On the Road

Postflood reconstruction is a story of struggle and ingenuity

The red river flows north along a curving path between the downtowns of Grand Forks, N. Dak., and East Grand Forks, Minn. This past winter the river was tame, frozen and tucked well within its banks, lacking the ferocity to turn a population of 60,000 into refugees. That's just what happened in April 1997, when the river, gorged with snowmelt, spilled over the cities' reinforced dikes and overwhelmed the Grand Forks area.

As spring approached this year, businesspeople in Grand Forks were still taking stock of lost sales and the devastation to their property. Yet they had reason to be thankful. The vast majority of businesses were back in operation, and some of them have reaped some surprising benefits. (See "Some Blessings") But the flood was no blessing in disguise; it has exacted a tremendous cost. It has left most small-business owners strained and weary and saddled with new, burdensome debt. For virtually everyone--all the Noahs of Grand Forks--struggle and ingenuity have been the currency of survival.

For two of them, banker Randy Newman and baker MaryAnn Hastings, the flood brought profound changes to their lives and businesses--but with very different outcomes. For one the striving has paid off. The other is still striving.

Newman's story begins more than a year ago, on Friday, April 18, when water first topped the dikes protecting downtown, where First National Bank North Dakota was headquartered. Newman, the bank president and CEO, fully expected the downtown to flood, but what happened the next day was beyond everyone's imagination. A fire, likely caused by an electrical malfunction, started Saturday afternoon in a downtown building and quickly spread. It destroyed 11 buildings, 3 of which housed the bank's offices.

As he sandbagged his house and the National Guard evacuated the city, Newman scrambled to reach the bank's senior managers by cell phone. "It felt like a war zone," he says, recalling the smoke and rescue helicopters that filled the sky. "I thought I had lost my home, I knew I had lost my bank, and I thought I had lost my community. I felt like there had been three deaths in the family. That's how emotional it was."

If matters seemed dire to the 44-year-old North Dakota native, they could have been worse. As it turned out, he hadn't lost his house, although he and his family had to move out of it for two weeks. And on the Friday night the waters had closed in, three bank employees managed to truck the bank's central computer system to a branch office in Fargo, 78 miles south. Nobody had anticipated the fire. But the employees had feared that the flood might undermine telecommunications in Grand Forks, paralyzing the bank's computer network. By Saturday night First National's headquarters had gone up in smoke, but its electronic brain was safe and functioning in Fargo.

Newman put the word out on the radio that First National employees, who had scattered to emergency shelters and other locations outside Grand Forks, should call Fargo for instructions. First National temporarily relocated much of its operations and support staff to Fargo. Newman directed his sales and customer-relations staff, who had laptop computers, to begin calling and reassuring customers. "They were using their cell phones, calling businesses, saying, 'How are you doing? How can we restructure your mortgage so your payment doesn't put an additional financial burden on you?" he says.

Since that time, bank officials say, the necessity of working without a home base has actually improved operations. First National's customer-relations staff has learned to rely on house calls, which proved to be more convenient for customers and more effective for the bank in gathering information. "We'd been talking for probably a year to a year and a half about needing to be more mobile and go to the customers," says Karl Bollingberg, the bank's market manager for Grand Forks. "But it almost took the disaster to force it to happen."

While awaiting relocation into new downtown headquarters--the bank's temporary offices are in a converted warehouse--First National is slowly reconstituting thousands of vital records such as mortgages, titles, and personal guarantees consumed by the fire. On its bottom line First National looks surprisingly flush. It collected $17 million in a settlement with its fire-insurance company. Earnings in 1997 increased by 68%, reflecting a capital gain realized because the insurance paid a replacement value for its depreciated buildings.

Looking back at the flood, Newman sounds almost wistful. "It's been said that the ideal bank is a paperless bank with a mobile sales force," he says. "We did that in one day." Those gains, he says, he is determined to preserve.

If proximity to the river alone determined fate, it would seem that MaryAnn Hastings, 40, had less to lose from the flood than Randy Newman did. Her bakery, Beary Best (named for the bear costumes that she and her sister used to wear when onstage with their mother, a former country-and-western singer), is on South Washington Street more than a mile southwest of downtown and fairly far from the Red River.

Washington Street is a commercial strip that runs north-to-south down the middle of Grand Forks, and engineers constructed a temporary sand-filled dike there in an attempt to contain the flood. The dike didn't prevent water from entering the west end of town, and virtually first in its path was Hastings's one-story storefront. All told, she got 10 inches of water inside Beary Best.

Hastings was evacuated on April 20 to a nearby air-force base, where the Red Cross had set up cots for thousands of refugees. She returned to Grand Forks the first week of May, hired a cleaning crew and an electrician to fix up her shop, and arranged for suppliers to replace spoiled food stocks.

But while she desperately wanted to reopen in early May, normally her best month because of the many cake orders she receives for high school graduations and for weddings, she had to wait until the Army Corps of Engineers had dismantled the dike in front of her store. "I was closed down for 54 days," she says, bristling. "My sales for the month of May alone are usually sixty thousand bucks. I lost that entire month."

Hastings says the effects of the flood have cost her customers. The shutdown of two nearby schools has ended her business from a steady stream of kids and parents, and an East Grand Forks restaurant ("my cheesecake account," she calls it) has been slow to reopen, to mention just two examples. Now she lists her mounting debts in a grim litany: $20,000 owed to the city on an inventory loan to buy flour and other supplies, $23,000 to the federal Small Business Administration on an equipment and operations loan, and $215,000 to the former owner of her building. Her debt service is eating $4,200 a month. She is falling behind and, reluctantly, has put her business up for sale.

At times her bitterness spills over. At public meetings she has vented her emotions. She has criticized the city for concentrating its redevelopment money on the downtown rather than in her neighborhood. "I'm frustrated. I'm angry. I'm upset. I'm disgusted," she says. "But every day I come in and tell myself there's got to be an angel somewhere, a positive person who can tell me how I can save what I started seven years ago."

Tom Fudge is a freelance writer based in Minneapolis.

After the Flood: Some Blessings

Before the flood of 1997 Kim Holmes had sworn that he would never locate a restaurant in a strip mall. But when the swollen Red River wrecked the historic downtown building housing his tony bistro, called Sanders, he had to find another location in Grand Forks. "And lo and behold, I'm in the south end of town in a strip mall with Sanders and doing great business," he says. "Most people have said, 'We don't want to hurt your feelings, Kim, but we like this place better.' It's closer to their homes. The south-end store has turned out to be a real godsend."

For many Grand Forks businesspeople like Holmes, the flood has had its upside. Take, for instance, Greg Schneider, the owner of Dakota TV and Appliance. During the flood he had to wade into his riverside store to save his computer, floating it eight blocks away to dry land in a freezer that he had jury-rigged into a boat. But 13 days later Schneider was set up in a temporary location two miles from downtown, receiving up to five truckloads a day of goods like washers and dryers to meet customers' demands to replace large appliances ruined in the flood. He did a year's worth of business in three months.

The flood forced Terry Knudson's Ski & Bike Shop out of its spacious downtown store into a much smaller space in a strip mall. Knudson had to revamp his operations to achieve faster inventory turnover, which boosted his cash flow. He was unusually busy dealing with suppliers and lenders, so he learned to delegate more tasks to his employees, who he says have savored the responsibility.

The flood's Darwinian effect of winnowing out bars and hangouts apparently has shifted business to Jon Bonzer, owner of Bonzer's Restaurant. And, like hundreds of the city's surviving companies, the restaurant benefited from a low-interest federal loan--money, in Bonzer's case, to relocate and enlarge his facilities.