CURRENT GRAND FORKS AND ND

 

In 2012 the building permit value for Grand Forks totaled nearly $128 million dollars. There was good construction in all major areas of new construction, single family housing, apartments, and commercial buildings. Repairs for commercial buildings were also very high.

In the first seven months of 2013 the permit values already totals nearly $126 million dollars. The big increase this year is in apartment construction. Last year that totaled $22,162,500. As you can see, this year through July the total is already over $52 1/2 million dollars. I knew the construction industry believed the demand for apartments was growing and that Grand Forks was considered to be further behind than the national average, but this surprises even me. I am going to research Fargo and Bismarck’s, and maybe St. Cloud and Duluth to see how their years compare. I will probably look at Minot too, but I believe the oil situation may make that a not comparable city.

 It will be interesting to see if the commercial value will increase another $8 million to equal last years total. It will be disappointing if it doesn’t. I believe this is one area that Grand Forks just hasn’t come up to the level I expect. Every thing Grand Forks has tried has failed to produce the retail stores that I just expect to be here. There is not a single men’s clothing store. Barnes and Noble was in Minot even before the oil boom. Hobby Lobby is a good sign. So too is Panera, but they are the first of anything of significance in some time. I thought the Buxton study would be money well spent, but it just hasn’t done anything of significance that I know of.

We can be happy for the big box stores and for Columbia Mall. Especially we can be pleased with those investing in restaurants and motels. What else draws people here? Well, we know a big thing is UND hockey and all of UND. So too, the rest of the sports, the Chester Fritz Auditorium, etc. We also need to realize the importance of Altru Health Systems. As aggressive as Fargo is in health care if Altru was just a clinic and hospital with limited specialties the Grand Forks economy and its population would be observably smaller.

It is with additional research like this that I intend to expand my writing compared to my previous work. That is, it is one thing to talk about how important UND is to the Grand Forks economy, but it will demonstrate a lot more to measure it.  How many professional positions are in Grand Forks because of the EERC? With their professional and personal spending how much do they add to the Grand Forks economy? The Medical School? The Aviation College? And just the University in general-the history department?


 


Fortunately that hasn’t happened here to any significant degree in the past few years. While its appears there has been a slow down in our Canadian visitors the total spending in Grand Forks is continuing to expand and that has meant increases in sales tax collections-record breaking increases if you look at the table listing highest collection months. Of course inflation over time will increase the taxes, but the past four or five years have been nearly inflation free.  Viewed on a month by month basis this table verifies the growth in the Grand Forks economy, and remember there are many areas that are not taxed, or may have received a reduced tax rate over the years. The economic growth is probably larger than this table indicates. I have said this before, but allowing local governments the authority to tax sales has been the greatest move the state has made to ease the local governments taxing abilities in my life time. Now it doesn’t necessarily create a solution for every government level. If it is one of those rural city and county areas that has been losing population and the economy that it doesn’t do a lot to solve their problems. However, if you are one of the growing urban areas, even without the oil or maybe another growing economic sector, it has made for a significant increase in tax collection. Of course, unlike property taxes a downturn in the economy can result in a reduced tax collection. That is especially true of a city like Grand Forks that is so depended on a sector of its buyers like our Canadian neighbors who like to shop here. The local sales are not only depended on our local economy, but also the economy on the Canadian prairie.

By the way, notice the increase in the 3% motel tax. If you had been able to see this report over the past few months you would have seen this continued increase in the motel taxes. You would have been able to see particular months when there have been big draws to the city like UND hockey especially when in playoff games, or Minnesota, etc. Other areas you don’t hear about is baseball or softball tournaments involving both the youth or tournaments for adults. That brings a lot of people to town, and a lot of money.

 

 

 When I first started writing this column many thought the Grand Forks airport was dying. Nearly every monthly report showed fewer and fewer boardings. It cost too much compared to Fargo, they said. There weren’t enough flights, they said. They had terrible planes, they said. It is better to go to Fargo, they said. And they were right, and they did. Go to Fargo.

However, certain people wouldn’t just roll over and let that happen. Certain people made pests out of themselves at the airline headquarters. Give us more flights, they said. Give us better planes, they said. Don’t charge so much, they said. We need a new terminal, they said. Well, truth be told, it was mostly one person that made the difference. Oh, he had the backing of others, and they deserve the credit that with that person they showed that you can make a difference. That you can turn things around. Sure the economy has gotten better. Certainly there are things like the increase in national corporations here because of the UAV program. And those people fly in and out, often

And now. Well, the tables have looked like this month for most months over the recent past. There is nothing guaranteeing this will continue. Other cities will go to those same airlines and offer them reasons to increase the flights to their city, but if Grand Forks keeps it up so too will this table continue its increases in numbers.

 

There is not much new to write here except to point out to those who want to say that things are slowing down is that they are wrong. It is more accurate to describe the energy exploration sector as maturing. For one thing, when the discovery rate is nearly 100 percent you do not need as many drilling rigs. In fact, except for the need to meet the 5 year rule with the leases the number of drilling rigs is limited by the number of fracking rigs that are available, and those are limited by the number of people available to run them, and that is what has happened. The continued and nearly steady increase in producing wells is a demonstration of how many fracking machines there are and to what extent the weather is affecting their work, but they are there and the oil is being pumped. The growth continues, just at a more rational pace.

Ho-hum. I shouldn’t be so blatant about the unemployment rate. So much of the country is still in serious trouble. Even, too, is much of ND. If you are one of those rural areas outside of the oil patch your local towns continue to lose jobs, businesses, and population.  Churches, elevators and schools continue to close. The average age of the county is continuing to increase.  A way of life is passing. The rapid change in agricultural technology is what drives that.  Every acre, and in fact more acres, are farmed.

But across ND the economy continues its way. That has meant the lowest unemployment in the United States. In fact, in the world. Farm profits will not be as good as they have for the past several years and so it will be interesting to watch this chart across the state over the next months.

 


Finally, I am presenting some statewide sales and purchases data. I will not spend too much time commenting on what is here because it is from the first quarter of 2013. That means it ended in March and it is now nearly September. The data does show a slow down, a significant slowdown compared to the previous two years but there are a couple of significant things to know. First, the slow down is attributed to both agriculture and to activity in the oil patch. There are good reasons for both.

First as to agriculture, while I don’t believe we are heading to anything approaching a recession, or certainly not a depression, in agriculture prices we have come a long ways towards closing the gap between demand and supply in the worlds food table. Americans, Western Europeans, Canadians, and Australians could feed the world if it rains, and even that is becoming less important with all the irrigation we do now. That means, the markets reflect it, that prices are down significantly, and that means a slow down in states like North Dakota. It doesn’t mean losses, but it does mean less.

Second, a lot of the booming part of the oil activity was directly attributable to the five year lease situation and now that we are beyond that the “lease every acre” era is over. They will still lease every acre, but on a lot more orderly basis. Tie that change to the nearly 100 percent hit when drilling and knowing where they stand with fracking and what we are seeing is a more orderly and less costly basis. The wells will still be drilled and payments made and profits will actually increase.

Here’s hoping that is where all areas of the state stand.

 

 

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