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July 2012

Build, Baby, Build Developers scramble to meet housing needs in oil patch

pg. 24

ALSO Planning, Permitting and Patience Commercial construction pace has intensified in western N.D.

pg. 28

Intelligent Abode Sophisticated software controls various features in $1.3 million home

pg. 32 www.prairiebizmag.com


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an an oceanographer in the middle of the North American continent find happiness studying a flooding freshwater lake in landlocked North Dakota? “Yes,” says Dr. Xiaodong Zhang, an associate professor in earth systems science and policy at the University of North Dakota. While Zhang continues to study oceans, these days much of his work focuses on the expansion of Devils Lake 90 miles west of Grand Forks and the seemingly intractable problems it’s created. The lake has risen nearly 32 feet since 1993, increasing in volume by seven times and in area by nearly five times (261 square miles). It has inundated prime farmland, forced towns to relocate, and required government to spend more than $1 billion on flood mitigation projects. “When I looked at doing research,” Zhang said, “I found that much of the

current research lacks a rigorous study of the hydrological properties of not only the lake, but also of the entire Devils Lake Basin. “We developed a hydrological model to study the rainfall and the runoff of the entire basin, instead of just the lake itself,” he explained. “We combined that model with NASA data and future climate predictions to see what the future looks like for Devils Lake. If the lake is still rising, how high will it go?” While Devils Lake is considered a freshwater body, its water is relatively salty because it’s a terminal lake, which means that water flowing into the lake normally has no natural outlet. Evaporation causes the salts to concentrate, which makes the lake more saline than water in the surrounding environment. “The salinity level is quite stable and doesn’t change very much,” Zhang said. “It’s about four parts per thousand…. In comparison, ocean water is about 35 parts per thousand.”

When Zhang came to UND in 2002, he wanted students in his class on hydrological cycles to understand how their lessons could be applied to everyday issues. Devils Lake was a natural fit. In September under a NASA-funded project to monitor the lake’s water quality, Zhang and his students — such as doctoral student Kate OvermoeKenninger, who’s family spent time in the Devils Lake area — deployed a buoy that continuously measures water temperature, salinity, turbidity (cloudiness or muddiness), dissolved oxygen level and chlorophyll concentration, in addition to weather information. The buoy was placed in Stump Lake, which Devils Lake drains into. “By monitoring water quality, we hope to have a better understanding of how it’s changing and what factors could cause that change,” he said. “We’ll better understand how the quality of water changes in response to the weather and long-term climactic changes.”


|INSIDE| JULY ISSUE 2012 VOL 13 ISSUE 7

FEATURES

DEPARTMENTS 6 Editor’s Note BY ALAN VAN ORMER

Construction out west is overwhelming 8 Business Advice BY MATTHEW D. MOHR

Develop a creative business atmosphere 10 Finance BY CURT EVERSON

Local leaders can chart new courses for communities 12 Research & Technology BY DELORE ZIMMERMAN

Boosting economic performance through education 14 Economic Development BY SARA OTTE COLEMAN

24

Tourism: a growing industry in N.D.

HOUSING

Housing Key to Development

16 Prairie News

Western N.D. communities doubling in size to meet needs

28

BY ALAN VAN ORMER

20 Prairie People

CONSTRUCTION

22 Business Development

Building Boom in the Oil Patch

BY ALAN VAN ORMER

Targeting the finance industry

Building permits increasing at record-breaking pace 34 Red River Valley

BY ALAN VAN ORMER

BY ALAN VAN ORMER

32

Chamber award geared to young professionals

TECHNOLOGY

Smart Home iPads, iPhones, iPod control $1.3 million Moorhead, Minn., home

36 South Dakota BY ALAN VAN ORMER

BY ALAN VAN ORMER

Building a stronger workforce 38 Western North Dakota BY ALAN VAN ORMER

Minot port to expand 40 Energy 46 Business to Business

4

On the Cover

Next Month

Shane Roers, president of ConstructionRoers West in Dickinson, N.D., studies the blueprints for a housing complex in the community. Housing is a major issue in western North Dakota and Roers Development Inc. is helping alleviate the housing problem in Dickinson. To date, they have built 250-unit apartments and have plans for 250 multi-family and 250 single family homes on 170 acres. PHOTO: ALAN VAN ORMER

In August, Prairie Business magazine will look at how company’s research and technology needs are changing by using universities and their assets to give them a business edge. In addition, Prairie Business magazine will look at popular degrees in community colleges and technical schools that students are focusing on and what new degrees are being added to meet the region’s workforce needs. Finally, fracking technology is a big reason why western North Dakota is becoming what it is today. Prairie Business will speak to companies that are doing this new technology, interview those who developed the technology and find out how our education system is preparing young people to work with this new technology.

Prairie Business Magazine July 2012

On the air Join Prairie Business magazine Editor Alan Van Ormer on Tuesday, July 10, at 3 p.m. on any Prairie Public radio station to hear more about construction in the region. To listen to Prairie Public, visit www.prairiepublic.org/radio/hear-it-now.


|EDITOR’S NOTE|

Construction out west is overwhelming ALAN VAN ORMER Editor avanormer@prairiebizmag.com

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or two days I traveled around Dickinson, Watford City and Williston to get a sense of what is happening with construction in that area of western North Dakota for our main stories in Prairie Business magazine this month. It doesn’t matter if you have two days or two months or two years, you just can’t get a grasp of all that is happening with just the construction part of the oil play. Building permits are skyrocketing. There aren’t enough houses for those looking for jobs. If there is a house for sale, you had better have cash in hand or you will lose it. During my interviews, one person told me if there is a house open it sells in two hours. Before the boom it might take two years. Another told me that even though there are many apartments being built you don’t know about it because they are rented before the job is even done. There are hotels, houses, commercial buildings and apartments, but not a lot of retail construction. Some believe that retail development is the next step in the evolution of what is happening there in the construction industry. Communities are annexing land, which will double their size in just a year. Above is just a glimpse of what is happening in the construction industry in western North Dakota. Inside this issue are two stories that discuss what it is like to be living in three cities that are in continuous construction mode and some of the challenges that are occurring with all the buildings going up. The main story specifically discusses the housing industry. Everyone I talked to about this issue believes that nothing can occur without adequate housing. There can be no workforce if there is no place for them to live. Retail cannot develop again if there is no place to live. The second piece is about what is happening in Williston, Watford City and Dickinson pertaining to building permits, annexation, commercial buildings and hotels, as well as the challenges that face builders and communities that are trying to keep up with the fantastic growth that is occurring. So turn the pages and get started reading this month’s issue. These two stories are only giving you a snapshot of what is occurring in western North Dakota. Stay tuned.

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Prairie Business Magazine July 2012


An SBA Award Winning Publication

MIKE JACOBS, Publisher ALANVAN ORMER, Editor TINA FETSCH, Production Manager BETH BOHLMAN, Circulation Manager JEN BRAATEN, Marketing Manager JOE GREENWOOD, Multi-Media Consultant KRISWOLFF, Layout Design, Ad Design Sales Director: JOHN FETSCH - eastern ND/MN/eastern SD 701.212.1026 jfetsch@prairiebizmag.com Sales:

BRAD BOYD - western ND/western SD 800.641.0683 bboyd@prairiebizmag.com SHELLY LARSON - eastern ND/western MN 701.212.1026 slarson@prairiebizmag.com Editor: ALAN VAN ORMER 701.371.9578 avanormer@prairiebizmag.com Editorial Advisors: Dwaine Chapel, Executive Director, South Dakota State University Innovation Campus; Bruce Gjovig, Director, Center for Innovation; Lisa Gulland-Nelson, Communications Coordinator, Greater Fargo Moorhead EDC; Tonya Joe (T.J.) Hansen, Assistant Professor of Economics, Minnesota State University Moorhead; Dusty Johnson, Chief of Staff for South Dakota Gov. Dennis Daugaard’s office; Brekka Kramer, General Manager of Odney; Matthew Mohr, President/CEO, Dacotah Paper Company; Nancy Straw, President, West Central Initiative Prairie Business magazine is published monthly by the Grand Forks Hearld and Forum Communications Company with offices at 375 2nd Avenue North, Grand Forks, ND 58203. Qualifying subscriptions are available free of charge. Back issue quantities are limited and subject to availability ($2/copy prepaid). The opinions of writers featured in Prairie Business are their own. Unsolicited manuscripts, photographs, artwork are encouraged but will not be returned without a self-addressed, stamped envelope.

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|BUSINESS ADVICE|

Develop a creative business atmosphere BY MATTHEW D. MOHR any successful businesses have started as a result of the creative vision of the initial owner. Countless opportunities have been discovered by “finding a need and filling it.” As time elapses, a business owner must continually look for and find new needs in the marketplace. Serving the same customers in the same market area the same way rarely will provide enough revenue to allow an entity to grow or even survive over time. The United States patent and copyright laws protect inventors and those with creative ability. Unfortunately, foreign competitors often disregard our laws and attack markets in unfair ways. Patented or not, creative business owners become successful by serving customers better, efficiently, with better products or in ways others cannot. Sometimes an entrepreneur has difficulty discovering new and different ways to grow. These times are frustrating. The enterprise seems to“hit a wall.”During these times

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of low creativity, the entrepreneur can become frustrated at what is a normal course of events for most businesses. Although short periods of a lack of creativity are normal, during these times the successful entrepreneur will reach out to others, look to customers for ideas, engage in discussions with other business owners or do whatever helps to add to a positive outlook. W. Clemet Stone, a motivational writer from the mid1900s, developed and encouraged his followers to form a group to discuss issues and become a “master mind group” for those who strive for success. Bringing a group together to theorize and explore ideas can be a healthy way to enhance business along with individual creativity as long as the group is dedicated to helping one another and honest success. New ideas, people, markets and ways of serving customers are great ways to grow and prosper. All take creativity. PB Matthew D. Mohr CEO, Dacotah Paper Co. mmohr@dacotahpaper.com

Prairie Engineering, P.C. recognizes the importance of energy conservation and environmental friendly construction practices and continues to be a leader in designing energy efficient mechanical and electrical systems. Innovative energy design is incorporated in all types of design including business, institutional, industrial, and educational facilities. Prairie Engineering, P.C. utilizes modeling software to design efficient lighting systems, geothermal well systems and ventilation heat recovery systems. Prairie Engineering, P.C. maintains an active membership with the US Green Building Council regularly attends energy conservation programs. • Geothermal Well Field Systems • Water to Water Heat Pump Systems • Heat Pump Hybrid Systems • Variable Flow Pumping Systems • Domestic Water Heat Pump Preheat • High Efficient Heating Systems • Heat Recovery Ventilation Systems • Energy Efficient Lighting Systems Randy J. Axvig, P.E., LEED AP, Mechanical Engineer Jeremy J. Butman, P.E. Electrical Engineer 619 Riverwood Drive, Suite 205 Bismarck, ND 58504-4304 Phone: (701) 258-3493 prengbis@btinet.net

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Prairie Business Magazine July 2012

Lon E. Drevecky, P.E. Mechanical Engineer Jason L. Hunze, P.E. Electrical Engineer 720 Western Avenue, Suite 204 Minot, ND 58701-3700 Phone: (701) 852-6363 peminot@prengr.net


www.prairiebizmag.com

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|FINANCE|

Local leaders can chart new courses for communities BY CURT EVERSON

uring my time at the helm of the South Dakota Bankers Association, I have been privileged to meet hundreds of bankers who work in banks of all sizes in communities large and small. But even with all of that diversity, they have one thing in common: they are highly motivated, eternal optimists who care deeply about the success of their customers and their community. They are servant leaders at heart. So, let’s think a bit more about leadership, especially in rural America. Communities in the rural areas of America’s heartland have faced a fundamental economic develop-

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ment dilemma for decades: “How Ya Gonna Keep ‘Em Down On The Farm, Once They Seen Paree?” More clearly stated what will it take to encourage the bright, ambitious young adults of today to stay home or come back home to be the leaders of tomorrow in our rural communities? At the SDBA’s recent Ag and Commercial Credit Conference, a sociology professor at the South Dakota School of Mines and Technology in Rapid City, Sid Goss, gave a presentation titled “The Impact of South Dakota’s Population Changes and the State’s Future Workforce.” Goss admits that there may

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Prairie Business Magazine July 2012

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be a few vocations in life more exciting than tracking changes in the ages of people on a city-by-city or county-by-county basis within a state of 824,000 people. But despite the inherent dryness of the subject, I can tell you that the bankers in the room were interested in what Goss had to say. Why? Those community leaders recognized that the demographic makeup of their local trade area has important implications for their community’s future. Should local leaders be planning to build a new school or gymnasium or should they be talking with the medical community about the construction of an assisted living center or additional nursing home beds? Depopulation has been the norm throughout much of America’s heartland for decades. Outmigration of young men and women is the primary culprit. Larger towns and cities have benefited as young people moved away from farms and rural towns in search of employment and social opportunities thought to be lacking in rural America. Today’s rural community leaders are faced with two choices: do nothing and watch history repeat itself or commit to do the hard work required to chart a new economic and demographic course for their community.Young people considering a lifetime in a smaller, rural community have a fairly common set of desires: vibrant local commerce, sound education system, cultural and recreational opportunities and access to basic health care services. Government agencies and programs by themselves cannot meet all of those needs. Local optimists with a fire in their belly; bankers, business men and women, health care professionals, lawyers, teachers, preachers, judges and government officials can turn the demographic tide in a different direction. It’s all about optimistic local leadership. PB Curt Everson President, South Dakota Bankers Association 605-224-1653, ceverson@sdba.com

www.prairiebizmag.com

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|RESEARCH & TECHNOLOGY|

Boosting economic performance through education BY DELORE ZIMMERMAN

t’s no secret that universities and colleges are playing a growing role as engines of innovation, productivity and economic vitality. Universities and colleges educate students for careers, train workers, prepare and support people for entrepreneurial pursuits and perform research and development with technology and business innovators. These science, technology and training (STT) activities are recognized throughout the world as a potent recipe for creating higher-value economic opportunities and higher-paying jobs. The Red River Valley Research Corridor was launched in 2002 and championed by former U.S. Sen. Byron Dorgan, D-N.D., to use our universities and colleges to build world-class research centers, provide skills training in emerging industries and work closely with technology businesses to create new opportunities.

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The research corridor also catalyzes relationships between the local “triple helix” of business, government and higher education and with partners from outside the region. More than 20 action summits have helped bring together researchers, policymakers, academics, business innovators and development professionals to showcase the research and development enterprise within the state and region and develop strategies and partnerships for advancing science and technology-based development in the region. While we have made strides on many fronts there is still much more work to be done. The global competition is intensifying as other regions around the world take bold steps to create 21st century opportunities. So, here are four key steps we can take: ■ Align even more closely our education, training

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Prairie Business Magazine July 2012


and research capabilities to fit the needs of the robust sectors of our region’s economy. ■ Improve our capability to deploy teams for cuttingedge research, development and commercialization involving the region’s research and training centers, technology innovators, investors, national laboratories, and federal agencies and research centers. ■ Raise the national and international profile of the region as a tech-based research, business and career center by implementing outreach initiatives that tell the compelling story of our strong and vibrant economy. A goal should be to create partnerships with science and technology hubs in other countries. ■ Put the integrated funding and programs in place to invest in research, development, demonstration and commercialization activities that will foster new ideas, generate start-up companies and help existing companies to expand. Ohio’s Third Frontier initiative is an example to be considered in this regard. Created in 2002, the Ohio Third Frontier is an unprecedented commitment to create new technology-based products, companies, industries and jobs. The $2.3 billion initiative provides funding for open innovation, entrepreneurial support, value chain development and expansion of a skilled talent pool that can support technology-based economic growth. The Ohio Third Frontier’s strategic intent is to cre-

ate an “innovation ecosystem” that supports the efficient and seamless transition of great ideas from the laboratory to the marketplace. The research corridor, along with North Dakota’s Centers of Excellence program and the state’s longstanding commitment to higher education have positioned North Dakota as a leader in research and development and created a business environment that is highly conducive to starting and building a technology company. By taking these steps we can build on the proven capabilities of our universities, colleges and the strong “brand power” of the research corridor to foster more innovation and investment. This will create new opportunities that will benefit all sectors of the economy and people in every corner of the region. PB Delore Zimmerman President, Praxis Strategy Group Executive Director, Red River Valley Research Corridor 701-330-6802, delore@praxissg.com

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|ECONOMIC DEVELOPMENT|

Tourism: a growing industry in N.D. BY SARA OTTE COLEMAN

ourism is a powerful industry and benefits the economies of all 53 North Dakota counties. Tourism generated $4.6 billion in nonresident spending in 2010 — the third-largest industry behind agriculture and oil. Travel and tourism is also one of North Dakota’s largest employers. The industry supports more than 32,000 jobs with an estimated $760 million in wages and salaries. It currently supports in excess of 860 accommodations, 640 attractions and 370 annual events. These numbers are constantly growing. North Dakota bested the nation in growth of travel spending, travel tax receipts, travel employment

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and travel payroll from 2008 to 2009. The hotel occupancy also grew in North Dakota to 74.7 percent in 2011, 14 percent above the national average. This summer, I encourage all the readers of Prairie Business to venture out and see what’s new in North Dakota. If you are a resident of the state, you have double the pleasure of enjoying our state’s diverse vacation opportunities and also serving as a fantastic host to out-of-state visitors. Venture throughout the state and rediscover treasures you haven’t seen lately like the Enchanted Highway, the Bagg Bonanza Farm or the North Dakota Badlands. Or create new family traditions like camping at any of our wonderful state

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parks, canoeing the Pembina Gorge or shopping and dining in our vibrant downtowns. Thanks to the state’s strong economy, many new people now call North Dakota home. If you’re new to North Dakota, welcome. You may be surprised by all the great attractions or events near you. Celebrate our patriotism and heritage at a family friendly community-wide festival. Hike the many trails that crisscross the state, or discover North Dakota’s quirky side by checking out our larger-than-life roadside attractions. And, of course, it wouldn’t be a North Dakota summer without experiencing a rodeo or powwow. Every part of the state, including those recovering from last year’s flooding, has so much to offer. And no

matter where in North Dakota you vacation, your travel plans can be accommodated. So hit the road this summer. An amazing array of activities and adventures await you in North Dakota. Visit NDtourism.com for ideas, tips and event listings. With our online trip planner, you can create a big tour of the state or several mini-trips, whatever fits your schedule. Get out there and enjoy. PB Sara Otte Coleman Director, North Dakota Tourism 701-328-2525, socoleman@nd.gov


Prairie News

Industry News & Trends

Marking the one-year milestone of the devastating May 2011 tornado that struck Joplin, Mo., national equipment manufacturers Kubota Tractor Corp. and Vermeer Corp., two companies that supply equipment in the three-state region, along with support from the Immanuel Lutheran Church of Joplin, planted more than 90 oak, maple and locust trees in neighborhoods hit hardest by the storm. The community beautification effort represents a step toward restoring the landscape to its original beauty and revitalizing the hope of its residents. PHOTO COURTESY OF TRACY TIERNEY, KUBOTA TRACTOR CORP.

NDSU receives research award from Navy A North Dakota State University research team is receiving $480,000 in a competitive grant award from the Office of Naval Research for research on coatings for ship hulls. In addition, scientists and engineers at NDSU’s Center for Nanoscale Science and Engineering and three Centers of Excellence at NDSU are receiving $1.4 million in sponsored research and competitive grant awards from global companies such as Triton Systems, PPG Industries, Starkey Laboratories and other organizations for research in coatings and microelectronics. Additional federal funds from the National Institute of Standards and Technology, a nonregulatory federal agency within the U.S. Department of Commerce and Centers of Excellence enhancement funding has been awarded to NDSU to add laboratory space. Construction of the additional laboratory space is expected to begin in early May of 2012 and be completed in the third quarter of 2013. The addition is funded through a federal $5 million construction award received 16 Prairie Business Magazine July 2012

from the National Institute of Standards and Technology and a $4 million enhancement award from the North Dakota Economic Development Centers of Excellence Program. The COE Commission approved the award in 2009. Additional labs will be connected to the south of the existing Research 1 building.

base, the facility will allow the company adequate space and staff for improved and timely service. When the project is complete, seven new jobs will be created at the Ashley dealership. Green Iron Equipment is an authorized John Deere dealership with six stores in North Dakota and South Dakota.

USDA, KEM Electric fund equipment dealership expansion

Custom Touch Homes expanding

USDA Rural Development selected KEM Electric Cooperative Inc. to receive a $740,000 loan through the Rural Economic Development Loan program. KEM Electric will use the financing to provide a loan to LaMoure Equipment Inc. d.b.a. Green Iron Equipment to construct a new building for its farm equipment dealership inAshley,N.D.The total project cost is estimated at $1.1 million. Currently, Green Iron Equipment operates out of four structures with two of those buildings being small service shops that cannot accommodate large farm machinery. The new building will improve efficiency by keeping all areas of operation, sales, parts and service under one roof. With a growing customer

Custom Touch Homes in Madison, S.D., is adding 48,000 square feet of production space, 2,000 square feet of office space and is doubling the company’s production capacity. Custom Touch Homes obtained a $720,000 Revolving Economic Development & Initiative (REDI) Fund loan from the Governor’s Office of Economic Development to assist in the $2.6 million expansion. The company builds complete custom homes inside the plant. The indoor setting allows homes to be built without time delays or with materials that have been weathered by the elements. All Custom Touch Homes are Energy Star rated. Custom Touch Homes has been a part of


|PRAIRIE NEWS| Sanford Health constructing sports facility Sanford Health is constructing a multi-use sports facility which will be the epicenter for a new sports complex in Sioux Falls, S.D. The Pentagon by Sanford Health is a 160,000-squarefoot facility that will include nine basketball courts. While theentirefacilityfeaturesmoderndesignandamenities,the heritage court located in the center of the building is a premium NBA and college size court with design inspiration reminiscent of 1950s and 1960s basketball. Floor space can be transitioned from basketball to accommodate 11 volleyball courts and also wrestling and cheer and dance events. The facility is focused on athletics, but will also serve other community needs. The Pentagon will be the epicenter of the Sanford Sports Complex. The 162-acre complex will be the home for Sioux Falls Junior Football league, Sioux Falls Tennis, Sioux Falls ICE and the DakotaAlliance Soccer Club which will operate from the Sanford Fieldhouse. Construction of the fieldhouse is already underway, which will also provide a state-of-the-art facility for the sports community in the region.

the Madison community since 1996, and contracts with a number of local companies including Montgomery’s Furniture, Rosebud Manufacturing, Dakota Fixture and Cabinet, Timmer Supply,Homestead Do It Center and others for floor coverings, furnishings, countertops and building materials.

Offutt School of Business receives $1 million The Concordia College, Moorhead, Minn., Offutt School of Business has received a $1 million gift from William C. Marcil and Jane Black Marcil. The gift will be used in the repurposing of Grant Center to house the Offutt School of Business. The atrium of the renovated structure will be named in recognition of the Marcils. William C. Marcil is the chairman of the board of Forum Communications Co., a multimedia organization and the parent company for several newspapers, radio and television stations, printing companies and an interactive media service. The Marcils have supported Concordia’s C-400 initiatives, its journalism program and the Concordia Language Village, El Lago del

Sanford Health is constructing a multi-use sports facility which will be the epicenter for a new sports complex in Sioux Falls, S.D. PHOTO COURTESY OF SANFORD HEALTH

Bosque, the Spanish Language Village.

Expansion for Minot AFB facility funded The U.S. Senate Appropriations Subcommittee on Military Construction has approved a $4.6 million project to modify and expand the Munitions Aero-space Ground Equipment (AGE) Facility at the Minot, N.D., Air Force Base. The facility houses maintenance operations for the trailers Minot’s B-52 squadrons use to transport Air Launched Cruise Missiles.The current facility is undersized and demands for trailer maintenance will grow with the stand-up of the new B-52 squadron. The project will enlarge the facility and make a number of enhancements, including overhead crane hoists and hook-ups for generators required to run specialized maintenance equipment. The project also includes conditioned air to allow for year-round maintenance operations.

Fargo, Bismarck business leaders honored

Fargo, N.D.,-based Warner and Co. Insurance, his sister Denise Magness, and niece Jessica Magness were named the 2012 National Jeffrey Butland Family Owned Business of theYear by the U.S.Small Business Administration. Denise serves as executive vice president and chief operating officer of the company and niece Jessica began working at Warner and Co. Insurance in 2010, making her the third generation of Hayers to work with the family-owned business. Heather Jones, president of Bismarck, N.D.,-based City Air Mechanical Inc., was named SBA’s 2012 North Dakota Small Business Person of the Year. Hayer, his family and Heather Jones accepted their awards during the SBA’s National Small Business Week events held in Washington, D.C., in conjunction with the annual observance of National Small Business Week. The SBA has hosted this annual conference since 1963 as a vehicle to recognize outstanding American entrepreneurs and small business owners.

Brian Hayer, president and CEO of the www.prairiebizmag.com

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|PRAIRIE NEWS| Heritage Homes Dream Big winner At America’s Small Business Summit, the U.S. Chamber of Commerce presented Heritage Homes with the 2012 Dream Big Small Business of the Year Award, sponsored by Sam’s Club. The award honors the Fargo, N.D.,-based home construction company for showcasing exemplary business practices in the areas of staff training and motivation, community involvement, customer service and business strategy. Founded in 1995 in Fargo, Heritage Homes designs and constructs homes to positively impact people’s lives. CEO and owner Daryl Braham and president and owner Tyrone Leslie took control of the company in 2000 and grew from building three homes in 1995 to more than 50 homes in 2011. Under Braham and Leslie’s leadership, Heritage Homes has become an award-winning company, distinguished within the homebuilder’s industry. Heritage Homes is an active corporate citizen, offering goods and services to ABC’s Extreme Makeover: Home Edition, FargoMoorhead Home Builders Association, Habitat for Humanity, local churches and numerous other organizations.

United Airlines to serve Grand Forks United Airlines officials have confirmed plans to begin offering flights from Grand Forks (N.D.) International Airport

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Prairie Business Magazine July 2012

to Denver. A launch date, flight schedules and other details will be made available soon. Forthreeyearsrunning,theGrandForksairporthassetrecords for passenger boardings, and United Airlines service will further complement the airport’s new passenger terminal capabilities. Among North Dakota’s four largest airports, Grand Forks International is the only one that does not currently provide a daily, direct flight to Denver. Delta Airlines provides six daily, 50passener flights between Grand Forks and Minneapolis. Allegiant Air’s standard flight schedule provides for two, 150-seat flights each week to Las Vegas, Phoenix and Orlando.

FMWF chamber among top three in the U.S. The Fargo Moorhead West Fargo Chamber of Commerce has been named a finalist for the 2012 Chamber of theYear Award program put on by the American Chamber of Commerce Executives. Only 10 chambers in the nation received this honor. The FMWF represents Fargo and West Fargo in North Dakota and Moorhead, Minn. The designation qualifies the chamber as a candidate for the ACCE’s Chamber of the Year Award, which recognizes up to four chambers (one per category) nationwide for excellence in operations, member services and community leadership. The FMWF chamber is one of only three chambers of its size to be chosen as


|PRAIRIE NEWS| a finalist. The ACCE Chamber of the Year competition requires each chamber to assess their organizational performance over the past year as well as articulate how its work has built strong and vibrant businesses and communities.The chamber highlighted its Business After Hours bi-monthly networking event, which often draws more than 500 people, and the 2011 State of Energy: The Next Generation of Jobs in North Dakota, which highlighted the state’s growing energy needs. The chamber was also awarded a bronze award for communications excellence by the ACCE for the State of Energy: The Next Generation of Jobs in North Dakota. The Chamber submitted the event in the category of campaigns and programs.

FS Engineering and Widseth Smith Nolting merge East Grand Forks, Minn.-based civil engineering and land surveying firm FS Engineering has merged with Widseth Smith Nolting. The combined companies are operating under the Widseth Smith Nolting banner, effectively doubling the firm’s footprint in the Greater Grand Forks area. It is now Widseth Smith Nolting’s eighth location. Widseth Smith Nolting is a multidisciplined firm that pro-

vides architecture, civil, structural, mechanical, and electrical engineering, land surveying, environmental services, water resources and funding development to public and private clients throughout the upper Midwest. In addition to Grand Forks, N.D., and East Grand Forks, the firm maintains offices in the Minnesota communities of Alexandria, Baxter, Brainerd, Bemidji, Crookston, Red Wing and Rochester.

Sanford Health breaks ground on TRF medical center Sanford Health has broken ground for the new Sanford Thief River Falls Medical Center. The 137,000-square-foot medical center will centralize care for patients, with clinic and hospital services conveniently located on one medical campus. Mortenson and Nor-Son Inc. have been named the general contractors for the $60 million construction project, which is expected to be complete by fall 2014. The project includes the building of a new, 25-bed critical access hospital with birthing units, intensive care beds, emergency rooms and operating rooms. Services include dialysis, behavioral health, chemotherapy, radiology, surgery, lab, family medicine, obstetrics and gynecology, pediatrics, cardiac rehabilitation and nutrition.

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|PRAIRIE PEOPLE| New MSCTC president takes over

Peggy Kennedy

The Minnesota State Colleges and Universities Board of Trustees has appointed Peggy Kennedy as president of Minnesota State Community and Technical College, which has campuses in Detroit Lakes, Fergus Falls, Moorhead and Wadena. Kennedy has served as interim president of the college since July 1, 2011. Previously, she served as a vice president of academic affairs and student development and dean for business and general education programs at Saint Paul College.

Wood named UMC chancellor

Fred E. Wood

AE2S names Sorenson regional manager

Russ Sorenson

Advanced Engineering and Environmental Services Inc. (AE2S) has named Russ Sorenson as regional manager for the western Dakotas. He will oversee the operations of AE2S’ Bismarck, Minot, Dickinson, Watford City and Williston offices serving clients in North Dakota and South Dakota. Sorenson will work with each office’s operations manager to oversee staffing, workload, business development, strategic planning and client advocacy. He will also help coordinate project execution and the delivery of professional services throughout the region.

Fargo-Moorhead CVB has new leader

Charlie Johnson

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Charlie Johnson has been named president and CEO of the Fargo (N.D.) and Moorhead (Minn.) Convention and Visitors Bureau. He replaces Cole Carley, who is retiring after 21 years in the community and hospitality industry. Johnson served in multiple roles in broadcast news in the region for more than four decades. He was news director and news anchor at KVLY television in Fargo for nine years, and then served as general manager of the combined operation of NBC and CBS affiliates in the Fargo and Valley City, N.D., markets for another 13 years. He most recently has been on the air in Grand Forks, N.D., as a co-anchor and producer of the evening newscasts at ABC affiliate WDAZ television.

Prairie Business Magazine July 2012

Fred E. Wood has been named chancellor of the University of Minnesota’s campus in Crookston. He will start on July 2, pending approval by the university’s Board of Regents. Wood comes to the University of Minnesota from the University of California, Davis, where he has been vice chancellor of student affairs and has held other leadership roles for 26 years. As UMC chancellor, Wood will be the chief academic and executive officer for the Crookston campus, responsible for leveraging its unique strengths in undergraduate education, applied research and public engagement within the broader mission of the University of Minnesota. One of five U of M campuses, UMC is a public baccalaureate institution in northwestern Minnesota enrolling 1,600 students. Wood, who was recommended by a systemwide search committee, succeeds Charles H. Casey, who is retiring after seven years as UMC chancellor and 26 years in other top university leadership roles.

BCBSND promotes Wald

Gregory Wald

Gregory Wald has been promoted to manager of marketing communications in the communications department at Blue Cross Blue Shield of North Dakota in Fargo, N.D. In this role, Wald collaborates with BCBSND’s marketing department to develop and implement marketing communications strategies and tactics to meet organizational goals. Wald joined BCBSND in March 2010 as interactive content coordinator in communications. He worked in advertising, higher education and state government before coming to Noridian. In those positions, he specialized in branding, strategic planning, advertising, market research and consulting.


Theodore Roosevelt Medora Foundation hires marketing director

Suzanne Wentz

Suzanne Wentz has been hired as the marketing director for the Theodore Roosevelt Medora Foundation in Medora, N.D. In this position, Wentz will lead the foundation’s marketing and public relations strategies. Wentz has more than 15 years of experience in sales, business development, management and strategic planning. Most recently she was the president and CEO of Odyssey Research in Bismarck, N.D. Wentz has a bachelor’s degree from South Dakota State University in Brookings.

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|BUSINESS DEVELOPMENT|

TCF Financial recently expanded its call center and deposit servicing functions in Sioux Falls in a 43,000-square-foot facility. PHOTO COURTESY OF TCF BANK

Citibank helped get the finance industry rolling in Sioux Falls in the early 1980s. PHOTO COURTESY OF CITIBANK

Targeting the finance industry Additional 1,000 jobs being created this year BY ALAN VAN ORMER IOUX FALLS, S.D. — By targeting the finance industry, the state of South Dakota is not only looking to create more jobs, but also to leverage the expertise in the finance community to lure other financial institutions. Slater Barr, president of the Sioux Falls Development Foundation, says that financial companies have found a home in Sioux Falls.“Many have major operations in expensive parts of the country,” he says. “We offer a proven alternative that is productive and is viable, at a much lower cost. It makes sense to target that area.” Dana Dykhouse, CEO of First Premier Bank, agrees the opportunity is here. “We (the finance industry) have the expertise and we are leveraging those resources we have.” This is important in luring finance companies to Sioux Falls. “We can convince them that resources are efficient and effective to them,” Dykhouse says. “Human resources are the difference in financing. It provides a high value to a business.” Those human resources have been key in adding more finance industry jobs in Sioux Falls. Capital One Financial Corp. opened a credit card contact center that will add 400 jobs. TCF Financial recently expanded its call center and deposit servicing functions in Sioux Falls in a 43,000-square-foot facility. The company is looking at hiring as many as 200 employees by the end of the year. Jason Korstange, director of TCF Corporate Communications, says the reason for the expansion is the workforce. “In financial industry-type of jobs there is experience,”he says.“That is one of the reasons we went to Sioux Falls. Sioux Falls is a very business friendly city with taxes, has a very talented and educated workforce. That is what we are looking for.” Citibank started the finance industry rolling in Sioux Falls in the early 1980s. The finance institution was struggling due to the harsh economic conditions of the late 1970s and early 1980s, says Ken Stork, site president for Citibank in Sioux Falls, adding that New York also had a cap on interest rates

S

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Prairie Business Magazine July 2012

that Citi and many financial services objected to, and the New York General Assembly refused to raise it. So in 1980 Citicorp executive vice president Charlie Long was directed by CEO Walter Wriston to explore possibilities for a new home for Citi’s credit card business, Stork says. “It was mere coincidence that the South Dakota Legislature had lifted the state’s limit on interest rates a year earlier to accommodate the state’s agriculture industry,” Stork says. “In just a matter of months, Long and Wriston were shaking hands with former South Dakota Gov. Bill Janklow on a deal to move Citi’s credit card business to Sioux Falls. A promise to bring several hundred jobs to South Dakota eventually turned into several thousand jobs. It’s just been a tremendous partnership between Citi and the state and people of South Dakota.” Stork adds that the move to South Dakota surprised Wall Street and also got the attention of other major banks that came to Sioux Falls, looked around and learned that South Dakota is a great place to do business. At the start, there were an estimated 3,000 banking jobs. Today that number has reached more than 15,000. It has also helped grow financial institutions in the city. For example, in 1985, First Premier Bank was a $100 million commercial bank. Today, it is a $1.5 billion community bank, has $1.8 billion in trust assets and $800 million in credit card receivables, Dykhouse says. The pay scale is also increasing. Ten years ago, First Premier Bank was paying $7.50 an hour for entry-level positions. Those same positions have increased to $11 to $12 an hour today. Supervisors are making more than $50,000 a year, while managers are pulling in $100,000 to $150,000 per year, Dykhouse says. “The National (finance industry) pie is the same or shrinking, but South Dakota finance institutions are getting a larger piece of the pie,”Dykhouse says. It hasn’t always been like that in the financial industry. Four to five years ago was a turbulent period of time for the financial services industry, says Dan Murphy, regional president for Wells Fargo in


North Dakota, South Dakota and western Minnesota. Murphy adds it was a tough time for both businesses and consumers.“Due to regulatory change, many financial service organizations had to re-examine business models to ensure compliance with regulatory changes,” he says. Being a national bank, Wells Fargo’s operations include banking, insurance, investments, mortgage, and consumer and commercial finance. “The governor’s office is trying to determine the opportunities for the state of South Dakota to solicit other financial institutions,” Murphy says. Stork adds that South Dakota was fortunate to avoid the worst of the recent recession. “Now that the economy is slowly improving and the banking regulatory field is leveling out, Citi and other companies are hiring hundreds of new employees,” Stork says. “However, with local unemployment around 4 percent, they are tougher to find. We appreciate the state’s help in targeting our industry and spreading the word that there are good jobs with excellent benefits available at Citi in Sioux Falls.” PB Alan Van Ormer Editor, Prairie Business 701-371-9578, avanormer@prairiebizmag.com

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|HOUSING |

Roers Development Inc. is helping alleviate the housing problem in Dickinson, N.D., by building apartments and housing units. PHOTO BY ALAN VAN ORMER/PRAIRIE BUSINESS MAGAZINE

Housing Key to Development Western N.D. communities doubling in size to meet needs BY ALAN VAN ORMER

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Prairie Business Magazine July 2012

ICKINSON, N.D. — Permanent housing will need to double from

D

8,000 units to 16,000 units by 2020 for Dickinson, N.D., to meet the demand of workers coming to the oil patch. Other western North Dakota communities are also in need of more housing units to meet their needs as jobs in the oil patch continue to increase. “Right now for the housing industry, supply is not meeting demand,” says Shawn Kessel, city administrator for Dickinson. “There are not enough houses out there for buyers. It elevates the value of rental property and (prices of) existing homes and leases are going up.” Shane Roers, president of Construction-Roers West, says it is difficult to help his employees find housing so they can build homes and apartments for those coming to communities in western North Dakota. “Probably the biggest thing we have done to help us be successful is provide housing or find housing for our subcontractors on a temporary basis,” he says. Roers Development Inc. is helping alleviate the housing problem in Dickinson. To date, they have built 250-unit apartments and have plans for 250 multi-family and 250 single family homes on 170 acres that they have purchased northwest of exit 59 along I-94. Roers Development has developed 80 acres and is in the process of developing


|HOUSING| 170 acres and is planning to get started on another 370 acres for homes, commercial buildings and retail buildings.

Annexing land The city of Dickinson represents about 6,800 acres. From October 2011 to February 2012, there has been interest in annexing more than 3,000 acres. Since February there has been an additional 1,500 acres proposed for annexation. North Dakota State University did a population study for Dickinson showing that the community will need temporary housing for 3,100 to 4,500 workers by 2015. “Our footprint will almost double if that all goes through,” Kessel says, adding that the city is worrying about growing too fast. Although housing numbers have increased in Dickinson, Joe Frenzel, broker for Everett Real Estate Inc., says housing is still short. “We’ve been short of houses for 10 years,” he says. “Construction is catering to growth. There were more than 1,000 apartment units in 2011. This year there are at least 1,200 to 1,500 units.” Frenzel adds that from the real estate perspective you don’t even know these apartments are available.“That is how much demand there is,”he says. “Chances are good that once the foundation is poured the apartments will be leased up.” Along with Dickinson, Watford City and Williston also have housing needs. In Watford City there wasn’t really anything happening just three years ago. Now the influx of workers has prompted the city to annex land that has doubled the land mass size of the community for housing and other needs. The population is projected to increase from 1,500 people to as many 5,000 people prompting a need for permanent and temporary housing. To ease the housing need, McKenzie County put in 2,400 temporary units. In addition, 800 to 1,000 permanent units have been built in the city limits. Gene Veeder, executive director for the McKenzie County Job Development Authority, says five years ago the community was trying to attract builders and developers because they were short of single family houses and rental homes. “Right now we’re having a hard time finding developers to do affordable projects,” he says. Curt Moen, building planner for Watford City, says right now there are no homes available. “Those existing on the market are gone within an hour or two,”he says.“Three-to-five years ago you would put a house up for sale and it would take two years to sell.” Watford City put together a five-year comprehensive plan which it had to change 18 months later. It includes annexing 1,000 acres and dedicating 40 acres to commercial use; the remainder for housing. Currently, there are 10 developments in Watford City addressing the commercial, housing and retail needs. Williston is seeing even more of a change in housing demand. Williston’s population in 2000 was 12,512 and 10 years later it increased to 14,716. A 2010 housing study shows that there are actually 16,223 people living in the city. The housing study also shows that there were 5,944 total housing units in 2000 and 7,338 total housing units in 2010. There were 738 housing units built between 2003 and 2009, 688 housing units built in 2010 and 1,440 housing units built in 2011. “We have seen the demographics of this area change,” says Tate

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|HOUSING|

Cymbaluk, a broker for Basin Brokers Inc. in Williston.“There have been hundreds of homes and thousands of apartments built. You couldn’t plan for it and you couldn’t budget for it.”

he says. ‘In 2009, there was a major change because we saw energy companies making significant long-term investments in such things as 10-year leases and longer, buying property and building facilities like they had never done before.”

5,000 homes in 24 months DAWA Solutions Group LLC, a professional service firm that also produces conferences in the region, spearheaded the Bakken Housing Summit, which was held in mid-May in Williston. The sold-out summit drew more than 350 people from 33 states. “The purpose was to really frame the scope of the need and the market in western North Dakota,” says Jeff Zarling, president of DAWA Solutions. “We had an economist present at both the housing summit and an earlier investor conference that said there was pent up demand for 6,000 housing units in Williston alone.” DAWA Solutions works with companies that are involved in the housing industry. The company connects stakeholders and service providers in an effort to build more homes in western North Dakota. Based on projections and future outlooks, Zarling sees housing as a long-term development. “What we saw in Williston and North Dakota in 2008 and 2009, there was a lot of hesitation,”

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Prairie Business Magazine July 2012

Meeting housing challenges One challenge in the construction industry in western North Dakota is finding the right people to fill the jobs. Roers fields three to five phone calls each day from people looking for work in the construction industry. “How can you hire someone from across the United States when you don’t know their qualifications?” he asks. “It is very challenging and you have to be careful.” Roers Construction uses as many as 120 subcontractors on a site at any given time and has had as many as 200 on a construction site. Another challenge is the high price of land and the impact it has on construction.“Area costs have gone up significantly,” Roers says.“They are not inflated. People need to understand that doing business in western North Dakota costs money. I always tell peo-


|HOUSING|

ple that to come to Dickinson you had better have a housing plan and you have to pay to play in Dickinson, meaning that it costs more money than people expect. You have better be willing to endure some pain.” Zarling says the recent housing summit identified another major challenge that involves commercial lending. “Private capital is very expensive,” he says. “However, the reality is that money has shown up. A private equity firm that funds infrastructure through public-private partnerships has $15 billion to invest in 2012, a portion of which they are looking to invest in North Dakota. There is a $250 million investment package from another group actively involved in residential projects in western North Dakota. This is representative of many groups active in the area.” He adds that commercial lending is needed to develop land. “What is also happening is that local banks are limited on the amount of large developments they can fund,” Zarling says. “One initiative being developed involves the Bank of North Dakota putting together a pilot program for subparticipations with local lenders and other banks inside and outside of North Dakota. This helps disseminate the risk by having local lenders, out-of-state lenders and other lenders participating together.” In Williston, Cymbaluk says the price of housing is becom-

ing competitive and there are more cash offers than before.“This is causing frustration for young-to-middle-age buyers who don’t have the cash,” he says.“A lot are coming from depressed areas or markets that are not as good. They don’t have the experience in the job to attain necessary financing.” In addition, market appreciation is increasing 1.5 percent to 2 percent monthly. The average home five years ago was between $90,000 and $95,000. Today, the average sales price that is reported is $161,000, Cymbaluk says. “Housing prices have gone up at such a fast pace that it is difficult in the real estate market for appraisers and lenders,” he says. PB Alan Van Ormer Editor, Prairie Business 701-371-9578, avanormer@prairiebizmag.com

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27


|CONSTRUCTION|

A new bank is being built in Williston, N.D. PHOTO BY ALAN VAN ORMER/PRAIRIE BUSINESS MAGAZINE

Building Boom in the Oil Patch Building permits increasing at record-breaking pace BY ALAN VAN ORMER

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Prairie Business Magazine July 2012

ILLISTON, N.D. — Many Williston, N.D., residents who were involved with the oil boom of the 1980s still remember what happened when the boom turned to a bust. Many see it differently this time around. “It is a different mentality and they are using different technology,” says Tate Cymbaluk, a broker for Basin Brokers Inc. in Williston. “Another difference is that the city and many businesses didn’t expend themselves too far out.” David Hanson, president and CEO of American State Bank and Trust Co., agrees that Williston has the perspective of the last boom still fresh in its mind.“The city of Williston has done a good job of not getting overextended like what happened in the 1980s.” The conservative attitude has seemed to help not only Williston, but other communities like Dickinson and Watford City, that have had to develop planning strategies to deal with the influx of construction projects that have inundated oil country in western North Dakota. “There is a tremendous amount of construction going on,” says Ward Koeser, Williston mayor. “What has changed from the past is that it is much more intense.” A few years ago the city was looking for builders and developers. Now builders and developers are coming to the oil patch to be involved in the growth occurring.

W


|CONSTRUCTION| “It has impacted us and it has impacted the entire state,” says Larry Nygard, president of Roers Development Inc. in Fargo, N.D. “It has allowed us to quadruple our business in construction. You see the impacts as far east as Minneapolis and Sioux Falls. In the past we have never had to stretch out that far for people.”

Office space is difficult to find. Cymbaluk says office space construction is slow, but believes that will change because new parcels of land have been approved. “We lack retail and that goes back to our lack of housing,” he says.“Until we get housing we are not going to see that. It is going to be a few years down the road.”

Commercial construction

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In Williston, Cymbaluk can safely say that commercial construction has increased 100 percent.“In the mid 2000s there weren’t many industrial buildings trading hands,” he says. “Now we have so much construction ongoing that they (businesses) have outgrown their facilities.” Back then the population in Williston was around 13,500. Today that has jumped to close to 23,000 within the city limits and a total of 32,000 within a five-to-seven-mile radius. Williston has issued 467 building permits in the first five months of this year. In 2011, there were 929 total building permits issued. In 2010 the number was 770. Those building permits totaled $357 million for all of 2011. At the end of May 2012, the building permits amounted to $120 million. Last year during the same period the number was $60 million. While the majority of construction involves housing units, builders are also projecting that at least two more hotels will be built by the end of 2012. Currently, there are 700 rooms permitted in 2011 and another 200 rooms permitted so far in 2012. Mercy Medical Center is constructing a cancer center and a birthing center. Trinity Medical Clinic is considering a clinic outpatient facility and a medical center complex.

Building permit explosion For Dickinson, this is the third straight year of record-setting building permit numbers. At the end of May 2012, Dickinson had issued 340 new building permits — 282 of them single family homes — with a total value of $119 million. There is planning for hospital construction, an elementary school in addition to the expansion of two elementary schools that were completed last year. Also, hotel rooms have increased from 600 to 1,200 rooms. An additional 200 rooms are slated to be available in 2012. Population is also skyrocketing in Dickinson. In 2000, the census says there were 16,000 people. In 2010, the population grew to 18,000. Since then it has jumped to about 23,000. “We have experienced dramatic growth,”says Shawn Kessel, city administrator for Dickinson.“The same growth we had in the previous 10 years we experienced in one year.” To accommodate this growth, Dickinson has changed its construction process. The first change the city made was to hire a planner, which was the first in the city’s history. In addition, the building process allows for a single point of contact throughout the construction cycle. One drawback is that it

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|CONSTRUCTION| still takes too much time to approve building permits. Like Williston, Dickinson is not seeing retail development. “The retail side is the last sector to develop,” says Joe Frenzel, broker for Everett Real Estate Inc. “Right now our retail sector is designed around 15,000 to 17,000 people.” Roers Construction is assisting with retail development. There are plans to develop 170 acres northwest of Exit 59 on I-94 that would include commercial, retail and housing. Shane Roers, president of Roers West LLC, says the construction company is working with a big box, grocer and hotel out in that area but no final decisions have been made.

Construction picking up In Watford City, at the end of May, 132 building permits were issued with a total valuation of more than $26 million. In 2011, there were 212 building permits issued for a total valuation of $34.7 million. There were 43 commercial permits and 169 residential permits. In 2010, the total building permits were 191 with a total valuation of $8.3 million. There were 38 commercial building permits and 153 residential building permits. Three-to-five years ago there wasn’t much construction happening in Watford City, says Gene Veeder, executive director for the McKenzie County Job Development Authority. “Since then an influx of workers has come in and the community has annexed land twice the size of the community in 2007 or almost 500 percent of the city’s land mass to prepare for a population growth of up to 3,500 to 5,000 people,” Veeder says. The community now has 300 hotel rooms and there are at least two more hotels coming. There are also plans for expansion of gas stations and retail space. A $4.5 million wellness center is under construction and there are also plans for a multi-million dollar hospital project, upgrading of an elementary school and the construction of an additional restaurant.

Construction challenges Finding housing for subcontractors is a major challenge. Roers Construction has as many as 120 people on site at any time. The construction firm has built 250 apartment units and a 100,000-square-foot project for an oil service company in Dickinson and a 30,000-square-foot complex for that same company in Williston. The construction company has developed 80 acres and is in the process of developing another 170 acres in Dickinson for primary retail and multifamily homes. Another 370 acres is planned for commercial, retail and housing. Then there are longer lead times because agencies are overwhelmed. For example, permitting for an apartment complex usually takes two-to-three weeks. Now it could be as long as six weeks. The time it takes for the land entitlement and annexation processes could easily be double what it normally takes.

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Prairie Business Magazine July 2012

The quality of contractors is also a concern.“As you get new people into the community it is difficult to watch the quality of some of these contractors,” Nygard says. “A lot of the rest of the United States is really slow and they come into the area and are more concerned about making a quick buck and getting out. As a contractor you have to be careful that you select companies that have a desire to do good work, have a reputation for that and have an interest in staying in the community.” Price inflation is also a concern. “Because supply and demand is so out of whack right now, we have a population in Dickinson that hasn’t benefited from a wage perspective as others,” Kessel says. “Rent for two bedroom apartments has doubled. That doesn’t mean everyone’s wage has doubled to afford that.” PB Alan Van Ormer Editor, Prairie Business 701-371-9578, avanormer@prairiebizmag.com


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|TECHNOLOGY|

Chris Thomsen, owner of Thomsen Homes LLC, checks out the automation in his new home. PHOTO BY ALAN VAN ORMER/PRAIRIE BUSINESS MAGAZINE

Smart Home

iPads, iPhones, iPod control $1.3 million Moorhead, Minn., home BY ALAN VAN ORMER

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Prairie Business Magazine July 2012

OORHEAD, Minn. — Chris Thomsen, owner of Thomsen Homes LLC, was at a restaurant having a meal when he noticed that Angie Seaberg, the designer of his new $1.3 million Moorhead, Minn., home was leaving his house. Thomsen was able to pick this up on his iPod even though he was eating a meal in Fargo, N.D. Thomsen has set up an elaborate $150,000 technological automation system in his 6,000-square-foot home on three-fourths of an acre in south Moorhead. He has two iPads, four iPhones and one iPod that can be used to control the temperature, 11 televisions, window blinds or security features from his home or anywhere in the world with a cell signal. He has installed Savant’s Apple-based Smart Home Solutions applications, a company that Thomsen says has been around for at least 10 years, but in the last two years, has developed the sophisticated software to run homes like his. Savant has developed a complete suite of integrated solutions for home automation, commercial control, entertainment and communications. Thomsen, a home builder, adds that this home is just showing possible clients what can be done. “We work with many clients in the Fargo-Moorhead area and want to grow this part of our business,” Thomsen says, adding that he hopes to build five-to-10 of the technologically automated homes each year. In five years, Thomsen Homes has constructed 125 regular homes in the $150,000 to $300,000 price range.

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|TECHNOLOGY| Western North Dakota Private Aircraft Shuttle

Home technology use increasing Javers Construction Co., a home builder in the Sioux Falls, S.D., region that specializes in custom home construction, is seeing that technology use has been growing in recent years. Owner Chad Javers has built homes over the past few years with technology features, including his own home with areas that can be operated by his phone, iPad, or even through the remote control on his television. “All of the homes have certain things that you can control by using a little technology,” he says. “For example, the technology provides unlimited control for lights, heating and even security measures, regardless of how far away from home you are. You can log in from your phone and see anything that is going on anywhere you have a camera placed. Or, you could even program lights to turn on and off at certain times of the day while on vacation, so it gives the appearance to others that you are home and there is activity.” The technology features are gaining in popularity because of the potential for energy savings over the long run. “You can set up everything to turn on and off at certain times, so, for example, exterior lights aren’t accidentally left on unneeded all day,” he says.“I can also set lights to turn on in my home at a lower percentage of power, which also helps with energy savings.” Javers adds that the feedback has been good from those who have purchased the hightech homes. “It is just finding the person that values these features and wants to spend the money on it,” he says. “Everyone has different wants and needs when building a custom home. Technology features aren’t important to some, while others really like its convenience. It seems like most of the people currently interested are the more techie-type of person, but as technology continues to expand, so will the desire to have these types of advancements.”

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First intelligent home The home Thomsen built near Moorhead, is his company’s first endeavor into developing an intelligent home. “We see technology in every aspect of our lives,” says Nick Meyer, a consultant, drafting and structural design specialist who assisted Thomsen in developing the Moorhead home. “It hasn’t passed down to the residential level.” (continued on page 35)

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|RED RIVER VALLEY|

Chamber award geared to young professionals BCBSND recognized for making a point to hire young people BY ALAN VAN ORMER

ARGO,N.D. — For the first time, the Fargo Moorhead West Fargo Chamber of Commerce has recognized a company that is making an effort in hiring young professionals. Blue Cross Blue Shield of North Dakota, based in Fargo, was honored during the 2012 ChamberChoice Awards in May as the Young Professional Network’s Best Place to Work. BCBSND is the largest provider of health care coverage in North Dakota, serving more than 50 percent of the state’s population. An estimated 41 percent of the employees are young professionals or persons under 40 years of age. In 2007, about 49 percent of the employees were young professionals. Paul von Ebers, president and CEO of BCBSND, says the health care plan provider is hiring young professionals for their energy, enthusiasm and creativity. “They put new perspectives on the issues that we are facing. They give us a perspective for their generation,” he says. “A lot of our customers are now having workers in the young professional area. They help us understand that emerging population.” Craig Whitney, president and CEO of the chamber, says that the ChamberChoice Awards has been one of the chamber’s premier events. “It is evident by more than 500 people attending,” he says. “It is a fantastic way for companies to show what they do. It is surprising what does exist right here in Fargo.” The new award was spurred by the North Dakota Young Professionals Network, a statewide organization that also holds an annual event. “It was just a national progression to do a local award here,” says Camille Weber, professional development manager for the chamber. “We had the most nominations out of any category for this award. Right there it tells us that this is something that is not only wanted but needed in the community to give recognition to businesses that employ and honor young professionals.”

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Job skills BCBSND is one of those businesses that have made it a point to hire young professionals. What has made BCBSND successful in recruiting young professionals are the different opportunities and the variety of job skills that are needed, says Von Ebers, adding that positions vary from entry level to highly skilled. “We have a lot of advancement opportunities within the company,” he says. A big reason young professionals join BCBSND is because of the interest in the work that the health care provider does. “Health care is important to everyone and that is interesting,” Von Ebers says. ‘Then we have an attractive workplace, good benefits, a fitness center and interesting things to work on.” Von Ebers says BCBSND will continue to attract more young professionals. “Hopefully, we show a welcoming place with lots of opportunities.” To be nominated for a ChamberChoice Award, a business must be in operation for at least three years, demonstrate a commitment to employee support and development, corporate citizenship and community leadership and commitment to ethical business practices and show stability or growth in sales, services and number of individuals served and expand programs and services. Also honored were Freedom Resource Center for Independent Living, Small Not-forProfit of the Year; United Blood Services, Not-forProfit of the Year; Onsharp, Small Business of the Year; Warner and Co. Insurance, Business of the Year; and Barry Batcheller of Appareo Systems, Entrepreneur of the Year. There were 117 nominations for the six different awards, which is a record for the ChamberChoice Awards. PB Alan Van Ormer Editor, Prairie Business 701-371-9578, avanormer@prairiebizmag.com


|TECHNOLOGY| (continued from page 33)

That is until now. Thomsen, with assistance from Seaberg, a design specialist who works at Floor to Ceiling Carpet One, and Meyer, started with an initial budget of $500,000. That grew into a $1.3 million, three-level rambler with four bedrooms, 3½ baths and a bonus room above the garage. “We put everything into this house imagining that potential clients would walk through and see different things and find out what is important to them,” Thomsen says. “We are showing every piece of detail they can have — floor plan, amenities, custom finishes and home automation.” In the lower level, there is a 150-square-foot exercise room that includes special rubber flooring that is used at gyms and fitness centers, mirrors around the room and a 42-inch television. The lower level also includes a large living area designed around activities and social networking. It includes a shuffle board, pool table, five televisions and a two-level theater room with a 123inch television with seating for about 15 people. The design team installed columns around the room that Thomsen says adds character. The main level features a 500-square-foot master bedroom, living room, dining room,

kitchen and three-sided floor-to-ceiling fireplace. Then there is a 16-foot waterfall that is the focal point of the home. “It is relaxing,” Thomsen says. “We built the home around the serenity of the waterfall.” The 500-square-foot bonus room, built above a three-car garage, is now designed to be an office space, but can be adapted to a specific space. Along with the waterfall and the automation, the building also is designed around the concept of a 45-degree angle, which differs from squarebuilt homes. Everything is set at a 45-degree angle with architectural lines that include a grand staircase and the outline of a fireplace when walking down the stairs. “The home has been integrated into a warm, comfortable, finished design and the technology enhances what can be done to a home,” Seaberg says. “I have seen touches of technology in homes in Fargo, but Chris went all the way. He did not hold back.” Thomsen adds that the design team took the budget and pushed the limits of a nontraditional type of house.“We want to continue to do this,” he says. “There is a possibility of doing these types of homes especially with the expanding business in

the Fargo-Moorhead area. This home will be a small minority, but in the bigger picture we can build something in the $400,000 to $800,000 price range and they can get better ideas of what they want.” Meyer says there are automated homes, but none that have been technically integrated. “This is the best example of cohesiveness when you look at the whole system,” he says.“All the technology is brought into one spot (the servers) and works together flawlessly.” Thomsen adds with this particular software we are on the cutting edge.“Savant is the key component of the whole thing,”he adds.“The software ties everything together in the interface you work off of to control the house. The software has taken off with the improvements in iPads and iPods.” Seaberg concludes that the home was designed around a lifestyle. “These were the features Chris wanted to enjoy in his life when he comes home,” she says. “We can now work with clients and flush out what their lifestyle entails.” PB Alan Van Ormer Editor, Prairie Business 701-371-9578, avanormer@prairiebizmag.com

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|SOUTH DAKOTA|

Building a stronger workforce Dan De Jong is a network services engineer for Workplace Technology Center in Sioux Falls, S.D. PHOTO COURTESY OF NICK BUKREY PHOTOGRAPHY

Students can save up to $6,000 for classes BY ALAN VAN ORMER

IOUX FALLS, S.D. —To develop a more educated workforce that provides companies more employees, the University Center in Sioux Falls, S.D., has launched a pilot tuition reduction program that saves students up to $6,000 for 100- and 200-level courses. “This is a different way of delivering classes,” says Mark Lee, executive dean of the University Center. “We won’t generate more demand for our workforce, but rather we will be able to help provide a more educated workforce by improving access to higher education. The key component is making Sioux Falls an even more desirable place for businesses to move here, start-up or expand.” Slater Barr, president of the Sioux Falls Development Foundation, says this program creates an opportunity to stimulate educational gains in Sioux Falls, allowing residents to improve their talents and further help them to pursue the jobs that will require those talents. The University Center Foundations program allows students enrolled in a 100- or 200-level course to pay $189 per credit hour, which is 21 percent below the regular tuition cost or $100 less per credit hour to take certain lower level classes at the University Center in Sioux Falls. Lee says the program will focus on filling current classes to their capacities and then expanding certain sections where it doesn’t harm the learning experience. The program will also assist two specific groups in getting an education. “Sioux Falls grows a lot through in-migration,” he says. “Some of these new residents are not as well prepared to participate in the knowledge economy, but are eager to gain access to jobs and the lifestyle of the United States. Education is key to attaining that.” He adds there are also a large number of students who have some college but do not have a degree credential. ”We think it’s vital for our community to encourage them to continue their studies and complete a degree,” Lee says.

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One Sioux Falls company that sees a benefit from this program is Workplace Technology Center, which is an IT service provider for small businesses providing full service cloud, help desk, monitoring and IT support services for companies with less than 100 personal computers.

Breaking barriers Joe Zueger, president of Workplace Technology Center, says the University Center Foundations program will assist companies like his in Sioux Falls. “What I like about the approach is that the University Center is looking at one of the barriers to education (cost) and re-engaging students in the learning process,” he says. “We need to recognize the cost element and how that is a barrier to further education.” The company has a history of recruiting people who are currently in school. Workplace Technology Center has plans to move to a 6,300-squarefoot facility in downtown Sioux Falls this summer. This will require the company to use even more of the workforce from higher education facilities in the city. “We have a long-standing tradition of paid part-time jobs where we can test drive our staff and they can test drive our business while they gain practical experience and pursue their degree,” Zueger says.“Higher education provides us a pipeline of people that meet our culture and fit well with our team.” There are currently 16 employees, but that is expected to expand with the addition of companies and contracts around the country. Workplace Technology Center manages more than 90 companies across the country, supporting more than 300 servers and 3,000 workstations. PB Alan Van Ormer Editor, Prairie Business 701-371-9578, avanormer@prairiebizmag.com


|WESTERN NORTH DAKOTA|

Minot port to expand $300 million investment will create jobs, support oil and ag industries BY ALAN VAN ORMER

GRAPH COURTESY OF MINOT AREA DEVELOPMENT CORP

A $300 million capital investment will increase capacity at the Port of North Dakota in Minot. The project will expand the port to 3,200 acres and will increase the rail up to 45 miles of track. The port currently consists of a headquarters building, warehouse and two miles of railroad tracks. Port authorities are in the process of outlining the phased development of the project. In addition, the area will include spaces for the North Dakota Port Services, petroleum energy companies, petroleum servicing companies, intermodal containment shipping companies and warehouse and distribution companies. Jerry Chavez, executive director of the Minot Area Development Corp., says petroleum companies in western North Dakota need service companies to assist with the oil play. “The capital investment of $300 million does not include construction of other buildings for tenant users,” he says. Greg Johnson, president and owner N.D. Port Services Inc. that operates the Port of North Dakota, says the project will generate revenue for the community, adding that N.D. Port Services does not share that information with the public. He does say that it will generate approximately 2,000 jobs. Johnson adds that the companies that will begin operations in the Port of North Dakota will be those that need rail access.

Agriculture trade United Pulse Trading Inc. in the Minot Value-Added Agricultural Complex is one company that needs the rail access. The complex is adjacent to the port, which will help United Pulse remain competitive, says Eric Bartsch, general manager of United States operations for United Pulse Trading. “One of the items that drew us to Minot was the access to the mainline railroad and container freight in Minot,”he says.“We can fill those containers coming in with our products and in return export them around the world from Minot.” Bartsch says investment in the port will impact the region and provides them with an

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opportunity for long-term growth.“Anytime you are investing in a container yard it provides a positive regional impact on the movement of goods.” United Pulse, which also has a processing facility in Williston, N.D., is constructing a $12 million plant that will employ 40 to 45 people, according to the company. The new plant will handle 100,000 metric tons of product per year. It will include processing equipment for beans, chickpeas, peas and lentils and will add capacity for making food ingredients such as flours, proteins, starches and fibers. Currently, 70 industrial container shipments come into the Port of North Dakota and 70 agricultural commodities are shipped out daily.The first containers of ag commodities were shipped out of the port in August 2010. According to literature provided by the Port of North Dakota, the port will be the largest distribution hub between Seattle and Chicago in Burlington Northern Santa Fe LLC territory and will be a distribution center for crude oil, condensate, frac sand, truck brokerage, aggregate hauling and low-boy services. Chavez says it will alleviate the congestion in the western part of the state for rail traffic and allows Minot to position itself as a distribution hub for the Bakken. “The capital investment, land and amount of track contemplated a grand vision to help the Bakken and those companies that are operating in that footprint,” Chavez says. “This is a different approach for meeting demand for rail transportation in North Dakota. This really puts us on the map in a major way.” PB Alan Van Ormer Editor, Prairie Business 701-371-9578, avanormer@prairiebizmag.com

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Quenching N.D.’s thirst for diesel fuel $250 million facility will add 10,000 barrels a day BY ALAN VAN ORMER

ISMARCK, N.D. — A $250 million diesel facility near Dickinson, N.D., will help ease the diesel fuel shortage in western North Dakota brought on by a robust economy in western North Dakota spearheaded by the oil play. MDU Resources Group Inc. is partnering with Calumet Refining LLC for the project forming a limited liability company with 50 percent ownership. The facility could boast as many as 100 employees. It will consume 20,000 barrels a day of crude oil and produce up to 10,000 barrels per day of diesel fuel or kerosene. The remaining byproducts will be shipped by rail to Calumet’s refinery in Superior, Wis., for further processing into other products which include lubricating oils, solvents and gasoline. The facility will be built in Stark County four miles west of Dickinson adjacent to the Burlington Northern Santa Fe LLC railroad. The plant will take up approximately 100 acres of a 200-acre site. Zoning permits were expected in July with the complete final design, engineering and economic evaluation in late July or August. Permitting and construction are expected to take up to 26 months.

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Supply and demand Mike Rud, president of the North Dakota Petroleum Marketers Association, says the project is needed, adding that it won’t solve all the diesel supply issues during peak seasons, but an additional 45 to 50 loads per day will make a difference. The oil industry has increased the diesel usage. However, Rud says it is not only the oil patch, but a diversified economy that has increased diesel usage over the past five years.“The (diesel fuel) demand forecast in April was 150 percent higher than last year,” he says. Demand typically increases in the spring when farmers are planting their crop.“We made a push in the fall of 2011 and early 2012 for ag producers or anyone who had storage to fill their tanks early. They did it and that eliminated the crunch on diesel fuel. The shots of rain have slowed down planting and have helped refiners ramp up the diesel supply. Right now I have heard very little about people concerned about diesel supply.”

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Rud says that he has heard of others that are discussing building diesel plants, but MDU is the only one moving forward. Even with MDU building a plant, Rud doesn’t believe it will meet the diesel fuel needs in crunch time. “We will always need more diesel fuel,” he says. Other diesel fuel suppliers have commitments from buyers and that won’t change. “In the slower months, there could be issues and MDU would have to secure contracts and have buyers on a steady basis.” Overall, Rud says that the demand for diesel fuel won’t slow down as long as the economy stays strong.“Things are good here and things are moving,” he says. “As long as the economy stays strong, it is going to be a good problem to solve.” The diesel fuel for western North Dakota is currently being supplied from a refinery in Billings, Mont., the Tesoro plant in Mandan, N.D., and other facilities in Jamestown, N.D., Fargo, N.D., and Minneapolis. Because of the distance the diesel has to be shipped that adds 5 to 15 cents to the price. The plant will help take trucks off the road and less fuel will have to be trucked to the region, says John Stumpf, vice president of strategic planning for MDU. MDU, a member of the S&P MidCap 400 index, provides value-added mineral resource products and related services for the energy and transportation infrastructure that includes regulated utilities and pipelines, exploration and production and construction materials and service companies. Calumet Specialty Products Partners LP processes crude oil and other feedstocks into customized lubricating oils, solvents and waxes used in consumer, industrial and automotive products. Calumet also produces fuel products including gasoline, diesel and jet fuel. The North Dakota Petroleum Marketers Association represents more than 300 retail members that sell petroleum products and 120 associate members. PB Alan Van Ormer Editor, Prairie Business 701-371-9578, avanormer@prairiebizmag.com


|ENERGY|

million people in North Dakota by 2030 and a million barrels of oil per day by 2015 are possible, at least according to one major oil executive. “It would be great if we had an increase in population,” says James Volker, chairman and CEO of Whiting Petroleum Corp. concluding the three-day Williston Basin Petroleum Conference, adding that North Dakota continues to lay plans to maintain a quality of life for a million barrels of oil a day and a million people. “It is possible to do it while maintaining a quality of life.” Gene Veeder, executive director of the McKenzie County Job Development Authority, says he doesn’t know if North Dakota will reach either of those plateaus. “It will have a lot to do with what is happening in other parts of the country,” he says. “I don’t think we’ve reached the peak of development.” Alison Ritter, public information specialist for the North Dakota Department of Mineral Resources, says reaching the 1 million barrels per day is based on several factors. One is rig counts. Currently, there are more than 200 rigs operating in the Bakken and the department expects that to increase in the future.“Hydraulic fracturing and the price of oil are indicative of how many rigs will be operating,” Ritter says. “If the price of oil drops the number of rigs will drop as well.” Changes in federal policy could also impact oil production. Ritter adds that the department sees the 1 million barrels per day as a possible scenario. The probable scenario is 800,000 barrels a day. “As long as the oil prices stay where they are at the oil patch we will be able to handle higher oil production,” she says. “The prices would have to drop significantly to put a hamper on oil production.”

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1 million barrels possible 800,000 barrels of oil a day a more probable scenario BY ALAN VAN ORMER

Those interested in learning more about the oil and gas industry packed the Bismarck, N.D., Convention Center Arena to hear from energy leaders about the oil play in western North Dakota.

(continued on page 44)

PHOTO BY ALAN VAN ORMER/PRAIRIE BUSINESS MAGAZINE

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|ENERGY| (continued from page 42)

Executive insights Volker, along with Harold Hamm, and Dave Roberts, finished the three-day Williston Basin Petroleum Conference providing an insight on the oil industry in western North Dakota. In his remarks to a packed Bismarck Civic Center Arena, Hamm, chairman and CEO of Continental Resources, asked the question what fun is this? “This is really something that has really captured the imagination of the world,” he says. He adds that fracking is not the story. He says the story is about energy renaissance occurring throughout the world and what has made that possible is horizontal drilling. During a press conference after the final session, Roberts, executive vice president and COO of Marathon Oil Corp., agreed that horizontal drilling is what opened the door, adding that the next generation of technology is going to be more efficient and provide effective placement of the drills. Volker adds that Whiting pledges to do its part in maintaining and improving the quality of life. He also says that Whiting is committed to the northern Rockies, which includes the Williston Basin. Whiting produces 80,000 barrels of oil per day with 67 percent coming from the northern Rockies; most of that from the Williston Basin in North Dakota. There are 345 million barrels of oil in reserve; 46 percent of it coming from the Williston Basin. There are an estimated 6,000 drilling opportunities in the northern Rockies; an estimated 2,500 known about in the Williston Basin. In addition, $851 million or 47 percent of Whiting’s $1.8 billion capital budget in 2012 is devoted to the northern Rockies. Marathon has been operating in the Bakken for the past six years and Roberts said the oil patch is a critical part of Marathon’s business. He adds that the oil industry is finding itself at an intersection; one built on innovation and technology and the other on social, environmental and geopolitical challenges. “Oil and gas sits at the middle of the two,” he says. During a press conference after the event, Roberts said Whiting is committed to maintaining a quality of life. “We’re hiring people who want to stay here, live here and want to be contributing members of the community,” he said. “We hire people from the northern tier states and that is the smart thing for us to do. Our turnover ratio is less than 5 percent.” PB Alan Van Ormer Editor, Prairie Business 701-371-9578, avanormer@prairiebizmag.com

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|ENERGY|

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