WILLISTON, N.D. - Williston city commissioners voted 3-2 Tuesday to close crew camps next year, prompting oil industry representatives to warn that their workforce may leave without temporary housing.
The City Commission approved the first reading of an ordinance that would require camps to stop operating July 1 and require the buildings to be removed by Sept. 1.
The ordinance affects 3,600 temporary workforce housing beds in city limits and the city's one-mile extraterritorial area, although occupancy of those camps has declined with the downturn in oil prices.
Commissioners Tate Cymbaluk, Chris Brosteun and Mayor Howard Klug voted "yes" after listening to an hour of public comment. Commissioners Deanette Piesik and Brad Bekkedahl opposed the motion. The ordinance will require a second reading.
Oil company representatives who spoke during the hearing cautioned about the impact of closing the camps at a time when low oil prices have prompted layoffs and other cuts for workers.
Rather than move from a crew camp to an apartment or hotel, workers will likely leave Williston for a place that's more stable, said Orlando Romero, director of real estate for Nabors Drilling.
"For us, it could be detrimental to our workforce to close the camps," Romero said.
But apartment developers warned commissioners about the consequences to long-term investments if crew camps continue to operate.
John Sessions, who helped develop Eagle Crest apartments in Williston, said the project was financed in 2013 when rent for a two-bedroom, two-bath apartment was $2,700 per month.
The average rent for that apartment is now $1,404, Sessions said, using information gathered by an apartment management group formed in Williston that represents most buildings constructed in the past five years.
At those rates, it requires almost full occupancy to pay off the debt and cover operating expenses, Sessions said, adding that the financing is over 23 years.
But on average, recently constructed Williston apartment buildings are 60 percent full, Sessions said.
"This is not what the investment community expected," Sessions said. "In time, fragile ownerships will get tired of this relationship. You might see fire sales of projects. Maintenance will suffer."
Similarly, Williston hotels have averaged about 55 percent occupancy this year, according to the Williston Convention and Visitors Bureau.
Terry Metzler with Granite Peak Development said investors had the confidence to support long-term developments because they understood Williston's intent was that crew camps would go away when permanent development caught up.
Metzler pointed out that crew camps will no longer pay taxes in the community after they leave.
"The rest of us will," Metzler said.
Sandy Haviland, representing Confluence Apartments in Williston, said the complex is a multidecade investment for Williston.
"The major difference between permanent housing and the camps is the number of investors and the amount of dollars that you have to line up on behalf of the town's long-term future," Haviland said.
John Brown with C&J Energy Services said hotels and apartments have not done a good job of competing to house employees because rates are too high.
"We had to do this for affordable housing for our employees to take care of the work," said Brown, representing a 450-bed camp he said is less than 50 percent full.
Brent Eslinger, senior district manager for Halliburton, said the company was one of the few that invested in permanent housing in Williston, constructing 50 homes, 48 townhomes and two apartment complexes. Halliburton also relies on temporary housing for crews that come and go, Eslinger said.
"We don't know where they're going to be from week to week," Eslinger said. "It changes that dramatically."
Eslinger and others at the meeting asked for the city to allow more time for crew camps.
Travis Kelley, regional vice president for Target Logistics, the largest workforce housing provider in the Bakken, suggested the city raise the standards for crew camps, which would likely prompt some camps to close. Kelley has said the Target Logistics camps are 70 percent full north of Williston.
Commissioners had little discussion about the ordinance Tuesday. Mayor Klug, who has previously said he doesn't want Williston to be a "temporary town," pointed out during Tuesday's meeting that there are crew camps in Williams County that continue to operate.
The ordinance allows an exemption for six camps that had permits from Williams County that expire after Dec. 31. Those would be allowed to operate until their permits expire.