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Published May 04, 2012, 08:27 AM

BUSINESS DEVELOPMENT: Minot: A year after the flood

Thriving economy before the disaster is helping recovery efforts

By: Alan Van Ormer, Prairie Business Magazine

Just one year after a devastating flood, Minot, N.D., residents and businesses are in full recovery mode and the community’s economy continues to rebound. Year-end economic indicators show that unemployment dipped down from 3.7 percent in 2010 to 3.1 percent in 2011. The unemployment rate for the state was 3.3 percent and the United States 8.3 percent in 2011. In addition, building permits, as can be expected after a disaster, increased from 528 in 2010 to 1,132 in 2011.

“Our sales tax numbers saw a lull in July, but in August we were at pre-flood level or higher,” says Jason Zimmerman, flood recovery coordinator for Minot.

Connie Feist, general contractor for Real Build Inc. and also chair of the housing committee for Flood Recovery 2011, says the recovery has started, but “I wouldn’t say we are there yet.”

On May 30, residents received their first flood evacuation notice. Seven days later the all-clear was given, but citizens were asked not to get too comfortable. The main event took place on June 22 and two days later water inundated the city and valley. There were areas where homes had 10 to 12 feet of water in them. Almost 85 percent of the homes in the impacted area had at least 3 feet of water on the main floor. The flooding covered an area that stretched approximately 6½ miles long and 2½ miles wide. More than 4,100 housing structures and hundreds of businesses were impacted by the flood.

The recovery began shortly after.

The most recent support came in April, when North Dakota Gov. Jack Dalrymple, along with Minot-area community leaders and officials, kicked off the Summer of Hope Souris Valley Long-Term Recovery campaign. As part of the flood recovery effort, organizers plan to rebuild as many as 40 flood-damaged homes every month during this year’s construction season. Long-term plans are to rebuild the main living quarters of more than 500 homes.

Jay Fisher, who works with the North Dakota State University North Central Regional Extension Center and was the chairman of the Minot Area Development Corp. in 2011, says the MADC, along with the Minot Area Chamber of Commerce and Minot Convention and Visitors Bureau are trying to get a handle on the situation.

“There are issues to overcome, but there are opportunities also,” Fisher says.

To find out how other communities have rebounded from flooding, the MADC, CVB and chamber studied Cedar Rapids, Iowa, and Grand Forks, N.D., both of which have successfully recovered from flood disasters.

In addition, a professional survey was developed to find out the needs of the community members. About 900 surveys were sent to businesses in the community and almost 25 percent responded to the survey. According to survey results, business suffered almost $300 million worth of losses including more than $196 million in estimated revenue loss, more than $10 million in business relocation costs, more than $59 million in building repairs and remediation costs and more than $28 million in capital equipment losses.

The survey also showed that 843 employees have permanently left the Minot area, 330 switched jobs and 335 employees have collected unemployment insurance due to the flood.

Almost nine-tenths of businesses in the evacuation zone reported damage to facilities. For those businesses not in evacuation zones almost 15 percent reported damage to facilities. Overall, more than two-fifths of Minot businesses reported facilities damage.

Within six months, more than half of all reporting businesses expect to meet or exceed pre-flood revenue levels.

Zimmerman says withstanding that type of loss speaks to the resiliency of the people and businesses in the community. “Because of how strong the economy has been up here business owners know what the reinvestment will be,” he says. “The loss was very significant, but because of the environment it was painfully absorbed by the business community.”

The main concern now is a housing shortage that the community was experiencing before the flood and is still prevalent after the flood, and an increase in the price of lots. Two years ago, a lot cost $35,000. Today, if you can find one, a lot costs $60,000 to $65,000.

Another issue that needs to be addressed is the shortage of workers. Almost half of all Minot businesses currently have too few employees. The most pressing current needs in Minot are (in order of importance) for construction, manufacturing, wholesale, restaurant/bar, hotel/motel, transportation and retail workers. The most prominent impediment to filling positions is the inability to find appropriate employees. Surprisingly, lack of housing for employees is the second-most common reason for understaffing.

“I don’t think the flood will have long-term consequences,” states Jim Ondracek of Ondracek & Witwer Consulting Co., which conducted the business survey. “We will grow with oil and gas and grow into a regional service center.”

Feist notes that if Minot didn’t have a thriving economy before the flood it would have been a different story for the community. “Anyone knows who has been here any amount of time we are stronger and better,” she states. “However, it is going to be expensive.”

Also, many family-owned businesses in the flooded areas could have left, but stayed. Zimmerman says that is part of the entrepreneurial spirit for those in Minot and other communities across North Dakota. “They are not quitters.” PB