Tuesday, September 29, 2015

Excellent Bloomberg Article On Real-Estate Situation In The Bakken -- September 29, 2015

As best I can tell, this is a pretty good description of what I saw in the Bakken just a couple of weeks ago. BloombergBusiness is reporting:
Chain saws and staple guns echo across a $40 million residential complex under construction in Williston, North Dakota, a few miles from almost-empty camps once filled with oil workers.
After struggling to house thousands of migrant roughnecks during the boom, the state faces a new real-estate crisis: The frenzied drilling that made it No. 1 in personal-income growth and job creation for five consecutive years hasn’t lasted long enough to support the oil-fueled building explosion.
“We are overbuilt,” said Dan Kalil, a commissioner in Williams County in the heart of the Bakken, a 360-million-year-old shale bed, during a break from cutting flax on his farm. “I am concerned about having hundreds of $200-a-month apartments in the future.”
Laborers descended on the state, many landing in temporary settlements of recreational vehicles, shacks and even chicken coops. Energy companies put up some workers in so-called man camps. In 2011, Williams County commissioners approved 12,000 beds, says Michael Sizemore, the county building official.
The camps were supposed to be an interim solution until subdivision and apartment complexes could be built. Civic leaders across the Bakken charged into overdrive, processing hundreds of permits and borrowing tens of millions of dollars to pay for new water and sewer systems.
Williston has issued $226 million of debt since January 2011; about $144 million is outstanding. Watford City issued $2.34 million of debt; about $2.1 million is outstanding.
Construction companies and investors went along for the ride.
And this is the nut:
"We didn’t build temporary housing on purpose because we viewed North Dakota as a long-term play," said Israel Weinberger, a principal at Coltown Properties, which invests in multi-family real-estate developments. "We think the local production of oil is here to stay. Yes, prices have dropped, but it’s a commodity and commodities fluctuate. There is always a risk."
We talked about this very issue in the blog early on (generally in the "comments" section, not in the bodies of the blog). I remember the arguments very, very well. I was quite clear in my mind; I don't recall how I posted at that time; I did not want to step on toes. Even so, I remember folks writing me, upset with what I was saying.

The New York City-based company plans to complete 35 units in Watford City this winter and break ground on another residential project in March, he says.
That's exactly what I saw when I was back in the Bakken just a few weeks ago; they were still building permanent structures. And lots of them. But the man-camps were coming down; and hotels on the prairie were being boarded up or standing empty.

Much more at the link. Much, much more.

But Will It Have Solar Electricity?

Ground broken for Black Hills Corporation's new headquarters building in Rapid City. Rapid City Journal is reporting:
Over the next two years, a $70 million corporate headquarters will rise at a site on the southwest corner of U.S. Highway 16 and Catron Boulevard in south Rapid City that some predict could the forerunner of a new corporate corridor in the Black Hills.
On a rainy Monday afternoon, corporate leaders from Black Hills Corp. invited about 60 local economic boosters and public officials for a formal groundbreaking at the 31-acre site where the company will further solidify its 130-year relationship with Rapid City, its local employees and their electric customers.
Black Hills Corp. is the parent of Black Hills Power, which serves about 65,000 customers in 23 area communities. Overall Black Hills Corp. has about 800,000 customers in seven states, though that number will rise to roughly 1.2 million customers in eight states due to the $1.9 billion acquisition of Source Gas. Buying the natural gas provider will add Arkansas to the company's reach when the deal closes next year.
The campus plan calls for a Y-shaped structure with three wings, two of which will be built during the initial phase of construction. The $70 million price tag will cover the 200,000-square-foot west and south wings, access road work, 1,030 parking spots and a plaza for employees. 
But will it run on solar electricity with Elon Musk back-up battery packs? If not, why not? Enquiring minds want to know.

The Gift That Keeps On Giving

This is an "old" item but I don't recall posting earlier, though I posted similar articles from other states with same theme.

StarTribune is reporting:
Health insurers are seeking large premium increases for 2016 in Minnesota, with average jumps of more than 50 percent proposed by one of the state’s largest health plans.
The proposed rates were released by the federal government Wednesday, a few days after similar data for most other states prompted widespread talk about how medical costs are running higher than expected for many insurers.
For now, the increases are just proposals. Final numbers in Minnesota won’t come until October, and only after a regulatory review process that could knock them down.
Even so, the filings touched off a political skirmish, in part because they apply to the portion of the market that includes the state’s MNsure health exchange. Plus, the proposals suggest premium hikes could be on the horizon for more than 225,000 Minnesotans.
“The proposed rate increases from Minnesota’s health insurers are outrageous, given that our state’s health care costs have been increasing by only 3 percent,” Gov. Mark Dayton said in a statement.
For more on MNure, see this 2013 post. No doubt things have improved 110%.

I'm glad to see that Mark Dayton has weighed in. That was probably the last we will hear from him on this subject, at least until next year.

North Dakota #1 In Honey; Minnesota #1 In Potential ISIS Recruits

I can't make this stuff up. StarTrib is reporting:
Minnesota recruits lead the nation in the number of people who have left the country to fight with terrorists aligned with the Islamic State of Iraq and the Levant in Syria, according to a scathing congressional report that details failures by the U.S. and western countries to stem the flow of combatants to the Middle East.
The report, released Tuesday by the U.S. House Committee on Homeland Security, specifically cites several Minnesotans from the Somali-American community who sought to join ISIL, highlighting its online recruiting success through peer-to-peer recruiting by using social media and sophisticated online messaging techniques.
Young fighters from at least 19 states have tried to join terrorists in Syria and Iraq.
Minnesota recruits comprise 26 percent of the sample of persons reviewed by the committee’s bipartisan task force. California and New York had the second most recruits, with each state comprising 12 percent, according to findings. At least 250 Americans, mostly young men, have attempted or made it to Syria and Iraq, compared to about 100 one year ago, according to law enforcement.
No quote from the governor. At least these Somalis have left the US to fight Russia, Syria, and Iran. A win-win for all, I would say. 

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