Housing fund lags in ND oil country
BISMARCK (AP) -- Farmers Gary and Alvina Skogen contributed what they could to a fund that supports the construction of affordable housing for seniors and others living primarily in North Dakota's booming Oil Patch.
"Some people are victims of the boom and that's what we were thinking when we designated our dollars," said Alvina Skogen, who has seen locals driven out of western North Dakota by skyrocketing rental and home prices aimed at highly paid workers drawn by the oil rush.
While contributions from people like the Skogens are undoubtedly valued, it is the big companies -- with big cash reserves -- that have the capacity to make an impact on the fund. But North Dakota Housing Finance Agency records obtained and analyzed by The Associated Press show that only a handful of the hundreds of businesses that benefit directly from the oil bonanza have contributed to the housing incentive fund.
The low-income housing development program gives individual and business donors a dollar-for-dollar tax credit, and they can designate their contributions for specific projects or regions. The state Legislature last year increased the amount of money to finance the credits from $4 million to $15 million.
But contributions are lagging expectations. More than $8.3 million is needed by the end of the year to finance the credits or several hundred units may not be built, said Sarah Mudder, a spokeswoman for the housing agency.
"Without adequate contributions, projects cannot break ground," Mudder said. "Projects that don't get their money could go away."
Ron Ness, president of the North Dakota Petroleum Council, said his group has strongly encouraged its members to contribute.
"We have spent a lot of time and effort trying to promote this effort," said Ness, whose group represents some 325 companies working in North Dakota's oil industry.
But few companies in the state, oil-related or otherwise, have stepped up, records show.
Ness said that beyond taxes paid, oil-related companies in North Dakota also have donated tens of millions of dollars to charities funding everything from day cares to hospitals to volunteer fire departments.
"The list is very long," Ness said. "Industry is paying for a whole lot of things."
The housing agency said of 20 projects that aim to build a total of 570 units, only nine projects have been fully funded.
Of the 20 housing projects, pegged at $86.5 million, 19 are slated for western North Dakota, where rental rates have soared due to demand for housing spurred by record production in the Oil Patch.
Longtime renters complain that the oil boom has made landlords greedy, sometimes doubling or tripling the monthly cost of a property. In one instance, the rents at an apartment complex in Williston spiked from $700 to $2,000 practically overnight.
Jill Beck, CEO of the North Dakota Association of Realtors, said home prices in the Oil Patch have increased up to 50 percent in the past few years. And they don't sit for sale long.
"Some of the homes are selling within hours," she said. "It's a market our realtors have never experienced before."
Fixed-income seniors have been especially hard hit by the rising housing costs, said Alvina Skogen, who farms with her husband in Ray, a rural community about 25 miles northeast of Williston and in the epicenter of the state's oil activity.
"We are losing vital people, people who have been volunteers, served on our boards and have spent their whole lives here," she said. "Where do they go? Many of these people really don't want to leave."
Skogen said she and her husband contributed "more than a few hundred dollars" to the housing fund.
Mudder, of the state housing agency, said 92 percent of the fund's contributors are "ordinary people." The contributions from nearly 250 individuals range from $100 to $150,000 and total $2.1 million, or about 32 percent of the sum raised so far, she said.
In addition, seven financial institutions have given a total of $1.4 million to the fund, including a $1.2 million donation from Minneapolis-based U.S. Bank. Another 15 businesses have contributed just more than $3 million combined, including $2.5 million from Houston-based Marathon Oil Corp. and $225,000 from Belfield-based MBI Energy Services, records show.
Terry Kovacevich, a manager for Marathon's North Dakota operations, said the company is mindful of the lack of affordable housing in the Oil Patch and wanted to do its part to help out.
"No doubt the (rental) rates have gone up," he said. "We want to provide opportunities for housing for communities where we live and operate."
Marathon made its contribution in December, just in time to claim the donation for that tax year.
Mudder said the housing agency has been soliciting donations from other companies but that, so far, none have made commitments.
Companies are likely keeping their cash in investments until the last minute, or at least that's what the agency is hoping, Mudder said.
"Big business probably will drag its feet until the end of the year," she said. "We know some are interested but we don't know if they'll bite the bullet and cut the check. We have our fingers -- and our toes -- crossed."