Oil boom forces employers to be landlords

Kasia Klimasinska / Bloomberg News /

Published Feb 22, 2013 at 04:00AM

WILLISTON, N.D. — Matt Grimshaw, who runs a hospital here, and Dale Patten, head of a family-owned bank in nearby Watford City, had the same problem and found the same solution.

Both went into the real estate business to attract employees.

Booming oil production means unemployment in Williams County is the lowest in the nation at less than 1 percent. That’s boosted the population of Williston, the Williams County seat, by 28 percent in 10 years.

The result is a housing shortage in which one-bedroom apartments rent for about $2,300 a month and families stay in single hotel rooms for weeks.

Mercy Medical Center has 50 out of 500 positions to fill at any given time, said Grimshaw, chief executive officer. When $5,000 sign-on bonuses offered to attract nursing recruits didn’t get enough takers, Grimshaw persuaded the parent company, Englewood, Colo.-based Catholic Health Initiatives, to build a $12 million, 68-unit apartment building near the hospital.

“We’re facing some of the greatest staffing challenges we’ve ever encountered,” Grimshaw said.

“This is a most unique situation, really, in America.”

Among Grimshaw’s staff is Jerry Freeman, a carpenter who moved from Spokane, Wash., in search of a stable job in the oil fields. Grimshaw wooed Freeman away from the rigs by arranging housing on the hospital campus for him and his wife, in a building once used by nuns and now shared with three other people.

There are “a lot of good people that would still be here if they could find a way to live,” said Freeman, who moved to North Dakota in 2011 and initially shared a trailer with his son-in-law until his daughter moved in and he had to find other lodgings. “I got lucky.”

To house a commercial lender and a residential loan processor, McKenzie County Bank in Watford City purchased two 1,800-square-feet townhouses for about $200,000 each, said Patten, the bank’s president.

“It’s either we purchase these, or we didn’t have any employees to fill the holes,” said Patten, who can watch trucks hauling oil, chemicals or water on busy U.S. Highway 85 from his office window. One of the employees previously lived in an extended-stay facility for seven months, he said.

The bank is renting the three-bedroom houses to its employees at $800 a month. Patten estimates the market rental would be between $2,000 and $3,000 a month.

The boom promises to last a while. Williston is atop the center of the Bakken oil formation, part of a larger geologic region called the Williston Basin. The Bakken, developed by companies including Continental Resources Inc., has turned North Dakota into the nation’s second-largest crude producer, following Texas and topping Alaska. Output more than tripled over the past four years to 731,000 barrels a day in November, according to the U.S. Energy Department.

North Dakota’s population is expected to grow by 25 percent over the next 15 years, reaching 841,820 people by 2025, from 672,591 in 2010, according to a report by the Center for Social Research at North Dakota State University in Fargo.

By comparison, between 1940 and 2000, the state added 265 people, according to the same report. The population of Williams County is expected to more than double to 51,106 in 2025 from 24,374 in 2011.

Businesses that can’t afford homes for their employees struggle. Skyrocketing growth has created conditions in which family businesses are choking on the expansion and secretaries are promoted to directorships in months just to keep them.

Gramma Sharon’s Family Restaurant in Williston closes early on Tuesdays and Wednesdays, because the business lacks enough staff for the evening shift. The eatery has openings for cooks, dishwashers and prep cooks listed on its website. The 200-seat restaurant, best known for its omelets and homemade soups, has become so popular during the boom that lines form out the door.

Penny Blotsky Groth put the restaurant opened by her mother up for sale as the stress related to the business, combined with health problems, became “a nightmare” prompting her to retire 10 years earlier than she initially planned.

Workers quit because they know they can easily find another job or because they can’t stand the winter, she said.

“In summer and fall they will actually live in their cars, or live in a small RV,” Blotsky Groth said in an interview at the restaurant on Jan. 30, when the temperature reached minus-15 degrees Fahrenheit. “But if the weather turns like this, they end up going back to where they’re from because it’s too cold out here.”

To keep workers, some organizations are using perks such as rapid promotions in addition to offering housing.

Raymond Nadolny, president of Williston State College, has lost more than 50 percent of his staff — custodians, directors and executive team members — who left to work for higher-paying employers such as the oil companies. To prevent more quitting, he promoted a secretary to a human resources director within three months, with a 50 percent salary increase, and he is considering a similar step again.

“I hired a secretary this week,” he said in an interview. “Immediately, when a director’s position came open, I thought, ‘This could be a good fit.’ ”

The college has 24 mobile homes, including some purchased from the Federal Emergency Management Agency, at its campus to house more than a tenth of its employees as it builds a $10 million, 72-unit apartment building. The vacancy rate in Williston is reportedly below 1 percent, according to the Federal Reserve Bank of Minneapolis in a July article on its website.

Halliburton Co., the world’s second-largest oilfield-services provider after Schlumberger Ltd., has built 50 single-family homes in Williston over the last two years and is completing 44 townhouses and two apartment buildings, according to Susie McMichael, a company spokeswoman. Some employees live in a mobile complex previously used at the 2010 Winter Olympics in Vancouver.

Williston’s mayor, E. Ward Koeser, estimates that about 6,000 men live in temporary units called “man camps” in Williams County. Some will find permanent housing in the 27 apartment buildings that are currently under construction around the town, he said.

“Williston is a growing community, a thriving community,” said Koeser, who moved to North Dakota from Montana in 1978 and has been the city’s leader for more than 18 years of watching it expand. “I wish it wouldn’t have happened as fast, but I use the expression: you’ve got to play the game with the cards you’re dealt, and so make the best of it.”

The city government has raised wages 10 percent a year for the past two years and topped it with at least a $350-a-month housing allowance for all its 200 employees. Williston also invested in apartment buildings, which will have units for about 45 employees.

“This is the new normal — continued growth and expansion and development,” said Grimshaw, who moved to North Dakota from Minnesota in 2010 and calls working in Williston “an amazing experience.”