the facade, unkempt. But on the wall, someone has spray-painted "Open in Rear." And in what used to be his warehouse, Ron Webb is doing a brisk business.

"It has been good since the storm, because people unfortunately have to redo their homes," he says, standing in front of mattresses and plastic-covered furniture. "Everything that you see here is special-ordered for customers."

Homestead Furniture represents the bittersweet blast of Hurricane Andrew. The United States' most expensive natural disaster damaged or destroyed 1out of every 6 businesses in Dade County. One out of 10 employees was thrown out of work - at least temporarily. Now, Dade is rebuilding and south Florida business is roaring back to life. But questions about long-term security persist.

"I think we are going to say it was one of the turning points of this area," says John Cordrey, vice president of research for the Beacon Council, a public-private group for Dade economic development.

"I call it the `great suburban renewal,'" says Michael Cannon, president of Appraisal and Real Estate Economics Associates (AREEA). "South Florida, in particular, is going to be on a growth basis ... whatever happens in the country."

The reason for this optimism is the money pouring into south Florida.

The federal government is expected to pony up at least $8 billion in aid. Public and private insurance claims will account for an estimated $12 billion. Eventually, south Dade County is in line to get at least $20 billion - equal to about a third of the taxable property in Miami.

The economic jump-start has already begun.

Construction is booming, of course. The state of Florida expects to collect an extra $500 million in sales taxes this fiscal year because of the rebuilding boom.

The spurt is boosting business for everyone from building-supply stores to automobile companies. Home Depot, the Atlanta-based building-supply chain, says sales are 40 to 60 percent higher than pre-hurricane levels at its three Miami-area stores.

"The hurricane has been a boom for Miami," says Robert Arutt, a salesman for Losada Truck and Equipment in Miami. "It has definitely taken the area out of recession."

After a boomlet of body work immediately after the hurricane, Mr. Arutt has been selling trucks at a record pace. Contractors are buying new vehicles. So are other businesses whose trucks were destroyed. Even today, demand is so strong for medium-duty trucks (vehicles larger than pickup trucks) that there is a two-to- four-week delay, he says.

Automobile sales are also strong.

"It's overwhelming for us down here," says Terry Bean, a manager for Kendall Toyota and Lexus of Kendall. The month after the storm, the dealership sold 1,800 Toyotas - a record. One customer in the construction business could not afford a $3,500 car last year, he says. After the hurricane, he bought two $30,000 Lexus cars. In cash.

But not all businesses are faring so well.

Large insurance claims from Hurricane Andrew have bankrupted eight insurance companies. More could follow. The state of Florida is floating bonds to pay the claims of people whose insurance companies folded.

Many businesses were so severely damaged that they have not been able to reopen. Mr. Cordrey estimates that south of 152nd Street in Miami, at least 60 percent of the 4,000 businesses in the area remain closed.

Mr. Webb is not sure he will rebuild his now-open furniture store. It depends on how business holds up. His insurance will only pay for half of the reconstruction.

Mr. Cannon says Webb is in the minority. Most people, even of average income, are walking away with larger-than-expected claim checks.

The average individual and family grant from the Federal Emergency Management Agency totals $2,952. The average Small Business Administration loan for physical damage to a business amounts to $42,962; the agency's average economic-injury loan is $47,708.

But some economists are less upbeat about Hurricane Andrew's ultimate economic impact.

"What you had here was merely a shift of wealth," says Merle Dimbath, an economic consultant based in Stuart, Fla. The money to replace losses in south Dade County is money that cannot be used to invest elsewhere.

And while the city of Homestead is seeing its all-important agriculture and tourism industries rebuild, a cloud hangs over its future.

The Homestead Air Force Base, which employed some 6,000 people, was virtually destroyed and may not reopen.

Hundreds of active and retired military personnel have already left. Homestead's high school band is at half-strength because so many residents have left.

"It has been a terrible setback," says Bill Finley, director of the Homestead planning team for the Enterprise Foundation. But "one thing that everybody has said to us is: `We want to be a better community. Let's use this as an opportunity.' "

The foundation, a not-for-profit group organized by developer James Rouse to house the poor, is working on a plan to revitalize the area. If Homestead embraces the plan, and if the economy revives and the city's leaders continue to aggressively redevelop the community, Homestead will be better than ever, Mr. Finley says. "An aggressive, positive city is going to make things happen that a sleepy city couldn't accomplish."