Case Studies

Bakken Housing Development Co.

Providing Critically Important Community Development Services

The potential for oil production in the Williston Basin region of eastern Montana, plus western North and South Dakota has been known for decades. However, only since 2008 has technology and the rising global demand fomented the conditions for major energy companies to attempt to extract it. As a result, towns and worker camps have popped up virtually overnight across the Bakken Formation, with out-of-state workers flocking to the region to take part in the boom. The resulting housing shortage is an ongoing problem that has even prevented energy companies from expanding operations, leading entrepreneurs like Steve Kovacs to develop more permanent solutions.

Kovacs got involved in the construction industry over a decade ago as a broker of both new and used mobile homes across Canada and the U.S., but conditions in the Central Bakken led Kovacs to refine his approach and establish Bakken Housing Development Co. (BHD).

“For quite a few months, I would get at least 20 to 25 phone calls inquiring about the availability of a home within an hour of posting the listing, so I decided I needed to come here myself,” chuckles Kovacs, founder and managing member at BHD. Kovacs ultimately established an office in New Town, N.D., and started out developing temporary housing facilities to help keep up with the market’s demand.

“Of course, many of these municipalities prefer permanent housing so the amount of temporary housing permits issued has decreased and we simply shifted to building permanent housing,” explains Kovacs. BHD today builds both commercial and residential developments specifically in the North Dakota communities of New Town, Stanley and Belfield. BHD targets communities surrounding the most active oil-producing areas, but avoids developing property directly in those markets because of the skyrocketing real estate values. Instead, BHD sticks to nearby communities where land prices are more accessible to the hoards of laborers flocking to the region.

BHD splits into two separate holding companies for commercial and residential development respectively, according to Kovacs. The commercial subsidiary specializes in developing properties with single-story structures well-suited to house commercial enterprises in need of some storage space, such as material suppliers and contractors. BHD’s commercial division does develop some specialty commercial properties on a smaller scale, including retail shopping centers, extended stay hotels and mixed-use developments with ground-level retail space and market-rate apartments for rent on the upper floors.

Family Focus

The residential side of the company, in contrast, serves as BHD’s development arm for the gamut of single-family homes. “In total we have about 609 acres under development in three different markets right now,” estimates Kovacs. To keep up with the demand BHD relies on a network of leading manufacturers of modular and prefabricated homes like Skyline Homes and Champion Homes, as well as a handful of additional manufacturers that produce product on a smaller scale and at a consistently high quality.

Prefabricated structures are especially advantageous in BHD’s market, as supply can barely keep up with demand, but the cold prairie winters leave little room for a sub-par product to succeed. “We’re kind of applying the Henry Ford assembly line method to our developments,” muses Kovacs. The buildings are all built off site so as to minimize the impact on the locally available labor pool. Additionally, homes are built with extra insulation to protect against the freezing North Dakota winters. The homes are also conveniently manufactured to the exact municipal, state and federal building code requirements for the market in question, allowing for expedient inspections and greater quality assurance.

If available, BHD will work directly with local contractors to ready the sites for swift home installations. More often than not, BHD looks to contractors from the surrounding states to come and complete any necessary site work, establish utility connections and pour the home’s concrete foundation. “I can bring in crews of my own from out of state and house them in mobile homes on other properties and, if they’re working long enough shifts, I can even establish a dining hall for them,” adds Kovacs.

Once the homes arrive on site, crews don’t even need a crane for installation. The homes simply arrive and crews can slide the home off the truck bed and onto its foundation. A good crew, by Kovacs’ standards, can set and connect the utilities of a home in just one day for a total of between five and seven houses in a week. Some are duplexes, some are four-plexes, and BHD equips all of the single-family residential developments with a 24- by 24-foot detached garage, capable of housing two side-by-side pickup trucks, the vehicle of choice in BHD’s markets.

Keeping Pace

The developments sell quickly as BHD creates each home to fit within the range of most oil and gas employees’ budgets. Most homes sell for between $254,000 and $269,000, depending on the size and location. The variation ensures that even if a development quickly sells out, BHD will create a list of customers with preapproved financing to jump in on the next available development.

The population boom has created ample opportunity for BHD’s commercial ventures as well. “When you take 300 acres of farmland and rezone it for housing, you also need to set some aside to create the amenities necessary to support that consumer base,” asserts Kovacs. BHD will also build a 20,000-square foot supermarket and an urgent care facility in Bellfield. The urgent care facility is especially significant, according to Kovacs, as the nearest hospital is a full 30-mile drive away. Establishing a smaller clinic closely will provide an outlet for patients with minor scrapes and bruises to receive treatment and prevent smaller issues from becoming more significant health concerns.

Kovacs does not see his team slowing down anytime soon, as BHD will continue focusing on developing strategically positioned properties for the benefit of the Central Bakken region. In the process Bakken Housing Development Co. provides a critical service to the hardworking families in North Dakota boomtowns, leaving behind a legacy of regionally oriented developments.

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