The Day California Cracks

Budget crises have left the state ill prepared for a big quake

CALIFORNIA (BusinessWeek) September 9, 2005 - It's power lunch time in Los Angeles. Media moguls are picking through their Cobb salads at Spago in Beverly Hills. Then the floor begins to move, first in undulating waves, then in increasingly violent jolts. The airy restaurant rumbles. Diners scream as the walls of the popular indoor garden room begin to shake, sending debris everywhere. Outside, along nearby Rodeo Drive, car alarms start to wail as upscale storefronts explode in a shower of glass and mannequins. A lonely poodle yaps in search of its master, who lies beneath an ornate streetlight.

Five miles to the east, downtown L.A.'s high-rises are swaying. As the 54-story Wells Fargo (WFC ) Tower buckles, a torrent of glass showers office workers along South Grand Avenue. More debris cascades down from the 72-story U.S. Bank (USB ) Tower nearby, just as the elevated 10 Freeway buckles, sending delivery trucks over its sides and sports cars into each other. In the distance, fireballs ignite where natural-gas pipelines have surrendered to the violent shaking.

It sounds like a Hollywood disaster movie, all right. But sooner or later, when the Big One hits, it will be all too real. As certain as California's sunny days, palm trees, and celebrity politicians, a massive earthquake is coming. With more than 300 faults beneath Southern California, and the giant San Andreas fault running through the state, California is a seismic time bomb. A magnitude 7 quake has a 62% chance of hitting San Francisco in the next 30 years, according to the U.S. Geological Survey (USGS); the risk for L.A. is only slightly less. Such a powerful quake would cause far more damage than the temblors that shook San Francisco in 1989 or L.A.'s Northridge neighborhood in 1994. A magnitude 7 quake that struck during a workday on a recently discovered fault under L.A. would kill 7,000 to 18,000 people, says the USGS. In San Francisco, 5,800 people would die if a temblor the size of the 1906 quake again savaged the city.

NO WARNING

A shaker of that size, especially in the densely packed areas of L.A. or San Francisco, could make the horrific sights from Katrina look almost tame. Because there would be no warning -- no CNN satellite shots like the ones that plotted Katrina's swirling path toward New Orleans -- there would be no evacuation. Virtually every one of L.A.'s freeways would be destroyed, says Lucille M. Jones, USGS chief scientist for Southern California. That could cut off supplies and needed help. Railways would be destroyed. Natural-gas lines would rupture. The giant Port of Los Angeles, which itself sits on a fault, would likely be out of commission, stalling shipments of autos, electronics, and other cargo that it handles along with adjoining Long Beach. The estimated hit to the local economy from the port closure: $36 billion. All told, if the quake hit directly below L.A., the damage could top $250 billion, a USGS study predicted.

Catastrophic damage would also occur if a giant quake were centered below the San Francisco Bay area, or farther down the coast under Silicon Valley. The region's network of bridges could tumble down and the port in Oakland would likely grind to a halt. And, just as L.A.'s entertainment industry would be laid low by a big quake, Silicon Valley would be dealt a terrible blow as its surviving creative minds and venture capitalists would be forced to relocate, creating nothing less than a tech diaspora.

How prepared is the state in the face of such potential destruction? Since the 1989 Bay Area quake, a 6.9 temblor that left 63 people dead, California has improved building codes for its schools and hospitals and has beefed up its Office of Emergency Services response capabilities. But political wrangling, a state budget crisis, and the federal government's fixation on putting most of the Federal Emergency Management Agency's money into anti-terrorism efforts has left California short of where it had hoped to be. "We're better than we were five or ten years ago," says state Senator Elaine Alquist, chairman of the Public Safety Committee. "But we're certainly not prepared."

No doubt, California has learned from the rubble of its past disasters. The state has spent billions to upgrade most of its overpasses, and has retrofitted many of its schools. But there hasn't been enough money for everything. A 2002 inventory by the state architect's office found 2,100 of the 9,600 schools surveyed are "not guaranteed" to hold up in future earthquakes. Many hospitals are in financial distress and don't have the funds to complete needed retrofits, says the California Seismic Safety Commission. Ballot measures have since been passed to upgrade both schools and hospitals.

GRASS-ROOTS EFFORTS 

Still, precious time has been lost. Plans to make the San Francisco Bay Bridge, which was partially destroyed in 1989, more earthquake-resistant have been delayed for eight years over design and funding controversies. Final plans were agreed to only this past July. The federal government's policies haven't helped much either. In the most recent Bush Administration budget, FEMA intends to spend three of every four dollars of its $3.4 billion in grant funds on anti-terrorism efforts, leaving little for earthquake preparedness. Fearing a New Orleans-like break in California levees, Senator Dianne Feinstein on Sept. 6 urged Congress to appropriate the $90 million it authorized to shore up levees along the Sacramento-San Joaquin Delta. "A major breach in these levees could imperil hundreds of thousands of people and endanger most of the state's water supply," Feinstein wrote.

The good news is, with the feds scaling back, communities are finding ways to fend for themselves. The city of Palo Alto is recruiting more volunteers for its emergency response team. And the state's Office of Emergency Services has increased from 8 to 13 the number of 60-person emergency teams, made up largely of local police, fire, and medical personnel. California companies are also taking the threat seriously. Intel Corp. (INTC ) has built its $2 billion chip-fabrication plant in Santa Clara on giant rollers to withstand a large quake.

Of course, all Californians know that no one is ever completely safe in a big quake. But they're waking up to the fact that they need to do more. Sacramento is spending an estimated $10 billion in hospital retrofits and voters have approved $25 billion in new bonds, partially to help make schools more quake-resistant. Still, the question remains: Will that sum, or any amount, be enough to truly cushion against the Big One when it finally hits?