The recent “discovery” of the giant Bakken oil field, described as the “largest continuous oil accumulation ever assessed by the US Geological Survey,” bodes fundamental changes for western North Dakota and eastern Montana. Lots of people are coming! Western North Dakota now faces a daunting challenge: building infrastructure that supports a new way of life and culture.
Just ask Don Nickell, president and COO of Nakota Development, LLC. The morning Nakota opened their two Value Place extended-stay hotels in Williston in September 2012, “we had people sitting in their cars in the parking lot, waiting for us to open the doors,” said Nickell.
Since then, Williston Value Place hotels have achieved enviable occupancy rates (>95 percent in August). They have also exceeded their competitors’ occupancy % for the past four months, which is a significant achievement given they have 248 rooms versus their competitor’s properties which average only 90-100 rooms.
Nickell is confident more customers are waiting. He’s in good company. Lynn Helms, director of North Dakota’s Department of Mineral Resources, told an audience at the 2012 North Dakota Association of Oil and Gas Producing Counties that western North Dakota can expect about 250,000 additional people settling west of Highway 83 to help produce oil and natural gas.
It’s more than just about oil and gas, however. Housing and lodging are of particular concern. Mike Anderson, director of the North Dakota Housing Finance Agency expects population growth to continue in the state for at least the next 15 to 20 years.
While many thousands of men are today living in temporary man camps, a gaping supply hole remains for those seeking lodging for the many two-to-four-month assignments typical in the Bakken and other shale oil regions. There are thousands of geologists, landsmen, technicians, engineers, field and construction workers and service personnel in need of housing and lodging.
Nakota Development is already two steps ahead in the game; they acquired the Value Place franchise territory rights for North Dakota, Montana, and Wyoming. They promptly built two hotels in Williston and recently completed a third in July in Dickinson. Nakota has also purchased, or acquired options on additional land for future construction. Their construction of another Value Place recently began in Watford City and is expected to open in spring of 2014.
The master plan, according to Nakota CEO Art Cahoon, is to invest an estimated $200 million over the next five years in the development of twenty new extended stay hotels in the Bakken and other developing US shale oil regions. Nakota’s willingness to take the early equity risks and invest millions of their own money to build their first two hotels and complete them on schedule brought Nakota a rare commodity in the Bakken: CREDIBILITY.
Even today, with credit availability increasing, Nakota continues to invest significant equity in each of its hotels. Despite the Bakken’s significant construction and operating challenges, including the scarcity of materials and high labor costs, Nakota has established itself as the gold standard developer and operator in the Bakken. “Current investors, which include all of Nakota’s senior management team, are enjoying very attractive returns on their investment,” said Cahoon.
Value Place is the largest economy extended stay franchise in America. The Value Place Brand comes from the management team that created and developed lodging brands such as Residence Inn (now owned by Marriott), Summerfield Suites (Hyatt) and Candlewood Suites (Intercontinental). In 2011, Value Place was recognized again as a Top 50 Franchise by the Franchise Business Review’s 2011 Franchisee Satisfaction Awards. Value Place was also recognized in USA Today in 2010 as a recession-proof business.
Written by Janelle Holden
In December 2012, 5.19 Sales & Marketing connected communities in Eastern Montana with business leaders looking to launch a first-of-its-kind housing project for oil and gas workers in the Bakken region.
With the guidance of the Eastern Montana Impact Coalition (EMIC) and the commitment of IAP Worldwide Services (IAP), the Eagles Landing Housing Community Project was born.
Just nine months later Sidney, Montana is now home to phase one of Eagles Landing, a state-of-the-art housing facility that includes 339 beds, private rooms, chef-prepared meals, free daily breakfast, a commercial grade laundry facility, housekeeping services, fitness center, 24-hour security and ample parking.
In this interview, Troy Selland of 5.19 Sales & Marketing shares lessons learned from the project and the secret to creating successful business ventures in the Bakken region.
Janelle: “So Troy, how did this project get started?”
Last December, I flew into Wolf Point, Montana with senior leaders from IAP to meet with EMIC executives. With over 60 years of expertise in remote site operations, IAP was looking for a community in the Bakken region in which to build and operate a multi-million dollar workforce housing community.
We toured six sites across Montana and North Dakota. All of them were potentially a good fit for a large-scale project, but the company was impressed by the opportunities that existed in Montana and how the EMIC represented the region.
Janelle: “Who is IAP Worldwide Services and why were they interested in building?”
IAP specializes in providing temporary housing solutions in remote locations around the world. It’s a company that has the capability to build specialized housing solutions in virtually any environment around the world. In the past, they have worked primarily with government agencies and were looking to expand into the private sector.
Janelle: “I’ve heard that Montana has had trouble in the past winning contracts like these. Is that true and if so, what made the difference here?
Montana has historically lost out on similar opportunities to other oil states such as North Dakota and Texas and the field was open to IAP to build anywhere in the world.
In early 2012, EMIC formed to address community challenges in the Bakken region and they welcomed IAP into the community. The coalition wanted to help solve a regional housing shortage that was persistent, challenging and frustrating.
When they met, the coalition members spoke with one clear voice about their visions, challenges and hopes for a region that is roughly the size of the state of New York. This made the difference with IAP as it was clear that an opportunity truly did exist for them in Montana.
Janelle: This project was built in record time and it seems like everyone in the community has been happy with the result. How did that happen?
Good communication and great partners. The coalition worked with the company to ensure that every phase of design, planning and construction would address and resolve the community’s concerns and fit with Montana culture.
As a result, Eagles Landing has become home to more than just oil and gas industry personnel. Current and future residents include county employees, policemen, electricians, and even families.
Janelle: What have you learned about doing business from this project?
When I look at the history of this project, I’m proud of Montana for finding a creative way to work with businesses and solve community challenges in the Bakken. The real secret to the success of the project was combining the visionaries of IAP with the local members of the EMIC. Including community input via the coalition and building local support is the secret for businesses looking for long-term success in Montana’s Bakken region.
Troy Selland is the Founder of 5.19 Sales & Marketing, based in Livingston, Montana. He has over fifteen years of leadership and consulting experience in the commercial airline, ground logistics, and oil and gas sectors. 5.19 Sales and Marketing helps firms of vision find their place, and ultimate success, in today’s unconventional energy industry.
by North Dakota Housing & Finance Agency
“Thanks to North Dakota citizens and our business community, the Housing Incentive Fund is fully capitalized and available to move forward on affordable housing projects in western North Dakota and across the state,” members of the Industrial Commission said in a joint statement. “With legislative approval, we will continue to utilize the Housing Incentive Fund to encourage even greater affordable housing development.”
The Industrial Commission, consisting of Governor Jack Dalrymple as chairman, Agriculture Commissioner Doug Goehring and Attorney General Wayne Stenehjem, oversees the North Dakota Housing Finance Agency, which administers HIF.
Created by the 2011 Legislature, HIF is used to develop affordable multifamily housing. Contributors to the fund receive a dollar-for-dollar state income tax credit for their contributions. Dollars given can be targeted to a specific project or community.
Ninety percent of the contributions were by individuals who contributed an average of $10,021. The largest corporate supporter was Marathon Oil Co., contributing $3 million. Gate City Bank contributed $1.25 million, the most by a financial institution.
“Developer interest in the program was strong from the start, with all of the available financing spoken for in less than a year,” said Mike Anderson, NDHFA executive director.
NDHFA has conditionally committed HIF dollars to 26 projects to create 739 new units in Beach, Belfield, Bowman, Crosby, Devils Lake, Dickinson, Grand Forks, Kenmare, Killdeer, Kulm, Mandan, Minot, Parshall, Ray, Watford City and Williston. Total construction cost for the projects is $104 million.
“Our greatest challenge was getting the word to taxpayers that they could direct their tax dollars to affordable housing development,” said Anderson. “We are grateful for assistance from our housing partners, business groups and the media in reaching this goal.”
Governor Dalrymple has proposed transferring $30 million from the state general fund for direct investment in HIF for the 2013-15 biennium. An additional $20 million in tax credits would bring the total fund to $50 million. The proposed legislation has been pre-filed as House Bill 1029.
For more information on HIF, contact NDHFA at (701) 328-8080, (800) 292-8621 orwww.ndhousingincentivefund.org.
Posted on 1/3/2013. Retrieved January 10, 2013.