HIGHEST AND BEST USE MARKET ANALYSIS

Transcription

1 HIGHEST AND BEST USE MARKET ANALYSIS 235-ACRE SITE WEST OF WILLISTON, NORTH DAKOTA PREPARED FOR: PPL GROUP, LLC Economic & Market Research / Land & Development Planning Landscape Architecture / Community Planning & Design Golf Feasibility Analysis

2 HIGHEST AND BEST USE MARKET ANALYSIS 235-ACRE SITE WEST OF WILLISTON, NORTH DAKOTA PREPARED FOR: PPL GROUP, LLC SEPTEMBER 28, 2012 PREPARED BY: 2953 SOUTH PEORIA STREET, SUITE 101 AURORA, COLORADO (303) PHONE (303) FAX Economic & Market Research / Land & Development Planning Landscape Architecture / Community Planning & Design Golf Feasibility Analysis

3 TABLE OF CONTENTS Executive Summary... i I. Introduction... 1 II. Site and Area Description... 4 III. Williams County and Roosevelt County Economic Base A. Historical Employment Growth Trends... 8 B. Projected Employment Growth C. Population and Household Growth Trends in Williams and Roosevelt Counties D. Housing Population Trends in Williams and Roosevelt Counties E. Residential Construction Trends in Williams and Roosevelt Counties F. Population and Household Growth Projections in Williams and Roosevelt Counties IV. Residential Market Analysis Part I: Demand A. Two County Projected Residential Demand by Unit Type B. Projected Rental Housing Demand by Unit Type in the Two County Area C. Residential Purchasing Capacity, Rental Capacity and Demand by Price Range in The Two County Area Part II: Supply A. Traditional Single-Family Residential Projects in Williston B. Williston Area Residential Estate Lot Developments C. Single-Family Residential Sales Characteristics in Williston D. Multi-Family Rental Apartment Projects in Williston 1. New Apartment Projects Planned/Proposed Apartment Projects Existing Apartment Projects E. Townhome Projects in Williston F. Manufactured Home Projects in Williston G. Rent Trends in Williston H. Temporary Housing Statistics in Williams County Man Camp Housing Hotels/Motels Recreation Vehicle Parks Part III: Residential Potential A. Residential Subject Site Potential ACRE SITE THK Associates, Inc.

4 TABLE OF CONTENTS V. Hotel Market Analysis A. Historical Lodging Data for the Two County Area B. Pent-up Hotel Room Demand in the Two County Area C. Completed Hotels/Motels in the Two County Area D. Projected Hotel Room Demand in the Two County Area E. Subject Site Hotel Room Demand Potential VI. Commercial Market Analysis Part I: Retail Market Analysis A. Retail Sales and Development Trends - National Trends B. Growth Projections in the Subject Site Retail Primary Trade Area C. Sales Tax Revenues in North Dakota and Williston D. Retail Primary Trade Area Expenditure Patterns E. Retail Development Trends Regional F. Estimates for Retail Space Demand by Store Type G. Retail Inventory in the Williston Environs H. Retail Potentials and Recommendations at the Subject Site Part II: Commercial Market Analysis A. New Employment Housed in Commercial Space B. Projected Commercial Space Demand in the Two County Area C. Projected Commercial Space Demand at the Subject Site D. Comparable Commercial Rents in the Williston Environs E. Comparable Commercial Lot Prices in the Williston Environs VII. Site Recommendations A. Land Use Program VIII. Williston Infrastructure A. Expansion Plans Figures 1. Regional Location Map Site Vicinity Map Site Aerial Williams County Zoning Map Williams County and Roosevelt County Boundary Map Representative Single-Family Projects in Williston Map Residential Estate Lot Developments in Williston Map ACRE SITE THK Associates, Inc.

5 TABLE OF CONTENTS 8. Representative Apartment Projects in Williston Map Planned/Proposed Apartment Projects in Williston Map Existing Apartment Projects in Williston Map Active Manufactured Home Communities in Williston Map Representative Townhome Projects in Williston Map Major Man Camp Locations in Williams County Map Recreational Vehicle Parks in the Two County Area Map Existing and Planned Hotels in Williston Map Subject Site Retail Trade Area Map Commercial/Flex Lot Sales in Williston Map Williston Utility Map Williston Proposed Truck Bypass Routes ACRE SITE THK Associates, Inc.

6 EXECUTIVE SUMMARY EXECUTIVE SUMMARY The purpose of this market analysis has been to determine the development potentials for the approximate 235-acre site owned by the PPL Group/Sandwins and located approximately 16 miles west Williston, North Dakota in Williams County along U.S. Highway 2. This study will explore potentials for single-family residential units, multi-family residential rental apartments, hotel room demand and commercial space demand. The following statistics have been put together by THK Associates, Inc. for the reader to better understand the unique and dynamic nature of the current economic boom that is underway in Williston, ND: I. Socio-Economic Facts Regarding the Williston Basin 1. The State of North Dakota is the 2nd largest oil producer in the United States after recently surpassing Alaska, ranking 2nd to only Texas. 2. Estimates at the end of 2011 put the economic impact of the oil industry at $2 billion per month to the State of North Dakota. 3. 1,926 total well permits were issued in North Dakota in 2011, up from 1,680 in 2010, 627 in 2009, 917 in 2008, 497 in 2007 and 422 in #1 is North Dakota s current national rank according to the Bloomberg Economic Evaluation of States Index. 5. Tremendous oil reserves are being estimated for the Williston Basin/Bakken Formation which occurs in North Dakota, Montana, South Dakota and in parts of Canada. The USGS in 2008 estimated the amount of oil in the Williston Basin at 3.65 to 4.5 billion barrels and more recently industry experts estimate the amount of oil in Williston Basin at billion barrels. These total estimates vary significantly and could increase dramatically in the future, as drilling companies are now not only drilling in the Bakken Formation, but also into the Three Forks Formation, which is directly below the Bakken. There is also a third, deeper formation that has not been drilled into yet, but is expected to contain significant oil reserves itself. 6. In North Dakota there were approximately 6,617 (as of January 2012) active oil wells and these are producing over 545,000 barrels of oil per day. In March 2012, the number of active oil wells increased to 6,636 active wells that were producing 575,490 barrels of oil per day. These numbers continued to increase in April 2012 to 7,025 wells producing 609,373 barrels per day. As of July 2012, there 7,467 active wells producing 674,066 barrels per day. As of April 2012, North Dakota accounted for approximately 9.7% of the 6.25 million barrels of oil that are produced on average each day in the United States. 7. It is estimated that at capacity, there will be 45,000 50,000 oil wells pumping out of Williston Basin and each well will have a life estimated at years. 8. Today there are approximately 210 oil drilling rigs in North Dakota drilling oil wells in Williston Basin with an additional 17 rigs drilling in eastern Montana. It is estimated that the total rig count in the Bakken could peak over at over 250 rigs by It takes approximately days to drill a well. Also, over 2,000 truck trips are associated with the drilling of one oil well. In the last two years the rig count has been growing by 6-7 new rigs per month. 9. It is estimated that there are upwards of 500 jobs associated with one oil well. This includes everything from land men, site preparers, drilling rig hands, casing crews, fracking crews, cementing crews, geologists, truck drivers, roustabouts, work-over crews, support administration staff, miscellaneous service crews, etc. 235-ACRE SITE i THK Associates, Inc.

7 EXECUTIVE SUMMARY 10. Once an oil well is operational, it is estimated that at least 10% of the original 500 total workers that were required to get the well operational will be required to service the operating wells, not including additional work to the wells including re-fracking. The 10% figure does include office staff at oil companies. The workers associated with the 10% figure will be associated with multiple wells, as are the approximate 500 workers that are required to get a well operational. 11. After the oil well is drilled, on average, one permanent operational job is associated with each well. At capacity, the Williston Basin should produce a total of 45,000-50,000 oilrelated jobs that will last years in the region based on a generic average of one permanent operational job per well and an estimated 45,000 to 50,000 possible wells. 12. A total of 210 rigs that take days to drill a new oil well have the capacity to create 2,700 oil wells per year. With 45,000 50,000 wells estimated to be needed, this results in a life cycle of years to put in place enough oil wells for the oil in Williston Basin. In 2010, 1,213 new oil wells were put into production. The common goal is for 2,100 oil wells to be drilled per year. 13. A geologist recently stated that there is at least one additional deeper formation that may include up to 3 separate other oil yielding formations are in this geographic area. 14. There are approximately 880 oil service companies in North Dakota today and 350 (40%) are based in the City of Williston. 15. Approximately 51% of the energy mining related jobs in North Dakota are in Williams County. 16. In 2010, North Dakota produced 113 million barrels of oil or 356,505 barrels per day as opposed to 79.9 million barrels in In 2010, there was an average of 5,331 producing wells, so the average well produced 67 barrels per day. In November 2011, there were 6,332 active wells producing 509,726 barrels per day, or an average of 80.5 barrels per day per well. By January of 2012, there were 6,617 wells producing and average of 545,161 barrels per day. In March of 2012, when North Dakota passed Alaska in oil production, there were 6,636 active wells producing 575,490 barrels per day. 17. As of 2011, a record was established for oil production out of one well when 7,009 barrels were produced in a 24-hour period. Brigham Exploration has drilled 61 consecutive wells with 20 plus fracking stages with an average yield of 2,880 barrels per day. The growth in oil production from one well from 67 barrels per day to 7,009 barrels per day demonstrates the impact of the new technology associated with fracking. 18. The cost to drill an oil well in the Williston Basin is approximately $8.0 million and the pay back is 1.5 years with an estimated life of years, producing on average 550,000 barrels of oil. 19. In April of 2011, a barrel of Bakken oil was priced at $103.90/barrel and it peaked in July of 2008 at $136.29/barrel. As of September 19, 2012, WTI crude oil is priced at $91.98 per barrel. 20. In March of 2011, 359,000 barrels per day were produced in the Bakken and estimates are for the production of million barrels per day by A new high was set in July 2012 at 674,066 barrels per day. 10 years ago, only 86,072 barrels of oil were produced every day in North Dakota. 21. Halliburton in the spring of 2011 announced that they were going to hire between 10,000 and 13,000 new employees with most to work in the Williston Basin. 22. It is estimated by the local Williston Economic Development Office that there are between 3,000 4,000 unfilled jobs in the Williston area with 250 new jobs being created each month or 3,000 3,500 new jobs per year, which should be able to be sustained for a minimum of 5 years and more likely 20 years. 235-ACRE SITE ii THK Associates, Inc.

8 EXECUTIVE SUMMARY 23. In July of 2011, 250 companies in Williston advertised that they had a job opening. In July of 2011, the Williston Office of Job Service of North Dakota advertised on an average day openings for 1,400 job opportunities with 60% in the oil related industries. On April 17, 2012, 829 jobs were listed online by the North Dakota job service in Williston. 24. The annual median income (including benefits and overtime) per family is currently estimated at $81,000 in the Williston area. The $81,000 median income includes pay across all employment industries. The average oil worker is currently earning an average of $106,000 per year when adding in regular pay, overtime pay and benefits. In addition, many oil companies are providing monthly housing subsidies ranging from $500 to $2,500 per month per employee depending on their individual level of employment. To stay in a corporate owned man camp it costs an average of $ per night, which includes 3 meals per day. 25. A 6-month moratorium was declared on any new man camp construction in the City of Williston as of September 11, In March of 2012, the moratorium was upheld for new man camps indefinitely; however existing man camps with at least 200 beds can apply to expand in the future, but only on their existing respective properties. 26.Of the 16.9 million barrels of oil produced in North Dakota in January 2012, 14.1 million or 83.4% were produced in North Dakota s top four oil producing counties; McKenzie, Mountrail, Williams and Dunn. Production increased to 18.3 million barrels in April II. Demand For Residential Units In The City Of Williston/Williams County, North Dakota Significant indications of a pent-up demand exist today for residential construction in the City of Williston, Williams County of North Dakota. 1. From April 1, 2010 to July 1, 2011, Williston was the fastest growing micropolitan area in the country with an 8.8% increase in permanent population over that time period. 2. In the last 5 years, up to September 2011, the City of Williston has averaged the delivery of 200 rental apartments per year and 128 were added in 2009, 246 in 2010 and 537 through September 11, The City of Williston and its environs has an estimated 6,600 men living in permitted man camps and another 3,995 men are estimated to be living in unpermitted man camps. Unbelievably, another 1,995 men that are working full-time jobs in the oil industry are living in their cars or RV s. The surrounding County of Williams has recently placed a moratorium on man camps, which will only increase the demand for available housing. Other North Dakota counties have also recently issued 6- to 18- month moratoriums on man camps. 4. The City of Williston also has an estimated 1,215 mobile home pads and it added 303 in 2010 and 113 in There are no vacant mobile home pads in the City of Williston. Williams County added an additional 81 mobile home pads in 2010 and 9 more in 2011 outside the City limits of Williston. 5. As of May 2012, there are currently 12 hotels operating in Williston with a total of 1,012 rooms. There are an additional 4 hotels under construction that will add 535 additional rooms to the market for a total of 1,547 total rooms by the end of There are virtually no vacant hotel rooms in the City of Williston because the energy companies have long term leases on the majority of hotel rooms. 6. Halliburton has offered all men living in their man camp an incentive of $1,000/month plus $40/night to find alternative long term housing so they can accommodate housing for new employees. 235-ACRE SITE iii THK Associates, Inc.

9 EXECUTIVE SUMMARY 7. There are approximately 16,388 persons in man camps, cars, RV parks and hotel rooms in the Two County area. Assuming approximately 80% of people living in temporary housing would relocate to their own individual personal housing unit if available this suggests a pent-up demand for 5,598 residential units. If a wife and their children accompany each man, the total population associated with men living in temporary housing grows to approximately 49,000 and the pent-up housing demand estimate increases to approximately 16,800 units. 8. In 2010, 230 or 48.3% of residential permits in Williston were for single-family homes and the remaining 51.7% or 246 permits were for multi-family units. In 2011, 341 or 24.6% of the residential permits were for single-family homes, while the remaining 75.4% or 1,043 permits were issued for multi-family units. 9. Of the total pent-up demand from temporary housing, it is estimated that approximately 80% of these tenants would relocate to permanent housing if it was available and of that 80%, 85% would relocate to multi-family rental housing equaling 3,807 total units. It is estimated that 10% would relocate to single-family detached housing equaling 448 units and the remaining 5% would relocate to single-family attached housing equaling 224 units. 10. Based on a 20% market capture rate of new demand for mobile/modular/rv units, it is projected that the 235-acre Subject Site could absorb approximately 675 lots in the next 7 years. 11. The multi-family rental apartment market in Williston is currently experiencing approximately a 100% occupancy rate, including both newly finished and older, existing product. However, due to the location of the site, THK does not recommend multi-family product at the 235-acre site. III. Demand For Hotel Rooms in Williams County 1. There are currently 12 hotels operating in Williston with a total of 1,012 rooms. There are an additional 4 hotels under construction that will add 535 additional rooms to the market for a total of 1,547 total rooms by the end of There is an effective 99% occupancy rates at the Williston area hotels right now. Assuming that they operated at a conservative industry standard stabilization rate of 80%, then there is a pent-up demand for an additional 387 hotel rooms in the area. 3. Combining the pent-up demand, with the new demand from the projected employment growth, there is a projected annual demand for 246 new rooms annually over the next decade in the Two County area. IV. Demand For Commercial Space in Williams County 1. Retail sales in Williston and the Williams County environs have skyrocketed in recent years. In 2011 (third quarter) total retail sales in Williston were over $721,000,000 of which $609,000,000 were taxable. 2. From 2003 to 2011 (third quarter), Williston has gone from the lowest dollar volume of retail sales of major cities in North Dakota to the largest. 3. The site area s retail trade area total population (permanent and temporary) and total household numbers are projected to grow significantly over the next ten years. Currently there are 61,926 total people living in 23,147 households in the retail trade area. These numbers are expected to increase to 125,400 and 46,850 in 2017 and to 185,344 and 68,493 by ACRE SITE iv THK Associates, Inc.

10 INTRODUCTION I. INTRODUCTION The purpose of this market analysis has been to determine the development potentials for the approximate 235-acre site owned by Sandwins and located approximately 16 miles west of Williston, North Dakota and 2 ½ miles east of the Montana State Line along US Highway 2. The study will explore potentials for multi-family residential rental apartments, residential singlefamily, hotel room demand and retail/professional space and light industrial demand. The Williston environs are currently in the midst of an economic boom unlike anywhere in the country and has drawn much national interest of late, with articles having appeared in such national publications/shows as The Wall Street Journal, Money Magazine, and Mad Money. The reason for the boom relates to the energy industry, and more specifically the Bakken Basin, in which oil production has grown astronomically from 3,000 barrels per day in 2005 to over 674,000 barrels per day by July Additionally, some forecasters anticipate the Basin could yield up to 1,000,000 barrels of oil per day within the next 2 or 3 years. The subject site is comprised of approximately 235-acres west of Williston, strategically located along US Highway 2 in between Williston and the Montana State Line. In order to position the subject site for residential units, hotel rooms and retail/professional and industrial space in the market place and at the subject site, THK has undertaken the following research: Prepared an economic base analysis of the Williams County, North Dakota and Roosevelt County, Montana. Profiled Williams County and Roosevelt County; including population and household growth, employment growth, major employers, income and age characteristics, permit data, housing supply, and other relevant statistics. Interviewed key persons related to the energy industry in the Bakken environs and researched recent publications related to the subject. Determined a primary trade area each type of use studied at the subject site and examined key demographic data and growth potentials in the primary trade areas. Examined residential characteristics in the Williams County and Roosevelt County environs and inventoried comparative single-family and multi-family residential projects in the subject site s primary trade area. Interviewed city officials and local developers to identify planned/proposed single-family and multi-family residential. Determined absorption levels for single-family detached units and multi-family rental apartments at the subject site. This assessment of supply and demand allowed THK to project the pace of absorption and build-out for the single-family and multi-family rental apartments planned for the subject site. Additionally, THK has programmed recommended unit/home pricing for each type of residential unit. Compiled historical lodging data for Williams and Roosevelt Counties. 235-ACRE SITE 1 THK Associates, Inc.

11 INTRODUCTION Determined pent-up hotel room demand in Williams and Roosevelt Counties based on employment growth, current occupancy levels and traditional hospitality stabilization levels. Inventoried existing hotel/motel facilities in Williams and Roosevelt Counties, as well as interviewed City officials and local developers to determine how many hotels and rooms are currently under construction or being planned in the area. Determined the projected hotel room demand in Williams and Roosevelt Counties, combining the pent-up demand, with planned hotels and future employment and population growth statistics. Determined the total room demand potential for the subject site based on the area s demand as well as the strategic location of the subject site. Prepared an overview of national retail sales and development trends. Projected permanent and temporary population and household growth for the established subject site retail primary trade area. Compiled and analyzed sales tax revenue totals for the entire state of North Dakota as well as for Williston. Analyzed household expenditure patterns of the population within the retail primary trade area broken down by store type, total expenditures and percentage of gross income. Analyzed the specific store characteristics for each type of retail store including; median household expenditures, sales per square foot, median store size, expenditure support, etc. Estimated retail sales per square foot in the trade area broken down by store types. Examined current supported retail space in the trade area projected the supportable space over the next decade. Inventoried the major national/regional retail tenants in Williston as well as in Dickinson, ND, Minot, ND and Sidney, MT in order to understand the existing local retail market. Profiled the existing retail stores by size and type within the Williston environs. Projected the retail development potentials of the subject site over the next decade. Recommend a land use plan for the 235-acre subject site that included unit totals and acreage totals for individual types of uses. 235-ACRE SITE 2 THK Associates, Inc.

12 FIGURE 1 - REGIONAL LOCATION MAP SITE 235-ACRE SITE 3 THK Associates, Inc.

13 SITE AND AREA DESCRIPTION II. SITE AND AREA DESCRIPTION The City of Williston is located in Williams County in the northwestern part of the State of North Dakota, approximately 55 miles south of the United States/Canada border. The Williston area is located at the center of the drilling activity for the Bakken Formation, which covers a land mass of approximately 15,000 square miles that stretches from Saskatchewan, Canada to northeast Montana and into Central North Dakota. The area has experienced a tremendous economic boom in recent years, as the amount of oil production in barrels per day (bpd) has increased from 3,000 bpd in 2005 to over 674,000 bpd in July Interestingly, many industry experts project that the Basin will produce as many as 1,000,000 bpd of oil once operating at maximum capacity. The City of Williston is actively embracing this growth and is investing over $182 million in capital improvements (such as a new wastewater treatment facility and major road expansions) for the rapidly expanding population. Several international energy companies now have major operations in the Williston environs, and the area is home to over 380 oil field service companies. In recent months these oil companies have hired between employees per month, with an average salary in the $82,000 per year range (after including benefits and wages paid for overtime). In March 2011, the international energy giant Halliburton announced they would be hiring between 10,000-13,000 new employees, with the majority being designated for work in the Williston area. The key to this influx of jobs is sustainability, and the Williston Economic Development Corporation indicated that energy companies have stated they will continue hiring in the area for the next five and potentially (more likely) the next 20 years. Because of this major influx of jobs and a lack of housing supply, Williston apartments, hotels, and temporary man camps are operating at full capacity at nearly all times and demand for new product is very high. This is evidenced by lodging tax receipts that were nearly four times greater in 2010 as compared to 2005, real estate sales prices that have skyrocketed, and monthly rents at apartment complexes that have doubled (or in some instances tripled) due to the increased demand. Construction activity in the Williston environs is also thriving. There are four hotels (535 new rooms) that are currently under construction, as well as at least five new apartment projects (>1,000 units). During 2010, 393 single-family permits and 476 multi-family residential permits were issued in the City. During 2011, these numbers increased to 1,327 single-family permits and 1,384 multi-family permits. Dating back to 1980, the average annually single-permit activity is 114 and the annual average multi-family permit total is 131. Additionally, many of the area roads are constantly filled with traffic and there is a continuous flurry of activity at area retailers and restaurants. Daily traffic counts on the Williston bypass have increased from approximately 9,000 vehicles per day in 2008 (15-20% truck traffic) to over 28,000 vehicles per day in 2011 (33-35% truck traffic). The subject sits approximately 16 miles west of Williston and straddles U.S. Highway 2, west of 153 rd Avenue. Access to the site is currently provided by U.S. Highway 2 from the east or west and 153 rd Avenue from the north or south. Visibility to the site is excellent as it fronts the north and south sides of Highway 2. There are no apparent constraints for development at the subject site. 235-ACRE SITE 4 THK Associates, Inc.

14 FIGURE 2 SITE VICINITY MAP SITE 235-ACRE SITE 5 THK Associates, Inc.

15 FIGURE 3 SITE AERIAL SITE 235-ACRE SITE 6 THK Associates, Inc.

16 FIGURE 4 WILLIAMS COUNTY ZONING MAP SITE 235-ACRE SITE 7 THK Associates, Inc.

17 WILLIAMS AND ROOSEVELT COUNTIES ECONOMIC BASE III. WILLIAMS COUNTY AND ROOSEVELT COUNTY ECONOMIC BASE A. Historical Employment Growth Trends Employment trends are prime indicators of the economic growth of an area. Increases in employment generate growth for most sectors of the local economy and dictate the rate at which it will expand. This section looks at Two County Region as a whole as well as Williams and Roosevelt County s individual various employment figures and projects their course over the next decade by industry. Table III-1 shows historical employment growth by year in the Two County area. Total employment has grown from 13,236 in 1970 to 33,376 in 2011 an annual average of 491 jobs. Tables III-1a and III-1b show the individual county employment statistics for Williams County and Roosevelt County. As is shown, the majority of the Two County area employment growth has occurred in Williams County. Over the last decade, the Two County area has added 1,525 jobs on an annual basis, and the number of jobs added annually increased dramatically between 2008 to 2011, with an average annual increase of 3,689 new jobs. The recent explosion in employment actually began in 2005, as oil exploration and oil service companies began securing leases and preparing for the current drilling and service activity. 655 jobs were added in 2005 to Two County area after just 114 new jobs in 2004 and only 58 new jobs in First adopted in 1997, the North American Industry Classification System (NAICS) replaced the Standard Industrial Classification (SIC) index in 2001 as the way the government classified employment sectors. The new system allows the government an improved method of tracking economic statistics by focusing on emerging economic activities which can better reflect the changing economy. Employment data by industry for the Two County area is displayed below in Table III-2. Since the institution of NAICS in 2001, the Two County area has experienced growth in almost every employment sector. In terms of growth magnitudes, the most significant contributor to the local economy has obviously been the Mining sector, which encompasses energy and oil related industries and averaged the addition of approximately 823 new jobs over the past five years and 899 jobs annually over the past three years. Other strong growth sectors in the Two County area include Transportation/Warehousing, Wholesale Trade, Government, and Health Care. Many of the new positions being added in the Williston environs are spin offs related to industries which serve the employees working in the oil servicing fields. 235-ACRE SITE 8 THK Associates, Inc.

18 FIGURE 5 - WILLIAMS COUNTY AND ROOSEVELT COUNTY BOUNDARY MAP SITE 235-ACRE SITE 9 THK Associates, Inc.

19 WILLIAMS AND ROOSEVELT COUNTIES ECONOMIC BASE Table III-1: Employment Trends in the Two County Area, Annual Change Year Total Employment Numerical Percent , , % ,045 3, % , % ,980-2, % , % ,263-1, % ,076-2, % ,975-1, % , % , % , % , % , % , % , % , % , % , % , % , % , % , % , % , % , % , % , % , % ,308 1, % , % ,645 3, % ,376 7, % Annual Change % , % , % , % Source: U.S. Dept. of Commerce, Bureau of Economic Analysis, and THK Associates, Inc. 235-ACRE SITE 10 THK Associates, Inc.

20 WILLIAMS AND ROOSEVELT COUNTIES ECONOMIC BASE Table III-1a: Employment Trends in Williams County, Annual Change Year Total Employment Numerical Percent , , % ,874 3, % , % ,520-2, % , % , % ,962-1, % , % , % , % , % , % , % , % , % , % , % , % , % , % , % , % , % , % , % , % , % , % ,079 1, % , % ,279 2, % ,633 7, % Annual Change % , % , % , % Source: U.S. Dept. of Commerce, Bureau of Economic Analysis, and THK Associates, Inc. 235-ACRE SITE 11 THK Associates, Inc.

21 WILLIAMS AND ROOSEVELT COUNTIES ECONOMIC BASE Table III-1b: Employment Trends in Roosevelt County, Annual Change Year Total Employment Numerical Percent , , % , % , % , % , % , % , % , % , % , % , % , % , % , % , % , % , % , % , % , % , % , % , % , % , % , % , % , % , % , % , % , % Annual Change % % % % Source: U.S. Dept. of Commerce, Bureau of Economic Analysis, and THK Associates, Inc. 235-ACRE SITE 12 THK Associates, Inc.

22 WILLIAMS AND ROOSEVELT COUNTIES ECONOMIC BASE Employment Trends in the Two County Area, ,000 30,000 25,000 20,000 15,000 10,000 5, ACRE SITE 13 THK Associates, Inc.

23 WILLIAMS AND ROOSEVELT COUNTIES ECONOMIC BASE Table III-2: Employment by Industry for Williams and Roosevelt Counties, Industry Total Non-Farm (By Place of Work) 10,813 17,530 18,398 15,268 15,633 15,359 15,659 16,256 16,244 16,435 16,443 16,480 16,005 11,790 Agricultural Services, Forestry, & Fisheries Mining 610 2,550 2,633 1,557 1,464 1,302 1,216 1,143 1,190 1,298 1,248 1, ,005 Construction 402 1, Manufacturing Transportation & Utilities 651 1,184 1, Wholesale Trade 531 1,225 1, Retail Trade 2,307 3,177 3,241 2,699 2,855 2,828 2,920 3,138 3,133 3,149 3,146 3,138 3,069 2,325 Finance, Insurance, Real Estate Services 2,761 3,717 4,115 3,946 4,184 4,317 4,537 4,808 4,702 4,783 4,882 4,944 4,857 3,731 Government 2,364 2,596 3,094 3,187 3,212 3,304 3,336 3,387 3,428 3,455 3,459 3,512 3,630 1,780 Farm 2,423 2,127 1,865 1,699 1,645 1,620 1,654 1,656 1,683 1,696 1,702 1,731 1, Total Employment 13,236 19,657 20,263 16,967 17,278 16,979 17,313 17,912 17,927 18,131 18,145 18,211 17,723 12,759 Sector Average Annual Change Industry Code '01-'11 '06-'11 '08-'11 Total Non-Farm (By Place of Work) 16,406 16,551 15,532 16,839 17,510 18,487 18,983 20,813 21,146 24,167 31,383 1,498 2,579 3,523 Forestry, fishing, and related activities Mining ,041 1,165 1,554 2,024 2,294 3,442 3,379 5,103 6, Utilities Construction ,075 1,209 1,235 1,456 1, Manufacturing Wholesale trade ,033 1,138 1,508 1, Retail Trade ,192 2,255 2,117 2,090 2,170 2,206 2,129 2,224 2,283 2,316 3, Transportation and warehousing ,129 1, Information Finance and insurance Real estate and rental and leasing , Professional and technical services Management of companies and enterprises Administrative and waste services Educational services Health care and social assistance 62 2,373 2,195 2,211 2,139 2,105 2,147 2,180 2,179 2,209 2,224 3, Arts, entertainment, and recreation Accommodation and food services ,130 1, ,240 1,288 1,305 1,298 1,297 1,323 1,420 1, Other services, except public administration 81 1,043 1,068 1,023 1,050 1,070 1,078 1,059 1,065 1,105 1,105 1, Government and government enterprises 90 3,652 3,742 3,839 3,759 3,710 3,709 3,685 3,696 3,750 3,770 5, Farm -- 1,725 1,608 1,512 1,492 1,476 1,435 1,481 1,495 1,477 1,478 1, Total Employment 18,131 18,159 17,044 18,331 18,986 19,922 20,464 22,308 22,623 25,645 33,376 1,525 2,691 3,689 Source: Bureau of Economic Analysis and THK Associates, Inc. 235-ACRE SITE 14 THK Associates, Inc.

24 WILLIAMS AND ROOSEVELT COUNTIES ECONOMIC BASE Employment Trends By Industry in Williams and Roosevelt Counties, '01-'11 '06-'11 '08-' ACRE SITE 15 THK Associates, Inc.

25 WILLIAMS AND ROOSEVELT COUNTIES ECONOMIC BASE Percent of Total Employment in Williams and Roosevelt Counties, 2011 O ther serv ices, except public administration 4.5% Gov ernment and gov ernment enterprises 15.3% Forestry, fishing, and related activ ities 0.6% F arm 6.0% Mining 18.4% Utilities 0.4% C onstruction 5.6% A ccommodation and food serv ices 5.6% A rts, entertainment, and recreation 1.0% Health care and social assistance 9.0% Educational serv ices 0.5% A dministrativ e and waste serv ices 2.4% Management of companies and enterprises 0.3% Professional and technical serv ices 2.5% Information 0.9% Retail Trade 9.4% Transportation and warehousing 4.2% Manufacturing 1.8% Wholesale trade 5.5% Real estate and rental and leasing 3.4% F inance and insurance 2.7% 235-ACRE SITE 16 THK Associates, Inc.

26 WILLIAMS AND ROOSEVELT COUNTIES ECONOMIC BASE B. Projected Employment Growth Williams County is major hub for several international energy/oil service companies, and the vast majority of these companies are rapidly expanding their operations in the area as the Bakken Basin continues to increase its drilling and production capabilities. Williams County has recently become a key focus in many national newspapers, industry publications, and television shows. The international energy giant Halliburton recently announced (spring 2011) that the company has plans to add between 10,000-13,000 new employees in the Williston/Williams County environs in the coming years. Additionally, there are over 380 oil service providers in the Williston environs at present. Many analysts have projected major growth potential for drilling at the basin, and some estimates project that as many as billion barrels of oil may eventually be extracted from the basin, up significantly from the previous estimate 4.0 billion barrels in This dramatic increase in oil reserves is related to the new findings in the three major formations. Most drilling activity is currently going on in the Bakken Formation, which is the upper of the three main formations. Some of the newer deeper wells have recently entered the Three Forks Formation, which sits directly below the Bakken. There is also a third formation lower that has not been drilled into yet, which is known to hold oil and gas, but how much and how it is dispersed is unclear at this time. Williams County is expected to operate as the base for this increased drilling in the future. Therefore, Table III-3 projects employment by industry for Two County area from 2012 to 2022 based off of industry projections for oil servicing in the area as well as conversations with local authorities and key industry leaders. The Two County area is projected to experience a yearend gain of approximately 6,045 jobs in 2012 and add approximatley 6,550 jobs in It is projected that the area will continue to grow significantly in the coming years with the addition of approximately 7,107 jobs in 2014 and 7,716 jobs in 2015, when the market stabilizes somewhat and future activity is more constant. As shown, the area will continue to experience significant growth with total employment averaging increases of 6,795 jobs annually, or approximately 10.9% over the next decade. The Mining sector will lead the way averaging annual gains of 2,227 employees from 2012 to The Construction sector will also be very strong over the next decade, averaging annual gains of 1,558 employees. Many other industries will also experience significant gains to keep pace with the services required by the rapid influx of oil industry employees, these include; wholesale trade, retail trade, transportation and warehousing, real estate and rental leasing, health care and social assistance and accommodation and food services. As with current employment figures, the majority of the employment growth will be focused near Williston in Williams County. Employment projections are separated by county in Tables III-3a and III-3b for Williams County and Roosevelt County, respectively. 235-ACRE SITE 17 THK Associates, Inc.

27 WILLIAMS AND ROOSEVELT COUNTIES ECONOMIC BASE Table III-3: Projected Employment in the Two County Area, Annual Average Rate of Historical Annual Industry Change Change Total Non Farm (By Place of Work) 10.9% 31,383 37,382 43,891 50,960 58,642 65,948 73,089 80,009 86,585 92,917 99, ,089 6,771 Forestry, fishing, and related activities 13.6% Mining 14.3% 6,139 7,938 9,963 12,223 14,725 17,137 19,513 21,824 24,023 26,142 28,217 30,208 2,227 Utilities 20.3% ,033 1,150 1, Construction 21.1% 1,872 2,687 3,704 4,951 6,455 8,024 9,675 11,375 13,077 14,789 16,531 18,262 1,558 Manufacturing 9.1% ,063 1,174 1,277 1,373 1,461 1,543 1,621 1, Wholesale trade 8.0% 1,840 2,140 2,443 2,751 3,064 3,342 3,600 3,837 4,051 4,250 4,437 4, Retail Trade 6.6% 3,143 3,567 3,986 4,402 4,817 5,180 5,510 5,811 6,080 6,327 6,558 6, Transportation and warehousing 8.0% 1,417 1,648 1,881 2,118 2,359 2,574 2,772 2,955 3,120 3,273 3,417 3, Information 11.1% ,061 1, Finance and insurance 8.9% 896 1,058 1,225 1,398 1,575 1,734 1,883 2,021 2,147 2,265 2,376 2, Real estate and rental and leasing 9.8% 1,123 1,347 1,582 1,827 2,082 2,315 2,534 2,739 2,927 3,103 3,272 3, Professional and technical services 8.7% ,115 1,267 1,424 1,565 1,695 1,817 1,927 2,029 2,127 2, Management of companies and enterprises 22.6% , Administrative and waste services 8.9% ,091 1,244 1,402 1,544 1,676 1,799 1,911 2,016 2,115 2, Educational services 17.0% , Health care and social assistance 7.1% 3,005 3,439 3,870 4,302 4,736 5,117 5,467 5,785 6,072 6,336 6,583 6, Arts, entertainment, and recreation 8.7% Accommodation and food services 11.4% 1,863 2,297 2,762 3,259 3,788 4,281 4,752 5,198 5,614 6,007 6,386 6, Other services, except public administration 5.5% 1,506 1,675 1,837 1,996 2,152 2,286 2,407 2,515 2,612 2,700 2,781 2, Government and government enterprises 2.5% 5,104 5,365 5,604 5,826 6,034 6,207 6,357 6,489 6,603 6,705 6,798 6, Farm 1.1% 1,993 2,040 2,081 2,118 2,153 2,181 2,205 2,225 2,243 2,259 2,273 2, Total Employment 10.5% 33,376 39,421 45,972 53,079 60,794 68,129 75,294 82,235 88,828 95, , ,375 6,795 Job growth/(losses) 6,045 6,550 7,107 7,716 7,335 7,165 6,941 6,593 6,348 6,221 5, Source: Williston Economic Development, and THK Associates, Inc. 235-ACRE SITE 18 THK Associates, Inc.

28 WILLIAMS AND ROOSEVELT COUNTIES ECONOMIC BASE Table III-3a: Projected Employment in Williams County, Annual Average Rate of Historical Annual Industry Change Change Total Non Farm (By Place of Work) 11.4% 26,526 31,951 37,869 44,322 51,357 58,066 64,636 71,012 77,077 82,923 88,657 94,171 6,222 Forestry, fishing, and related activities 13.6% Mining 14.3% 6,309 8,157 10,238 12,560 15,132 17,610 20,051 22,426 24,686 26,864 28,996 31,042 2,289 Utilities 20.3% Construction 21.1% 1,660 2,382 3,284 4,389 5,723 7,114 8,577 10,085 11,594 13,112 14,656 16,191 1,381 Manufacturing 9.1% ,018 1,108 1,191 1,267 1,338 1,405 1, Wholesale trade 8.0% 1,790 2,081 2,376 2,676 2,980 3,251 3,502 3,732 3,941 4,134 4,316 4, Retail Trade 6.6% 2,403 2,727 3,047 3,365 3,682 3,960 4,212 4,442 4,648 4,837 5,013 5, Transportation and warehousing 8.0% 1,236 1,437 1,640 1,847 2,057 2,244 2,417 2,576 2,720 2,854 2,979 3, Information 11.1% Finance and insurance 8.9% ,089 1,242 1,400 1,542 1,674 1,797 1,909 2,013 2,112 2, Real estate and rental and leasing 9.8% 1,107 1,329 1,560 1,802 2,054 2,283 2,499 2,701 2,887 3,061 3,227 3, Professional and technical services 8.7% ,018 1,118 1,212 1,298 1,377 1,450 1,520 1, Management of companies and enterprises 22.6% ,026 1,155 1, Administrative and waste services 8.9% 996 1,176 1,362 1,553 1,750 1,927 2,093 2,246 2,386 2,517 2,640 2, Educational services 17.0% Health care and social assistance 7.1% 2,528 2,893 3,256 3,619 3,984 4,305 4,599 4,867 5,108 5,330 5,538 5, Arts, entertainment, and recreation 8.7% Accommodation and food services 11.4% 1,611 1,985 2,388 2,817 3,275 3,701 4,108 4,494 4,854 5,193 5,521 5, Other services, except public administration 5.5% 1,210 1,345 1,475 1,603 1,728 1,836 1,932 2,020 2,097 2,168 2,233 2, Government and government enterprises 2.5% 2,795 2,938 3,069 3,190 3,304 3,399 3,481 3,553 3,616 3,671 3,722 3, Farm 1.1% 1,148 1,175 1,198 1,220 1,240 1,256 1,270 1,282 1,292 1,301 1,309 1, Total Employment 11.2% 27,674 33,126 39,067 45,542 52,597 59,322 65,906 72,293 78,369 84,224 89,966 95,488 6,236 Job growth/(losses) 5,452 5,941 6,475 7,055 6,725 6,584 6,388 6,075 5,855 5,743 5, Source: Williston Economic Development, and THK Associates, Inc. 235-ACRE SITE 19 THK Associates, Inc.

29 WILLIAMS AND ROOSEVELT COUNTIES ECONOMIC BASE Table III-3b: Projected Employment in Roosevelt County, Annual Average Rate of Historical Annual Industry Change Change Total Non Farm (By Place of Work) 7.2% 4,857 5,430 6,022 6,638 7,285 7,882 8,453 8,998 9,508 9,995 10,467 10, Forestry, fishing, and related activities 13.6% Mining 14.3% Utilities 20.3% Construction 21.1% ,097 1,290 1,483 1,677 1,875 2, Manufacturing 9.1% Wholesale trade 8.0% Retail Trade 6.6% ,037 1,135 1,220 1,298 1,369 1,432 1,491 1,545 1, Transportation and warehousing 8.0% Information 11.1% Finance and insurance 8.9% Real estate and rental and leasing 9.8% Professional and technical services 8.7% Management of companies and enterprises 22.6% Administrative and waste services 8.9% Educational services 17.0% Health care and social assistance 7.1% ,006 1,045 1, Arts, entertainment, and recreation 8.7% Accommodation and food services 11.4% Other services, except public administration 5.5% Government and government enterprises 2.5% 2,309 2,427 2,535 2,636 2,730 2,808 2,876 2,936 2,987 3,033 3,075 3, Farm 1.1% Total Employment 6.6% 5,702 6,295 6,904 7,536 8,197 8,807 9,388 9,941 10,459 10,952 11,431 11, Job growth/(losses) Source: Williston Economic Development, and THK Associates, Inc. 235-ACRE SITE 20 THK Associates, Inc.

30 WILLIAMS AND ROOSEVELT COUNTIES ECONOMIC BASE Historical and Projected Employment Trends in the Two County Area, , ,000 80,000 60,000 40,000 20,000 0 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 Historical Projected 235-ACRE SITE 21 THK Associates, Inc.

31 WILLIAMS AND ROOSEVELT COUNTIES ECONOMIC BASE Table III-4 displays the top 15 employers in Williston and as expected many are oil/gas related. Nabors Drilling, USA, Inc. is the largest employer in the area, followed by Halliburton Energy Services, Inc. and Mercy Medical Center. Table III-4: Largest Employers in Williston*, 2011 Employer Industry 1 Nabors Drilling, USA, Inc. Well Drilling 2 Halliburton Energy Services, Inc. Well Services 3 Mercy Medical Center Medical 4 Williston Public Schools Education 5 Wal-Mart Retail 6 Bethel Lutheran Home Nursing Care 7 Nondisclosable -- 8 Pioneer Drilling Services Well Drilling 9 Key Energy Services Well Services 10 Schlumberger Well Services Well Services 11 Sanjel Corporation Well Services 12 City of Williston Government 13 Williams County Government 14 Ensign United States Drilling, Inc. Well Drilling 15 JK Foods, Inc. Retail *Employers ranked by number of employees, total numbers not disclosed Source: North Dakota Job Force and THK Associates, Inc. Additionally, Table III-5 compares the average hourly and annual (based on 40 hour work week) rate of an oil field worker in the Two County area to other professions in the States of North Dakota and Montana as well as an overall average for all professions in both the states and counties. The average oil field worker is currently earning $50.96 per hour, which is much higher than the overall North Dakota state hourly average rate of $19.94 and the overall Montana state wage of $ It is also significantly higher than the Williams County overall average of $30.83 per hour and the Roosevelt County wage of $ ACRE SITE 22 THK Associates, Inc.

32 WILLIAMS AND ROOSEVELT COUNTIES ECONOMIC BASE Table III-5: Hourly and Annual Income Comparisons by Occupational Group, December 2011 Annual Salary Occupation Hourly Rate Based on 40 Hrs/Wk Oil Field Worker in Williams County $50.96 $106,000 State of North Dakota Management $40.94 $85,155 Business and Financial Operations $25.55 $53,144 Computer and Mathematical $25.80 $53,664 Architecture and Engineering $30.68 $63,814 Life, Physical, and Social Science $23.36 $48,589 Community and Social Services $18.16 $37,773 Legal $31.15 $64,792 Education, Training and Library $19.74 $41,059 Arts, Design, Entertainment, Sports and Media $16.22 $33,738 Healthcare Practitioners and Technical $27.98 $58,198 Healthcare Support $12.46 $25,917 Protective Service $18.07 $37,586 Food Preparation and Serving Related $9.34 $19,427 Building and Grounds Cleaning and Maintenance $11.28 $23,462 Personal Care and Service $11.18 $23,254 Sales and Related $14.69 $30,555 Office and Administrative Support $14.14 $29,411 Farming, Fishing and Forestry $12.37 $25,730 Construction and Extraction $20.19 $41,995 Installation, Maintenance and Repair $20.39 $42,411 Production $16.57 $34,466 Transportation and Material Moving $16.25 $33,800 Average of All Professions State of North Dakota $19.84 $41,270 Average of All Professions State of Montana $16.64 $34,610 Average of All Professions Williams County $30.83 $64,126 Average of All Professions Roosevelt County $14.74 $30,660 Source: Job Service of North Dakota and Montana and THK Associates, Inc. 235-ACRE SITE 23 THK Associates, Inc.

33 WILLIAMS AND ROOSEVELT COUNTIES ECONOMIC BASE Average Annual Salary, December 2011 $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 $0 Average of All Professions State of North Dakota Average of All Professions State of Montana Average of All Professions Williams County Average of All Professions Roosevelt County Oil Field Worker in Williams County 235-ACRE SITE 24 THK Associates, Inc.

34 WILLIAMS AND ROOSEVELT COUNTIES ECONOMIC BASE C. Population and Household Growth Trends in Williams and Roosevelt Counties Population and household growth drive the demand for residential real estate development, and the population and household growth in Williams County has been strong, especially in recent years. Since 2000, Williams County has added an average of 1,243 people and 258 households annually; resulting in a compound annual growth rate for population and households of 4.8% and 2.7%, respectively. In 2012, Williams County has an estimated population of 34,677 persons living in 11,186 permanent households. The population and household figures referred to in the preceding text and illustrated in Table III-6 do not include an additional 16,388 temporary persons living in man camps, recreational vehicles, cars, and hotel/motel rooms as is shown later in Table III-8. Roosevelt County has not yet experienced the rapidly population growth that neighboring Williams County has gone through in recent years. Population and total households declined slightly from the 2000 to the 2010 census in Roosevelt County dropping from 10,620 people living in 3,581 households to 10,425 people living in 3,553 households. Population has increased slightly in the past two years to 10,642 people living in 3,627 households. 235-ACRE SITE 25 THK Associates, Inc.

35 WILLIAMS AND ROOSEVELT COUNTIES ECONOMIC BASE Table III-6: Estimates of Permanent Population and Households in Williams and Roosevelt Counties and the States of North Dakota and Montana, Roosevelt County State of Montana Williams County State of North Dakota Year Pop HH Pop HH Pop HH Pop HH ,467 3, , , ,237 7, , , ,999 3, , , ,129 8, , , ,620 3, , , ,761 8, , , , ,425 3, , , ,398 8, , , ,642 3,627 1,002, , ,677 11, , , ( ): #REF! ( ): Numerical ,750 4,110 Numerical ,530 Percent 0.1% 0.8% 1.2% Percent 1.4% 1.1% 0.1% 0.6% Percent of Percent of Montana 0.1% 0.2% 100.0% 100.0% North Dakota 54.2% 6.5% 100.0% 100.0% #N/A #N/A #N/A #N/A ( ): #N/A #N/A #N/A #N/A ( ): Numerical ,261 4,954 Numerical ,751 1,630 Percent -0.1% -0.1% 1.0% 1.4% Percent 2.3% 1.5% 0.3% 0.6% Percent of #N/A #N/A #N/A #N/A Percent of Montana -0.2% -0.1% 100.0% 100.0% North Dakota 35.2% 8.7% 100.0% 100.0% ( ): ( ): Numerical 2 4 8,385 4,707 Numerical 1, ,926 1,632 Percent 0.0% 0.1% 0.9% 1.2% Percent 4.8% 2.7% 0.4% 0.6% Percent of #N/A #N/A #N/A #N/A Percent of Montana 0.0% 0.1% 100.0% 100.0% North Dakota 42.5% 15.8% 100.0% 100.0% Source: U.S. Dept of Commerce, Bureau of Census, and THK Associates, Inc. 235-ACRE SITE 26 THK Associates, Inc.

36 WILLIAMS AND ROOSEVELT COUNTIES ECONOMIC BASE D. Housing Population Trends in Williams County and Roosevelt County Below, Table III-7 compares data from the 2000 and 2010 U.S. Census regarding total housing units in each of the two counties. The total housing units are separated into total occupied housing units and of those housing units, which are occupied by renters. There is also a breakdown of type of housing units based on size and type of units. Total housing units in Williams County increased from 9,680 to 10,891 during the ten-year time frame. The majority of the Williams County housing market is made up of single-family residences. This percentage decreased from 70.9% of the total units in 2000 to 69.5% of the total units in Large (20+ units) multi-family projects made up just 5.4% of the total units in Williams County in These totals increased to 6.1%, respectively in Of the occupied housing units, the percentage of renter occupied units increased in Williams County from 23.9% to 26.2% during the ten-year time frame. Total housing units in Roosevelt County increased from 4,044 to 4,062 during the ten-year time frame. The majority of the Roosevelt County housing market is made up of single-family residences. This percentage increased from 79.5% of the total units in 2000 to 81.7% of the total units in Large (10+ units) multi-family projects made up just 1.7% of the total units in Roosevelt County in These totals decreased to 1.0%, respectively in Of the occupied housing units, the percentage of renter occupied units decreased in Roosevelt County from 29.5% to 24.5% during the ten-year time frame. Table III-8 displays the total number of estimated residents living in the Two County area in This total estimate includes the 45,319 residents accounted for living in permanent households as well as the additional 16,388 estimated residents living in temporary housing. For the study s purposes, temporary housing has been defined to include the following types of housing; permitted man camps, unpermitted man camps, hotels/motels, RV parks and miscellaneous. The miscellaneous section includes those who may be living in vehicles, RV s not in permitted RV parks, various rental rooms, etc. The majority, 15,501 of the Two County area temporary residents reside in Williams County. The largest percentage of residents in temporary housing resides in the man camps. Over a third of the overall temporary population, 6,690, lives in permitted man camps, with an additional 3,995 estimated people living in unpermitted man camps. Over 2,100 people are currently living in the existing hotel/motel rooms, with this number expected to increase significantly with the addition of approximately 535 additional hotel rooms to the Williston market in There also approximately 1,270 people living in known RV parks and another 2,310 people living in other types of housing. In total, there are approximately 57,117 people currently living in the Two County area, with this number increasing every day as more of the oil field and related service jobs are filled. In September 2011, Williams County voted to place a minimum 6-month moratorium on man camp permits. The legal permitted man camps were originally given 2-year permits with possible renewal options. When the moratorium expired in March 2012, County officials voted to extend the moratorium indefinitely to new man camps. However, camps with at least 200 bed existing permits, will be allowed to apply for expansion permits going forward. Of the 9,777 total permits issued, only about 6,600 have been constructed to date. There has also been one additional man camp approved for approximately 500 beds that will be within the City limits of Williston. It will be operated by the City and 150 to 200 of the beds will be used for 235-ACRE SITE 27 THK Associates, Inc.

37 WILLIAMS AND ROOSEVELT COUNTIES ECONOMIC BASE construction laborers, which beds will be removed when there is no longer a high demand and a permanent 300 to 350 bed facility will remain. Roosevelt County has added a small man camp on the edge of Culbertson as well as a small modular man camp on the edge of Bainville. As the drilling expands into eastern Montana, the number of man camps there is expected to increase. The housing shortage is acute. City officials understand the seriousness of the housing shortage and organized a housing conference in May of 2012 to bring together approximately 400 builders, developers, analysts, industry experts, investors, etc. to try and plan how to build approximately 5,000 housing units in the next 24 months. 235-ACRE SITE 28 THK Associates, Inc.

38 WILLIAMS AND ROOSEVELT COUNTIES ECONOMIC BASE Table III-7: Total Housing Units and Type in Roosevelt and Williams Counties, 2000 & US Census 2010 US Census Roosevelt County % of Williams County % of Roosevelt County % of Williams County % of Total Total Total Total Total # of 4, % 9, % 4, % 10, % Housing Units Occupied Units 3, % 8, % 3, % 9, % Renter Occupied 1, % 2, % % 2, % Unit Type Breakdown 1 Unit - Detached 3, % 6, % 3, % 7, % 1 Unit - Attached % % % % 2 Units % % % % 3-4 Units % % % % 5-9 Units % % % % Units % % % % 20+ Units 5 0.1% % 3 0.1% % Mobile Homes % 1, % % % Boat, RV, Van, etc % 5 0.1% 0 0.0% % 4,044 9,675 4,062 10,817 Source: US Census Bureau and THK Associates, Inc. 235-ACRE SITE 29 THK Associates, Inc.

39 WILLIAMS AND ROOSEVELT COUNTIES ECONOMIC BASE Units 5% Williams County Housing by Unit Type, 2010 Census 20+ Units 6% Mobile Homes 9% Boat, RV, Van, etc. 1% 5-9 Units 5% 3-4 Units 3% 2 Units 2% 1 Unit - Attached 4% 1 Unit - Detached 65% 5-9 Units 3.7% Units 4.1% Roosevelt County Housing by Unit Type, 2010 Census 20+ Units 5.4% Mobile Homes 10.5% Boat, RV, Van, etc. 0.1% 3-4 Units 3.6% 2 Units 1.7% 1 Unit - Attached 4.2% 1 Unit - Detached 66.7% 235-ACRE SITE 30 THK Associates, Inc.

40 WILLIAMS AND ROOSEVELT COUNTIES ECONOMIC BASE Roosevelt County Williams County Two County Total Total # % of Total Total # % of Total Total # % of Total Population Source of People Population of People Population of People Population Permanent Population in Households 10, % 34, % 45, % Permitted Man Camp Residents % 6, % 6, % Unpermitted Man Camp Residents 0 0.0% 3, % 3, % Hotels/Motels* % 1, % 2, % RV Parks** % 1, % 1, % Miscellaneous % 1, % 2, % Total 2012 Population 11, % 50, % 61, % *Assumes 1.8 people per hotel room **Assumes 3.0 people per RV Source: THK Associates, Inc. Table III-8: Summary of Williams and Roosevelt Counties Total Population, ACRE SITE 31 THK Associates, Inc.

41 WILLIAMS AND ROOSEVELT COUNTIES ECONOMIC BASE E. Residential Construction Trends in Williams and Roosevelt Counties Residential housing permit data by unit type for the Williams County is displayed in Table III-9. The same information is displayed in Table III-10 for Roosevelt County. Tables III-9 and III-10 are summaries of single-family and multi-family permits since 1980 in each county. As shown, single-family/duplex and multi-family rental apartment units generate approximately the same amount of permits annually in Williams County, with single-family having accounted for roughly 47% of permit activity since 1980 and multi-family 53%. Unlike the rest of the country, Williams County has enjoyed a major construction boom in recent years, with an estimated 1,384 total residential permits issued in 2011, up from 476 in 2010 and 197 in In recent years, as with the oil boom in the early 1980 s, the residential permits have been dominated by multi-family permits. Since 2009, 69% of the residential permits have been for multi-family units. The housing boom that Williams County is currently experiencing has not yet spread to Roosevelt County. Roosevelt County reports only 17 residential permits, all single-family, have been issued since Over the last three years Williams County has issued an average of 686 permits annually. In 2011, Williams County issued the greatest number of single-family and multi-family permits in one year dating back to In 2011, Williams County issued 341 single-family permits and another 1,043 multi-family permits. The Two County area permit totals are shown below in Table III ACRE SITE 32 THK Associates, Inc.

42 WILLIAMS AND ROOSEVELT COUNTIES ECONOMIC BASE Table III-9: Residential Building Permits Issued by Type and Tenure in Williams County, * Single Multi- Family Percent Family Percent Percent Year Units of Total Units of Total Total of Total % % % % % % % % % % 0 0.0% % % 0 0.0% % % 0 0.0% % % 0 0.0% % % 0 0.0% % % 0 0.0% % % 0 0.0% % % 0 0.0% % % 0 0.0% % % 0 0.0% % % 0 0.0% % % 0 0.0% % % 0 0.0% % % 0 0.0% % % 0 0.0% % % 0 0.0% % % 0 0.0% % % 0 0.0% % % 0 0.0% % % 0 0.0% % % % % % 0 0.0% % % 0 0.0% % % 0 0.0% % % % % % % % % % % % % % % 1, % 1, % 2012 * % % 1, % 31-Year Average % % % Average between % % % Average between % % % 3-Year Average % % % *2012 permits include only data through August Source: U.S. Department of Commerce, C-40 Reports and THK Associates, Inc. 235-ACRE SITE 33 THK Associates, Inc.

43 WILLIAMS AND ROOSEVELT COUNTIES ECONOMIC BASE Historical Residential Buildng Permit Activity in Williams County, ,500 1,350 1,200 1, '80 '81 '82 '83 '84 '85 '86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 Annual Totals 235-ACRE SITE 34 THK Associates, Inc.

44 WILLIAMS AND ROOSEVELT COUNTIES ECONOMIC BASE Table III-10: Residential Building Permits Issued by Type and Tenure in Roosevelt County, * Single Multi- Family Percent Family Percent Percent Year Units of Total Units of Total Total of Total % 0 0.0% % % 0 0.0% % % 0 0.0% 0 0.0% % % % % 0 0.0% % % 0 0.0% % % 0 0.0% 0 0.0% % 0 0.0% % % 0 0.0% % % 0 0.0% % % 0 0.0% % % 0 0.0% % % 0 0.0% 0 0.0% % 0 0.0% % % % % % % % % 0 0.0% % % 0 0.0% % % 0 0.0% 0 0.0% % 0 0.0% % % 0 0.0% % % 0 0.0% 0 0.0% % 0 0.0% % % 0 0.0% % % 0 0.0% 0 0.0% % 0 0.0% % % 0 0.0% % % 0 0.0% % % 0 0.0% % % 0 0.0% % % 0 0.0% % % 0 0.0% 0 0.0% 2012 * 0 0.0% 0 0.0% 0 0.0% 31-Year Average % % % Average between % 0 0.0% % Average between % 0 0.0% % 3-Year Average % 0 0.0% % *2012 permits include only data through March Source: U.S. Department of Commerce, C-40 Reports and THK Associates, Inc. 235-ACRE SITE 35 THK Associates, Inc.

45 WILLIAMS AND ROOSEVELT COUNTIES ECONOMIC BASE Historical Residential Buildng Permit Activity in Roosevelt County, '80 '81 '82 '83 '84 '85 '86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 Annual Totals 235-ACRE SITE 36 THK Associates, Inc.

46 WILLIAMS AND ROOSEVELT COUNTIES ECONOMIC BASE Table III-11: Residential Building Permits Issued in Williams and Roosevelt Counties, Single Family Residential Permits Roosevelt County 37 Williams County Two County Total Percent Percent Percent Year Permits of Total Permits of Total Permits of Total % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % 2012 * 0 0.0% % % 31-Year Average % % % Average between % % % Average between % % % 3-Year Average % % % 235-ACRE SITE 37 THK Associates, Inc.

47 WILLIAMS AND ROOSEVELT COUNTIES ECONOMIC BASE Table III-11 (Cont.): Residential Building Permits Issued in Williams and Roosevelt Counties, Multi-Family Residential Permits Roosevelt County Williams County Two County Total Percent Percent Percent Year Permits of Total Permits of Total Permits of Total % % % % % % % % % % 0 0.0% 8 0.0% % 0 0.0% 0 0.0% % 0 0.0% 0 0.0% % 0 0.0% 0 0.0% % 0 0.0% 0 0.0% % 0 0.0% 0 0.0% % 0 0.0% 0 0.0% % 0 0.0% 0 0.0% % 0 0.0% 0 0.0% % 0 0.0% 0 0.0% % 0 0.0% 0 0.0% % 0 0.0% % % 0 0.0% 5 0.0% % 0 0.0% 0 0.0% % 0 0.0% 0 0.0% % 0 0.0% 0 0.0% % 0 0.0% 0 0.0% % 0 0.0% 0 0.0% % 0 0.0% 0 0.0% % 0 0.0% 0 0.0% % % % % 0 0.0% 0 0.0% % 0 0.0% 0 0.0% % 0 0.0% 0 0.0% % % % % % % % % % % % % % 1, % 1, % 2012 * 0 0.0% % % 31-Year Average % % % Average between % % % Average between % % % 3-Year Average % % % 235-ACRE SITE 38 THK Associates, Inc.

48 WILLIAMS AND ROOSEVELT COUNTIES ECONOMIC BASE Table III-11 (Cont.): Residential Building Permits Issued in Williams and Roosevelt Counties, Total Residential Permits Roosevelt County Williams County Two County Total Percent Percent Percent Year Permits of Total Permits of Total Permits of Total % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % 1, % 1, % 2012 * 0 0.0% 1, % 1, % 31-Year Average % % % Average between % % % Average between % % % 3-Year Average % % % *2012 permits include only data through August Source: U.S. Department of Commerce, C-40 Reports and THK Associates, Inc. 235-ACRE SITE 39 THK Associates, Inc.

49 WILLIAMS AND ROOSEVELT COUNTIES ECONOMIC BASE F. Population and Household Growth Projections in Williams County Population, household, and employment data for the Two County area is compared in Table III- 12. In 1980, the total population was 32,704 and resident employment was 19,657 for an employment participation rate of.6011, meaning that 60.1% of the population was employed. By 1990, the Two County s resident employment had increased to 19,967, while the population had decreased to 32,128 for an employment participation rate of The current employment participation ratio is estimated at This ratio is calculated by dividing the estimated permanent population in the Two County area, 45,319 by the projected employment of 39,421. The estimated 2012 population of 45,319 for Two County area does not include population in man camps, recreational vehicles or hotel/motel rooms. When the population living in man camps, hotel/motel rooms and recreational vehicles (estimated at a total of 16,388) is accounted for the overall population increases to 61,707 and the employment participation ratio is 63.9%, much more in line with ratios found in metropolitan areas around the western part of the United States. In Table III-12, the population growth of the Two County area is projected based on the anticipated employment growth, which is expected to be substantial. With a projected 2022 resident employment of 107,380, the estimated 2022 population for the Two County area will be 128,490 with a projected employment participation rate of The area s permanent population is projected to grow by 8,180 persons per year through It is anticipated, that there will still be a large temporary population of workers staying in hotels, man camps, RV s, etc. as a lot of the workers and executives will not have to be in the area on a full-time basis. Table III-12 also shows the projected trends in new household formations for the Two County area. The population per household in the area decreased from 2.85 in 1980 to 2.69 in 1990 and 2.54 in By 2010, the population per household had increased to 2.59 and in 2012 this number has increased dramatically to As employment and population continue to grow at such a high rate, during the next decade, household size should continue to increase slightly. New household formations in the area are projected to grow by an average of 2,548 annually during the next decade, with the average household size increasing to Population in group quarters, e.g., institutions, dormitories, etc., is expected to increase modestly during the decade to approximately 964. It should be noted that the group quarter population does not includes those living in man camps or temporary housing. Also, as is shown in Tables III-12a and III-12b, the majority of the population, employment and household growth will occur in Williams County. 235-ACRE SITE 40 THK Associates, Inc.

50 WILLIAMS AND ROOSEVELT COUNTIES ECONOMIC BASE Table III-12: Projected Permanent Population and Households in the Two County Area, Permanent Permanent Employment Permanent Annual Population Population Population Annual Total Participation January 1, Population in Group In Per Household Year Employment Ratio Population* Change Quarters** Households Household Households Change , , , , , , , , , , , , , , , , , ,319 7, , ,813 2, , ,060 8, , ,331 2, , ,510 9, , ,068 2, , ,730 8, , ,042 2, , ,590 8, , ,880 2, , ,300 8, , ,652 2, , ,830 8, , ,347 2, , ,020 7, , ,916 2, , ,980 7, , ,394 2, , ,850 7, , ,827 2, , ,490 6, , ,172 1, , #DIV/0! 42,842 Average Annual Change ( ) 1,390 #REF! #REF! #REF! #REF! #REF! Numerical: 6,800 8, ,300 2, #REF! Percent: 10.5% 11.0% 2.0% 11.1% 10.8% *Population estimate is permanent population, not including those living in temporary housing **Group quarter population exclusive of those living in temporary man camps Source: Dept of Commerce, Bureau of the Census and THK Associates, Inc. 235-ACRE SITE 41 THK Associates, Inc.

51 WILLIAMS AND ROOSEVELT COUNTIES ECONOMIC BASE Table III-12a: Projected Permanent Population and Households in Williams County, Permanent Permanent Employment Permanent Annual Population Population Population Annual Total Participation January 1, Population in Group In Per Household Year Employment Ratio Population* Change Quarters** Households Household Households Change , , , , , , , , , , , , , , , , , ,677 6, , ,186 2, , ,060 7, , ,237 2, , ,060 7, , ,478 2, , ,730 7, , ,922 2, , ,100 7, , ,254 2, , ,390 7, , ,547 2, , ,520 6, , ,773 2, , ,370 6, , ,896 2, , ,030 6, , ,946 2, , ,640 6, , ,966 1, , ,050 5, , ,911 1, , #DIV/0! 34,581 Average Annual Change #DIV/0! ( ) 1,870 #REF! #REF! #REF! #REF! #REF! Numerical: 6,240 6, ,920 2, #REF! Percent: 11.2% 11.6% 2.0% 11.7% 11.4% *Population estimate is permanent population, not including those living in temporary housing **Group quarter population exclusive of those living in temporary man camps Source: Dept of Commerce, Bureau of the Census and THK Associates, Inc. 235-ACRE SITE 42 THK Associates, Inc.

52 WILLIAMS AND ROOSEVELT COUNTIES ECONOMIC BASE Table III-12b: Projected Permanent Population and Households in Roosevelt County, Permanent Permanent Employment Permanent Annual Population Population Population Annual Total Participation January 1, Population in Group In Per Household Year Employment Ratio Population* Change Quarters** Households Household Households Change , , , , , , , , , , , , , , , , , ,642 1, , , , ,710 1, , , , ,850 1, , , , ,030 1, , , , ,130 1, , , , ,190 1, , , , , , , , , , , , , , , , , , , , , , , , #DIV/0! 7,229 Average Annual Change ( ) 2,550 #REF! #REF! #REF! #REF! #REF! Numerical: 560 1, , #REF! Percent: 6.6% 7.0% 2.0% 7.1% 6.7% *Population estimate is permanent population, not including those living in temporary housing **Group quarter population exclusive of those living in temporary man camps Source: Dept of Commerce, Bureau of the Census and THK Associates, Inc. 235-ACRE SITE 43 THK Associates, Inc.

53 WILLIAMS AND ROOSEVELT COUNTIES ECONOMIC BASE Population & Household Growth in the Two County Area 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1, * Average Annual Population Growth ,245 8,180 Average Annual Household Growth ,548 * Projected 235-ACRE SITE 44 THK Associates, Inc.

54 RESIDENTIAL MARKET ANALYSIS IV. RESIDENTIAL MARKET ANALYSIS PART I: RESIDENTIAL DEMAND A. Two County Area Projected Residential Demand by Unit Type The potentials for new residential development are subject to a variety of pressures including interest rates; inflation; and social, political, and other economic influences. The first section of this report projected the overall growth in population and household formations, which will create the aggregate demand for new housing construction. Historical trends in new housing construction were also examined to show how past construction trends have coincided with population and demographic changes and economic conditions. However, in the Williston and Williams County market, current population and employment growth is much greater than historical levels, so residential demand will be at levels significantly higher than historical levels for the next several years until the supply catches up to the current growth. As was shown earlier by the number of permits issued, recent growth in Roosevelt County has been minimal. While there is a tremendous demand for new housing in Williams County and Williston, there may not be sufficient land with available utilities to accommodate current and future needs. At this time sewer service is available only from the City of Williston. Thus, it is likely that a substantial portion of future residential development will be located in the County where a property will need to utilize septic systems or individual sewer treatment plants. A review of recent aerial photography combined with the most recent Williston area planning and zoning maps, indicates that there are approximately 600 acres of undeveloped land that available for development within current City limits. There is also the possibility of future development at the 600 acre airport site, which is within City limits, but is several years away from a possible move. If 100% of this undeveloped land were developed into residential uses at an average density of 6.0 units per acre, only 3,600 units would be accommodated. It is shown in the following tables and text that over the next ten years the area will demand (annual and pentup) over 25,000 new housing units. It appears unlikely that the Williston area will be able to adequately accommodate all future housing demand, placing further pressure on land prices, housing prices and rental rates. It should be noted that the City of Williston is in the process of annexing more land; however, it will take time and money to supply these new areas with utilities. 235-ACRE SITE 45 THK Associates, Inc.

55 RESIDENTIAL MARKET ANALYSIS 1. Projected Demand in the Two County Area Table IV-1 demonstrates the Two County residential demand by tenure and unit type. During the time period , the Two County area is expected to add an average of 2,548 households per year, reaching a total of 41,172 households in This household increase will give rise to a demand for the construction of 2,646 new housing units annually after accounting for vacancies and demolition activity. THK has assumed that roughly 40% of these potential units will be persons that will opt to own their home. This percentage is an average ownership rate based on historical levels, plus the past 10-year, 5-year and 3-year ownership levels. Thus, an average of 1,073 total ownership units will be demanded annually, of which 644 detached single-family units will be demanded, or approximately 24.3% of total new residential unit demand. Demand for attached single-family (townhome/condominium) housing will average 182 units (6.9%) annually and RV/mobile homes will demand 247 units (9.3%) annually. The remaining 60% of new residential demand will go towards rental housing, which will average 1,574 units annually from 2012 to Typically, the majority of rental housing demand will go towards multi-family apartment communities. However, as Williams County is not a typical residential market, the rental housing demand will be separated into multi-family, single-family detached, single-family attached and RV/mobile homes in the next section. There is also additional pent-up demand for multi-family rental apartments which will be discussed later in this section in Section G Temporary Housing Statistics in Williams County. Table IV-1: Projected Total Residential Demand in the Two County Area, % 60.0% 17.0% 23.0% 59.46% Total Ownership Units. Annual Housing Total Detached Attached RV & Household Unit Owner- Single Single Mobile Rental Year Households Growth Demand ship Family Family Homes Housing ,813 2,518 2,556 1, , ,331 2,737 2,792 1, , ,068 2,974 3,049 1, , ,042 2,838 2,923 1, , ,880 2,771 2,882 1, , ,652 2,696 2,830 1, , ,347 2,568 2,697 1, , ,916 2,478 2,602 1, , ,394 2,434 2,555 1, , ,827 2,344 2, , ,172 1,670 1, ,043 Average Annual Demand ( ) 2,548 2,646 1, ,574 % of Total 100.0% 24.3% 6.9% 9.3% 59.5% Total Demand ( ) 29,101 11,798 7,079 2,006 2,713 17,304 Source: THK Associates, Inc. 235-ACRE SITE 46 THK Associates, Inc.

56 TWO COUNTY TRADE AREA MAP SITE 235-ACRE SITE 47 THK Associates, Inc.

57 RESIDENTIAL MARKET ANALYSIS B. Projected Rental Housing Demand by Unit Type in the Two County Area To better quantify the demand for new rental housing, THK breaks down the rental market into specific housing categories. The average annual demand of 1,574 new rental units over the next decade will be divided among four major types of rental properties, shown below in Table IV-2. The majority of the rental housing demand, approximately 70%, will go towards multifamily apartments, which will have an annual average demand of 1,101 units from 2012 to Approximately 15% of the rental demand or 236 units annually will go towards singlefamily detached homes, while single-family attached homes will capture approximately 5% of the market or 79 units annually. The remaining 10% of the rental market demand will go towards RV s and mobile homes, which will average 157 units annually over the next decade. Table IV-2: Projected Rental Housing Demand in the Two County Area, % 5% 10% 70% Total Detached Attached RV & Multi- Rental Single- Single- Mobile Family Year Housing Family Family Homes Apartments , , , , , , , , , , , , , , , , , , , , , Average Annual Demand ( ) 1, ,101 % of Total 100% 15% 5% 10% 70% Total Demand ( ) 17,304 2, ,730 12,113 Source: THK Associates, Inc. 235-ACRE SITE 48 THK Associates, Inc.

58 RESIDENTIAL MARKET ANALYSIS C. Residential Purchasing Capacity, Rental Capacity and Demand by Price Range in the Two County Area To better quantify the demand for new residential units in the Two County area, THK breaks down the residential primary trade area's existing households by income range and then converts those income ranges to home purchasing capacity and monthly rental capacity. As has been stated, the majority of the demand will come from current and new residents in Williams County. Home purchasing capacity is calculated using estimated monthly payments (principle, interest, taxes and insurance) based on a 30-year fixed rate mortgage with a 6.5% interest rate and a 20% down payment. In determining monthly rental capacity it's assumed - as available statistics indicate - that households that rent spend, on average, 25% of their gross income on housing. However, as rental costs are currently higher in Williams County than the average across the country, it was assumed that approximately 33% of renter s income will be spent on housing. Households that own their homes typically allot approximately 25%-32% of their income to mortgage payments. It should be noted that no allowances have been made to account for the greater purchasing capacity that may be derived from adjustable rate mortgages (ARMs) or other alternative financing mechanisms. Also, spending on new homes is generally much higher than for re-sales. Further, this does not account for or factor in second home buying power. For that reason, Table IV-3 s home purchasing capacity estimates are likely conservative, and are adjusted accordingly. The median household income for a resident home buyer in Williams County is approximately $64,126. However, THK interviewed the Williston Economic Development director and it was learned that the average base salary of a new employee coming to the area plus overtime and bonus pay, increases for a new employee to roughly $82,000 annually. Thus, the purchasing capacity estimate is slightly conservative. Utilizing this data suggests that the median household in the primary trade area can afford a $352,300 home. Table IV-4 demonstrates the price range demand for sales price bands for new single-family attached and detached product in the Two County area over the next decade. Of the 644-unit annual average demand for new single-family detached product, the majority, 209 or 32.5% will fall in the $232,900 to $349,299 price band. The next highest percentage of single-family detached product, 25.0% (161 units), will fall in the $163,000 to $ 232,899 price band. An additional demand for 22.5% (145 units) of the single-family detached product will be in the price range above $349,300. Demand for mobile/manufactured units will fall into three main price bands. The under $139,700 price band will demand 30% of the annual market or 74 units, the $139,700 to $162,300 band will demand 50% of the market or 123 units annually and the over $163,000 price range will demand the remaining 20% of the market or 49 units annually. Table IV-4 also demonstrates the average rental multi-family unit demand by price range in region over the next decade. Of the approximate demand for 1,101 new multi-family units per year, the largest percentage (80%) will be in the over $2,079 per month rent range. This accounts for approximately 881 units annually from 2012 to Followed by, 15% or 165 units, in the $1,110 to $2,079 range. There will be a demand for 55 units annually or 5%, in the $970 to $1,109 range. Realistically, while income levels indicate these price points for demand, new construction given land prices, construction costs and labor costs will be unable to meet the lower price bands. 235-ACRE SITE 49 THK Associates, Inc.

59 RESIDENTIAL MARKET ANALYSIS Demand for lower priced units will be forced into existing, older product and all new construction will accommodate upper price levels. Existing tenants in older product with the ability to afford newer, modern units will re-locate to new units. Table IV-3: Residential Purchasing and Rental Capacity in the Two County Area, 2012 Estimated Monthly Percent of Number of Home Payment Monthly Income Range Households Households Purchasing Capacity (PITI) Rental Capacity Under $15, % 0 Under $69,900 $330 Under $420 $15,000 - $19, % 0 $69,900 - $93,100 $440 $420 - $559 $20,000 - $24, % 795 $93,100 - $116,400 $550 $560 - $689 $25,000 - $29, % 846 $116,400 - $139,700 $660 $690 - $829 $30,000 - $34, % 846 $139,700 - $163,000 $770 $830 - $969 $35,000 - $39, % 907 $163,000 - $186,300 $880 $970 - $1,109 $40,000 - $49, % 1,561 $186,300 - $232,900 $1,100 $1,110 - $1,389 $50,000 - $74, % 2,832 $232,900 - $349,300 $1,650 $1,390 - $2,079 $75,000 - $99, % 2,378 $349,300 - $465,700 $2,200 $2,080 - $2,779 $100,000 & Above 31.4% 4,652 $465,700 & Above $2,480 $2,780 & Above Median* $64, % 14,817 $298,600 *previous residents have a median household income of $44,585, however Williston Economic Development indicates that new oil and gas employees in 2012 have an average median household income of $106,000 (including bonuses) annually Source: City of Williston Economic Development, U.S. Dept. of Commerce, Bureau of the Census, and THK Associates, Inc. 235-ACRE SITE 50 THK Associates, Inc.

60 RESIDENTIAL MARKET ANALYSIS Table IV-4: Annual Average New Single-Family Unit and Rental Multi-Family Unit Demand by Price Range in Williams County, Number Price Range of Units Percentage Detached Single-Family Under $163, % $163,000 - $232, % $232,900 - $349, % $349,300 - $465, % $465, % Total Annual Average SF-Detached Demand 10-Year Total SF-Detached Demand % 7,079 Attached Single-Family Under $139, % $139,700 - $162, % $163,000 - $232, % $232, % Total Annual Average SF-Attached Demand 10-Year Total SF-Attached Demand % 2,006 Mobile/Manufactured Homes Under $139, % $139,700 - $162, % $163, % Total Annual Average SF-Attached Demand 10-Year Total SF-Attached Demand % 2,713 Rental Multi-Family Under $ % $690 - $ % $830 - $ % $970 - $1, % $1,110 - $2, % $2, % 100.0% Total Annual Average Rental MF Demand 10-Year Total Rental MF Demand 1, % 12,113 Source: U.S. Bureau of the Census and THK Associates, Inc. 235-ACRE SITE 51 THK Associates, Inc.

61 RESIDENTIAL MARKET ANALYSIS PART II: RESIDENTIAL SUPPLY A. Traditional Single-Family Residential Projects in Williston As was shown in the residential permit summaries, the new residential development is occurring in Williams County and more specifically Williston. A survey of six traditional single-family detached projects selling units within the primary trade area are profiled below. The data was obtained from interviews with several local realtors, home builders, and developers and was completed in June A summary of the six projects is located on Table IV-5, while each project is individually detailed on Table IV-6: The six projects range in size from 179 planned units at Harvest Hills Phase I (all lots sold) to a low of 18 planned units at Heron Flats. Of the six projects for which information was available, a total of 552 units are planned for an average of 92 units per project. All of the lots are sold out in the six projects profiled. Of the six projects profiled, units at three projects are sold out, while two of the projects have less than 10 units remaining. All of the 101 lots in Granite Peaks were originally sold to Halliburton. They have since decided to sell approximately half of them to builders and keep half of them to sell to their employees. Sales in the communities vary depending on the community, with some communities such as Granite Peaks selling all lots in a contract with Halliburton. The Timbers has also enjoyed great success, averaging sales of 5.6 units per month since the project began selling in June Unit sales prices at six developments range from a low of $169,800 to approximately $450,000 for the highest end product. Prices per square foot are generally in the mid $100 s range with some units approaching the $200 per square foot range. The Williston market is currently supply driven. If available, builders and lot speculators would be likely to buy additional lots to increase their inventory, so that not only would they have lots to build units on today, but could also be prepared for future unit construction. A few of the most recent recorded single-family residential lot sales have occurred in the Creekside Ridge subdivision where the lots were sold for approximately $75,000 per lot for lots ranging from 0.20 acres to 0.25 acres. 235-ACRE SITE 52 THK Associates, Inc.

62 RESIDENTIAL MARKET ANALYSIS Table IV-5: Characteristics of Representative Traditional Single- Family Detached/Duplex Residential Projects in Williston A. Projects by Number of Units Planned B. Projects by Units Remaining Number % of Number of % of Total Units Planned of Projects Total Total Units Unsold Projects Total % % % % % % % % % % % TOTAL 6 TOTAL 6 C. Projects by Average Unit Base Price D. Planned Units by Ave. Unit Base Price Number of % of Number of % of Unit Price Range Projects Total Unit Price Range Units Total Under $200, % Under $200, % $200,000 - $224, % $200,000 - $224, % $225,000 - $249, % $225,000 - $249, % $250,000 - $274, % $250,000 - $274, % $275,000 - $299, % $275,000 - $299, % $300,000 - $349, % $300,000 - $349, % $350, % $350, % TOTAL 6 TOTAL 552 E. Monthly Sales Pace by Ave. Unit Base Price F. Projects by Monthly Sales Pace * Average Total Number % of Unit Price Range Sales Pace Units Sold of Projects Total Under $200,000 #DIV/0! NA % $200,000 - $224,999 #DIV/0! % $225,000 - $249,999 #DIV/0! % $250,000 - $274, % $275,000 - $299, % $300,000 - $349,999 #DIV/0! % $350, NA % AVERAGE 4.01 TOTAL 6 G. Total Monthly Sales Pace by Price Range* Total % of Ave. Unit Minimum Price Sales Pace Total Under $200, % $200,000 - $224, % $225,000 - $249, % $250,000 - $274, % $275,000 - $299, % $300,000 - $349, % $350, % TOTAL * Sales data as of March 2012 Sources: Basin Brokers, Bakken Realty, Frederickson Real Estate & THK Associates, Inc. 235-ACRE SITE 53 THK Associates, Inc.

63 RESIDENTIAL MARKET ANALYSIS Table IV-6: Representative of Traditional Single-Family Detached/Duplex Residential Projects in Williston Project Name/ Overall Overall Expected Builder Name/ Total Units Lots Average Average Price per Ave. Lot Size Lot Prices Start Unit Lot Unit Sell Location Planned Released Sold Remaining Remaining Price Range Square Feet Square Feet Low - High Low - High Date Sales Rate Sales Rate Out Rate 1 Spring Creek Estates $300,000 - $400,000 2,200-2,800 $ $ $40,000 - $65,000 7/1/ Apr-12 Tufte Brothers SWC 26th St E & E Dakota Pkwy Creekside Ridge $300,000 - $450,000 1,800-2,300 $ $ $40,000 - $75,000 5/1/ Jul-12 Adria Custom Homes, Williston Homes 20th Ave W & Sand Creek Wendy 3 The Timbers $260,000 - $350,000 1,400-1,700 $ $ $35,000 - $45,000 6/1/ Apr-12 Constructors West, Hive Built, Williston Homes No additional city assessment 19th Ave W & 23rd St W Stephanie 4 Granite Peaks - Stonecrest North $169,800 - $199,800 1,244-1,838 $ $ NA - NA 8/1/2010 NA NA Apr-12 Stonecrest Construction All 101 lots originally purchased by Halliburton 26th St W & 24th Ave W Heron Flats $229,000 - $284,000 1,267-1,960 $ $ $0 - $0 6/1/ Apr-12 Envision Land 26th St W & 6th Ave W Harvest Hills Phase I $266,900 - $408,000 1,444-1,690 $ $ $48,000 - $76,300 11/1/ Jun-13 Granite Peaks NWC 26th St W & 35th Ave W TOTAL AVERAGE $254,283 - $348,633 1,559-2,048 $ $ $32,600 $52, Sources: Basin Brokers, Bakken Realty, Frederickson Real Estate & THK Associates, Inc. 235-ACRE SITE 54 THK Associates, Inc.

64 FIGURE 6 REPRESENTATIVE TRADITIONAL SINGLE- FAMILY PROJECTS IN WILLISTON MAP SITE 235-ACRE SITE 55 THK Associates, Inc.

65 TRADITIONAL SINGLE-FAMILY COMMUNITY PHOTOS Stonecrest North Stonecrest North 235-ACRE SITE 56 THK Associates, Inc.

66 TRADITIONAL SINGLE-FAMILY COMMUNITY PHOTOS Creekside Ridge Creekside Ridge 235-ACRE SITE 57 THK Associates, Inc.

67 TRADITIONAL SINGLE-FAMILY COMMUNITY PHOTOS The Timbers The Timbers 235-ACRE SITE 58 THK Associates, Inc.

68 TRADITIONAL SINGLE-FAMILY COMMUNITY PHOTOS Harvest Hills Harvest Hills 235-ACRE SITE 59 THK Associates, Inc.

69 TRADITIONAL SINGLE-FAMILY COMMUNITY PHOTOS Spring Creek Estates Heron Flats 235-ACRE SITE 60 THK Associates, Inc.

70 B. Williston Area Residential Estate Lot Developments RESIDENTIAL MARKET ANALYSIS (1) Sweet Clover Acres Under Construction o Located east of Williston, SE of 134 th Avenue NW and 55 th Street NW o 7, 1-acre residential lots 4 sold as of June 1, 2012 o Typical manufactured home: 2,300 square feet, 3 bedroom, 3 car garage o Lot price: $75,000 (2) Round Prairie Estates - Planned o Located west of Williston at Highway 2 and 150 th Avenue o Builder: Rocky Mountain Real Estate & Construction o 160 total residential acres 2-acre sites Lot included with modular home (approximately $250,000) Average model 3 bedroom, 2 bath, 2 car garage o Infrastructure to begin late July 2012, with homes expected by end of August 2012 o Utilities: well water, septic system, county electricity, gas/propane trucked in o Subdivision will have dirt roads (3) Missouri Ridge Residential Proposed o 2-acre residential lots o Prices are planned at $30,000 to $60,000 acre o Developer stated that it s more likely that the entire 310-acre development will be developed as commercial property 235-ACRE SITE 61 THK Associates, Inc.

71 FIGURE 7 - RESIDENTIAL ESTATE LOT DEVELOPMENTS NEAR WILLISTON MAP SITE 235-ACRE SITE 62 THK Associates, Inc.

72 RESIDENTIAL ESTATE LOT PHOTOS Round Prairie Estates Round Prairie Estates 235-ACRE SITE 63 THK Associates, Inc.

73 RESIDENTIAL ESTATE LOT PHOTOS Missouri Ridge Missouri Ridge 235-ACRE SITE 64 THK Associates, Inc.

74 C. Williston Area Residential Resale Characteristics RESIDENTIAL MARKET ANALYSIS With sales data through the end of 2011, the average resale price for a single-family residential unit in the Williston area was $192,203, up from $160,149 and representing a 45% increase from $132,666 in While residential prices nationally have plummeted since 2006, prices in Williston have more than doubled over the five year time-frame through Over the last five years, sales values in the Williston area have increased an average of 18.0% annually. Additionally, sales volumes have remained very strong with 218 sales in 2009, 250 community sales in 2010, and 305 sales in THK believes that as employment and population continue to sharply increases and more development occurs in the area, prices and sales will escalate correspondingly. In the following table the number of days from offering to closing is demonstrated since The actual number of days from offering to contract is less. Table IV-7: Single-Family Residential Sales Trends in Williston, ND Area Community Average Days Average Home % Price Sales Year Sales (Volume) On Market Sales Value Change Change Change $71, $89, % $17, $110, % $21, $123, % $12, $132, % $9, $160, % $27, $192, % $32, Total To-Date 1, Average To-Date $125, % $20, Source: Flex MLS and THK Associates, Inc. 235-ACRE SITE 65 THK Associates, Inc.

75 EXAMPLE PHOTOS OF EXISTING RESIDENTIAL PRODUCT IN WILLISTON nd Street West 212 East Highland Drive 235-ACRE SITE 66 THK Associates, Inc.

76 EXAMPLE PHOTOS OF EXISTING RESIDENTIAL PRODUCT IN WILLISTON th Avenue West st Avenue East 235-ACRE SITE 67 THK Associates, Inc.

77 D. Multi-Family Rental Apartment Projects in Williston 1. New Apartment Projects RESIDENTIAL MARKET ANALYSIS A survey of actively leasing, under construction, and planned/proposed apartment complexes within Williston was completed in June The data was obtained from interviews with the developers, city officials, property managers and leasing consultants at the apartment complexes. Master leases do exist at many of the apartment complexes in Williston, however, due to nondisclosure agreements between the leasing agencies and corporate tenants, rates and terms are not available for the master leases. It is believed that these lease rates in many cases are above stated rates to individual renters. Each project is individually detailed on Table IV-8: There are currently 1,042 existing or under construction apartment units that have been built and planned recently. The 7 complexes that are open or under construction detailed in Table IV-8, average 149 units per complex. Rental rates in the area have skyrocketed in recent months. Even though Williston Gardens, Timber Trails and Bakken Heights are not fully complete yet, they are fully leased. Leasing agents stated that when leases come due to renew the rents will be higher than what they were leased at recently, however they have not decided yet what these rates will be. Bakken Heights has no vacancy until January 1, Timber Trails and Williston Gardens have no vacancy until the spring of Leasing agents at existing properties/buildings plan to increase rents as leases are renewed to remain consistent with local averages. Williston Gardens will have a minimal amount of vacancy in spring of 2013 as most of the units have 2-5 year leases in place. Of the 7 new projects, 4; Pineview, South Western Investments, Sandwins Apartments and the Confluence at Harvest Hills, are currently leasing units. The complexes consist of one, two and three-bedroom units and the unfurnished rents are ranging from $2.92 to $4.00 per square foot. Among the 4 complexes that are currently leasing, the average one bedroom unfurnished unit rents for $2,264 to $2,452 per month for a 629 square foot to 681 square foot unit, or $3.60 per square foot. The average two bedroom unfurnished unit rent ranges from $3,051 to $3,410, with average square footage between 925 and 994 square feet. Price per square foot of unfurnished two-bedroom apartments currently ranges from $3.29 to $3.41 per square foot. 235-ACRE SITE 68 THK Associates, Inc.

78 RESIDENTIAL MARKET ANALYSIS Among the 4 complexes that are currently leasing, the average threebedroom rent for an unfurnished unit ranges from $3,537 to $3,644, with average square footage between 1,105 and 1,157 square feet. Price per square foot of unfurnished three-bedroom apartments currently ranges from $3.16 to $3.20 per square foot. Timber Trails Apartments offer fully furnished units for an extra $500 per month in addition to the rents that are shown in Table IV-9. The one-bedroom units have 1 garage space included, while the two- and three-bedroom units have 2 garage spaces included. The extra charge for a furnished unit is between $0.38 and $0.66 per square foot. Approximately 25% of Williston Gardens units will be fully furnished, which they expect to receive on average a 25% rent premium. A minimum of one over-sized garage space will be included with each unit. The extra charge for a furnished unit is between $0.61 and $0.71 per square foot. THK has heard that the Timber Trails project (located less than a mile southeast of Harvest Hills) of 114 units is under contract for sale at a price of $22,000,000 or $192,982 per unit. The sale price is reportedly at a 12% cap. The due diligence is being conducted by Kennedy Wilson of San Francisco. This price and cap rate would indicate that rental rate are well above the stated rates of $2.57 to $2.67 per foot, adding credibility to the impact of master lease to oil service and related companies at rates higher than states lease rates. THK believes that a 15 to 20 acre parcels of land located among the hotels immediately adjacent to the airport was purchase by Mr. Clint Wilson of Hybrid core homes for rental apartment and commercial development. There are no definite plans at this time. If densities of 25 units per acre can be achieved the sales price would have been $25,000 to $27,000 per unit. The land for the two hotels (Value Place) being competed near the Bakken Industrial Park was reportedly purchased for $10,000 to $12,000 per door in 2011 which would equate to approximately $24,000 per unit if the site was developed for multi-family units. THK believes that South Western Investment has 1-24 unit apartment building in the Timbers subdivision under contract for $4,230,000 or $176,250 per unit. The units are currently under construction. 235-ACRE SITE 69 THK Associates, Inc.

79 RESIDENTIAL MARKET ANALYSIS Table IV-9: Representative Apartment Projects in Williston Monthly Square Price Per Overall Total # of Year Rent Feet Square Foot Occupancy Project Name/ Location Units Built Bed Low High Low High Low High Rate Amenities 1*** Williston Garden Apartments* bd $1,800 - $1, $ $ % fitness room, billiards room, 18 42nd Street East Under Construction 2bd $2,400 - $2, $ $2.58 clubhouse, tot lot, grills, Williston, ND 3bd $3,000 - $3,200 1,120-1,120 $ $2.86 over-sized garages *** Timber Trails* bd $2,000 - $2, $ $ % minimal, one garage space 26th St & 25th Ave (Timbers) Under Construction 2bd $2,500 - $2, ,050 $ $2.57 for 1BR and 2BR units, $500 extra Williston, ND 3bd $3,400 - $3,400 1,300-1,300 $ $2.62 for fully furnished apartments prairie prty mgmt 3*** Bakken Heights* /2012 1bd $1,365 - $1, $ $ % minimal, cable included, 27th St W & 24th Ave W Under Construction 2bd $1,661 - $1,769 1,010-1,258 $ $1.41 one garage space included Williston, ND 3bd $1,932 - $2,002 1,300-1,300 $ $ , jana 4*** Pineview Apartments** bd $2,850 - $2, $ $ % no garage, 2 bedroom, 1 bath units SWC 11th Street W & 13th Ave W Williston, ND *** South Western Investment** bd $3,325 - $4, ,050 $ $ % unfurnished, no garages included 26th St W & 24th Ave W Under Construction Williston, ND 6*** Sandwins Apartments (JGP)** bd $2,700 - $3, $ $ % unfurnished, 1 garage space incl. 27th Ave W & 23rd St SW Under Construction 3bd $3,300 - $3,500 1,100-1,200 $ $2.92 Williston, ND 7*** Confluence bd $2,264 - $2, $ $3.60 N/A Harvest Hills (original) Phase I Under Construction 2bd $3,329 - $3, ,026 $ $3.50 Williston, ND 3bd $3,774 - $3,788 1,110-1,114 $ $ garages, fully furnished, community center, power heads for vehicle block heaters *Per discussions with local developers, THK has assumed 100% occupancy at the under construction projects. **Projects that are actively leasing as of June 2012 ***Leasing agents at existing properties/buildings plan to increase rents as leases are renwed to remain consitent with local averages. TOTAL 1,042 (Includes Above 7 Projects) AVERAGE bd $1,857 - $1, $ $ % 2 bd $2,681 - $2, ,033 $ $ bd $3,081 - $3,178 1,186-1,106 $ $2.67 TOTAL** 460 (IncludesOnly ActiveProjects, #4, #5, #6 and #7**) 1 bd $2,264 - $2, $ $3.60 AVERAGE bd $3,051 - $3, $ $ % 3 bd $3,537 - $3,644 1,105-1,157 $ $3.16 Note: The above rental rates are for unfirnished units only. The Confluence project will have fully furnished units. Source: Community Leasing Offices, City of Williston, and THK Associates, Inc. 235-ACRE SITE 70 THK Associates, Inc.

80 FIGURE 8 REPRESENTATIVE APARTMENT PROJECTS IN WILLISTON MAP SITE 235-ACRE SITE 71 THK Associates, Inc.

81 REPRESENTATIVE APARTMENT PROJECT PHOTOS Williston Garden Apartments Williston Garden Apartments 235-ACRE SITE 72 THK Associates, Inc.

82 REPRESENTATIVE APARTMENT PROJECTS PHOTOS Timber Trails Apartments Timber Trails Apartments 235-ACRE SITE 73 THK Associates, Inc.

83 REPRESENTATIVE APARTMENT PROJECT PHOTOS Bakken Heights Apartments Bakken Heights Apartments 235-ACRE SITE 74 THK Associates, Inc.

84 REPRESENTATIVE APARTMENT PROJECT PHOTOS Pineview Apartments Pineview Apartments 235-ACRE SITE 75 THK Associates, Inc.

85 REPRESENTATIVE APARTMENT PROJECT PHOTOS JGP Development Apartments JGP Development Apartments 235-ACRE SITE 76 THK Associates, Inc.

86 REPRESENTATIVE APARTMENT PROJECT PHOTOS Confluence Apartments Confluence Apartments 235-ACRE SITE 77 THK Associates, Inc.

87 2. Planned/Proposed Apartment Complexes RESIDENTIAL MARKET ANALYSIS A survey of planned and proposed apartment complexes within Williston was completed in June The data was obtained from interviews with the local developers, city officials, property managers and leasing consultants at the apartment complexes. Each project is individually detailed on Table IV-9. Of the Planned/Proposed projects, 5 are under construction or probable to move forward. These projects are summarized as follows: The University Commons site is currently being graded and the land developers stated that the initial infrastructure should be in-place in the spring of They are currently attempting to sell multi-family sites, which include the first 3 phases of 150 units each. Renaissance Heights (Brutgers) is currently being marketed as the first luxury apartment complex in Williston, with planned units set to be ready sometime in The developers are currently looking at site plans ranging from 500 to 800 total multifamily units. Chandler Field will be 2 and 3 bedroom units in phases in the coming, totaling 1,344 units in Williston. Only 300 units are anticipated in Haugen Apartments is in the early stages of planning and feasibility and will add 160 units in Williston. Halliburton Estate is in the early stages of planning and feasibility and will add 140 units in Williston. Additional projects are proposed but have yet to obtain approvals or financing making their near term impact on the market less likely. 235-ACRE SITE 78 THK Associates, Inc.

88 RESIDENTIAL MARKET ANALYSIS Table IV-10: Planned/Proposed Multi-Family Rental Apartment Projects in Williston Planned Total # of Construction Estimated Number of Apartments Released Each Year Project Name/ Location Units Start Date Notes PLANNED/PROPOSED PROBABLE 1 University Commons th St and University Ave Williston, ND Renaissance Heights (Brutgers) NWC 42nd St W & 2nd Ave W Williston, ND 3 Chandler Field 1, Hwy 2 & 137th Ave NW Williston, ND Haugen Apartments Harvest Hills Phase I Williston, ND 5 Halliburton Estates Harvest Hills Phase I Williston, ND Infrastructure should be finished spring 2013, currently acting as land developer to sell multi-family parcels, initial plans call for 3 phases of 150 units apiece. Owned and managed by Brutger Equities, who also operates Williston Gardens Apartments, plan allows up to 800 units, currently considering reducing the overall plan to 500 total units. Will offer furnished and unfurnished units, each unit will have 1 or 2 garage spaces included. Site will include fitness center, spa, clubroom, playground, bbq area and game room. 2 and 3 bedroom plans, units to be phased over the next 3 years. Early stages of planning and feasibility. Beginning construction 6 Timber Trails Early stages of planning and feasibility for 8 additional buildings to be rented or sold to investors S of 26th St W, W of Easy St Williston, ND Total 3, , TENTATIVE/SPECULATIVE* 7 Westridge Apartments Harvest Hills Phase I Williston, ND 8 Corner Stone Apartments SWC 42nd St E & 135th Ave NW Williston, ND 9 North Gate Apartments N of 42nd St E, W of 11th Ave E Williston, ND 10 Marberger Estates S of 53rd St E, W of University Ave Williston, ND 11 Arctic Terrace N/A Williston, ND 12 Williston Mile Community 1, N/A Williston, ND 13 Harvest Hills Village Williston, ND Early stages of planning and feasibility. Early stages of planning and feasibility. Early stages of planning and feasibility. Early stages of planning and feasibility. Early stages of planning and feasibility. Early stages of planning and feasibility. Early stages of planning and feasibility. Total 3,906 *As the tentative/speculative projects are still in early stages of planning and have not started site or infrastructure work, late 2013 would be the earliest that units would be available with 2014 more likely Source: Local Developers, Engineers and Leasing Agents, City of Williston, and THK Associates, Inc. 235-ACRE SITE 79 THK Associates, Inc.

89 FIGURE 9 PLANNED/PROPOSED APARTMENT PROJECTS MAP SITE 235-ACRE SITE 80 THK Associates, Inc.

90 RESIDENTIAL MARKET ANALYSIS 3. Existing Apartment Complexes A survey of existing, older apartment complexes within Williston was completed in April The data was obtained from interviews with the city officials, property managers and leasing consultants at the apartment complexes. Each project is individually detailed on Table IV-10: As with all residential product rents in the older apartment communities continue to rise, seemingly on a month-to-month basis. However, the average rates are still well below the new product rates, yet high historically for this area. The apartment managers stated that they have no vacancies (current overall occupancy rate approximately 100%) in the coming months and will not determine future rents and rent increases until necessary. Some of the older apartments such as, Williston Village, Riverside Apartments and Waters Edge Apartments are income restricted properties. Not including the income restricted properties, rents have increased in the older apartments to approximately $1.50 per square foot for 1-bedroom units and $1.40 per square foot for 2- and 3-bedroom units. Some apartments, particularly older buildings such as Century Apartments, report lower than market rents and intend to remain slightly lower, even as average rents increase. Overall, leasing agents are hesitant to speculate on rent increases but most indicate a plan to significantly increase rents at the time of lease renewal. 235-ACRE SITE 81 THK Associates, Inc.

91 RESIDENTIAL MARKET ANALYSIS Table IV-11: Representative Older Apartment Projects in Williston Monthly Square Price Per Overall Total # of Year Rent Feet Square Foot Occupancy Project Name/ Location Units Built Bed Low High Low High Low High Rate 1 18th Street Apartments bd $1,100 - $1, $ $ % 45 18th St W Williston, ND 2 Century Apartments bd $925 - $1, $ $ % 1509 Bison Drive 2bd $1,080 - $1, $ $1.17 Williston, ND 3bd $1,275 - $1,275 1,067-1,067 $ $ Park Village Apartments 96 NA Studio $550 - $ $ $ % th Ave W 1 bd $750 - $ $ $1.50 Williston, ND 2bd $950 - $ $ $ Pheasant Run Apartments* Studio $950 - $ $ $ % th Ave W 1bd $1,100 - $1, $1.47 $1.53 Williston, ND 2bd $1,350 - $1, $1.42 $ Highland Manor Apartments bd $800 - $ $ $ % 303 W Highland Drive Williston, ND *17 of the 48 are Income Restricted TOTAL 388 AVERAGE OF EXISTING bd $925 - $1, $ $ % 2 bd $966 - $ $ $ bd $1,275 - $1,275 1,067-1,067 $ $1.19 Source: Community Leasing Offices, City of Williston, and THK Associates, Inc. 235-ACRE SITE 82 THK Associates, Inc.

92 FIGURE 10 EXISTING APARTMENT COMPLEXES IN WILLISTON MAP SITE 235-ACRE SITE 83 THK Associates, Inc.

93 EXISTING APARTMENT COMPLEX PHOTOS Century Apartments Pheasant Run Apartments 235-ACRE SITE 84 THK Associates, Inc.

94 EXISTING APARTMENT COMPLEX PHOTOS Highland Manor Apartments Park Village Apartments 235-ACRE SITE 85 THK Associates, Inc.

95 RESIDENTIAL MARKET ANALYSIS E. Townhome Projects in Williston To date, there have been very few townhome projects completed in Williston. A few townhome projects are detailed below in Table IV-11. The initial reaction to the housing crisis seemed to focus mainly on multi-family rental apartments and then single-family detached homes. As more master planned communities emerge, more townhome product will be introduced to the market. According to local real estate brokers, the few projects that are underway in Williston are private projects that will either be sold individually or used as rentals. Strata Extended Suites has constructed row/townhome product in Williston that they are leasing out offering limited hotel type services. The monthly rent includes utilities as well as cleaning and linen laundry service every other week. Each unit does have a private garage. 40 of the units are one-story, one-bedroom, units that have been leased by Halliburton at $3,000 per month. Halliburton provides the housing to their managers and subsidizes $2,150 per month of the $3,000 charged by Strata. The other 40-units that Strata operates are 2-story, 3-bedroom units that Halliburton was leasing at $4,500 per month. Recently, Strata attempted to raise the rent on the 2-story product to $8,300 per month and in-turn Halliburton declined to pay the substantial increased and moved their employees elsewhere. The units have since been rented by Strata to individual renters and companies, but it is unknown at what rent level. Williston Mile is a planned community that is in the early stages of planning by Annabelle Homes and DJR architecture that has not yet been submitted to the City. Initial plans call for approximately 140 townhome units. All parcels of land in Williston that are currently ready for vertical construction of townhomes have been sold. The only know proposed project, in addition to Harvest Hills, that could accommodate additional townhomes in the near future is Williston Mile by Annabelle Homes. 235-ACRE SITE 86 THK Associates, Inc.

96 RESIDENTIAL MARKET ANALYSIS Table IV-8: Representative Single-Family Attached Townhome Projects in Williston Equivalent Monthly Square Price Per Overall Total # of Lots Lots Year Rent Feet Square Foot Occupancy Project Name/ Location Units Sold Remaining Built Bed Low High Low High Low High Rate Amenities 1 24th Ave W & 27th St W bd NA - NA NA - NA NA - NA 100.0% single garages Williston, ND Under Construction 3 bd NA - NA NA - NA NA - NA 2 Bison Drive bd NA - NA NA - NA NA - NA 100.0% no garage SEC Bison Drive & 19th Ave W Under Construction Williston, ND prairie prty mgmt 3 Strata Extended Suites bd $3,000 - $3, $ $ % garage, weekly cleaning and S of Bison Dr on 19th Ave W 3 bd $4,500 - $4,500 1,300-1,300 $ $3.46 linen service, utilities paid Williston, ND , jana PLANNED/PROPOSED 4 Williston Mile Planned 2 bd TBD - TBD TBD - TBD TBD - TBD TBD Annabelle Homes 3 bd TBD - TBD TBD - TBD TBD - TBD Williston, ND *Per discussions with local developers, THK has assumed 100% occupancy at the under construction projects. TOTAL TOTAL INCLUDING PLANNED AVERAGE OF EXISTING bd $3,000 - $3, $ $ % 3 bd $4,500 - $4,500 1,300-1,300 $ $3.46 Source: Community Realtors, City of Williston, and THK Associates, Inc. 235-ACRE SITE 87 THK Associates, Inc.

97 FIGURE 11 REPRESENTATIVE TOWNHOME PROJECTS IN WILLISTON MAP SITE 235-ACRE SITE 88 THK Associates, Inc.

98 EXAMPLE TOWNHOME PRODUCT IN WILLISTON PHOTOS 24 th Ave. W & 27 th St. W 24 th Ave. W & 27 th St. W 235-ACRE SITE 89 THK Associates, Inc.

99 EXAMPLE TOWNHOME PRODUCT IN WILLISTON PHOTOS Bison Drive Strata Extended Suites 2-Story 235-ACRE SITE 90 THK Associates, Inc.

100 EXAMPLE TOWNHOME PRODUCT IN WILLISTON PHOTOS Strata Extended Suites 1-Story 235-ACRE SITE 91 THK Associates, Inc.

101 F. Active Manufactured Home Communities in Williston RESIDENTIAL MARKET ANALYSIS Lukenbill Estates (1) located approximately 3 miles northwest of Williston is underway selling manufactured homes and completing infrastructure in their 350-lot subdivision. o Phase I of III is currently underway with approximately half of the 73 homes available already sold. o The homes available range from 1,494 square feet to 2,144 square feet. o The homes are being sold from $199,000 to $275,000. o Factory Homes Outlet is providing the manufactured homes. Little Muddy River Estates (2) is a 180-lot manufactured home subdivision approximately 3 ½ miles northeast of Williston. Initial phases are underway with similar models and prices to Lukenbill Estates as the same home builder and developer is doing both subdivisions. 235-ACRE SITE 92 THK Associates, Inc.

102 FIGURE 12 ACTIVE MANUFACTURED HOME COMMUNITIES IN WILLISTON MAP SITE 235-ACRE SITE 93 THK Associates, Inc.

103 MANUFACTURED HOME COMMUNITY PHOTOS IN WILLISTON Lukenbill Estates Lukenbill Estates 235-ACRE SITE 94 THK Associates, Inc.

104 MANUFACTURED HOME COMMUNITY PHOTOS IN WILLISTON Little Muddy River Estates Little Muddy River Estates 235-ACRE SITE 95 THK Associates, Inc.

105 RESIDENTIAL MARKET ANALYSIS G. Rent Trends in Williston As has been discussed, rents in Williston have increased exponentially in the past 1-2 years. Tables IV-12, IV-13 and IV-14, compare rent data from the 2000 and 2010 US Census. Table IV-14 includes average rental rates for new, unfurnished apartments in Williston in As is shown there has been a dramatic increase in rents as well as a large increase in the percentage of household income being used for rent. Property managers at Century Apartments stated that it was just in 2006 or 2007 that a 2-bedroom apartment could be found anywhere in town for just $350 per month. By 2008, that same 2-bedroom apartment had at least doubled to $700 per month and today it has nearly doubled again to over $1,300 per month. In 2000, the average renter was spending $500 or less per month on rent and many were spending less than $300. By 2010, the average spent on monthly rent was well above $500 and less than 10% of the population was spending less than $300. Table IV-12: Rent Trends in Williston, Percent Rented % of Rented % of Change Total Gross Rent Per Month Units Total Units Total 2000 to 2010 Less than $ % % -63.4% $200 to $ % % -82.4% $300 to $ % % -18.1% $500 to $ % % 551.8% $750 to $ % % 470.4% $1,000 to $1, % % 681.8% $1, % % 390.0% Total Rented Units 1, % 2, % 11.6% Median Rent $ $ % Percent % of % of Change Gross Rent as % of Household Income Hhlds Total Hhlds Total 2000 to 2010 Less than 15% % % 37.6% 15.0% to 19.9% % % -7.2% 20.0% to 24.9% % % -7.9% 25.0% to 29.9% % % 25.0% 30.0% to 34.9% % % 45.9% 35.0% % % -20.7% Total Households Renting 1, % 2, % 11.6% Source: US Census Bureau and THK Associates, Inc. 235-ACRE SITE 96 THK Associates, Inc.

106 RESIDENTIAL MARKET ANALYSIS Table IV-13: Rental Amounts by Number of Bedrooms in Williston, Summary Average Number of Total Total Bedrooms Number of % of Number of % of 0 Renters Total Renters Total Less than $ % 0 0.0% $200 to $ % % $300 to $ % % $500 to $ % 0 0.0% $750 to $ % 0 0.0% $1, % 0 0.0% No Cash Rent % 0 0.0% Total % % Weighted Average Monthly Rent $ $ Weighted Average (Not Including No Cash Rent) $ $ Less than $ % % $200 to $ % % $300 to $ % % $500 to $ % % $750 to $ % % $1, % 0 0.0% No Cash Rent 9 1.7% 0 0.0% % % Weighted Average Monthly Rent $ $ Weighted Average (Not Including No Cash Rent) $ $ Less than $ % % $200 to $ % 7 0.6% $300 to $ % % $500 to $ % % $750 to $ % % $1, % % No Cash Rent % % % % Weighted Average Monthly Rent $ $ Weighted Average (Not Including No Cash Rent) $ $ or More Less than $ % 0 0.0% $200 to $ % 0 0.0% $300 to $ % % $500 to $ % % $750 to $ % % $1, % % No Cash Rent % % % % Weighted Average Monthly Rent $ $ Weighted Average (Not Including No Cash Rent) $ $ Source: US Census Bureau and THK Associates, Inc. 235-ACRE SITE 97 THK Associates, Inc.

107 RESIDENTIAL MARKET ANALYSIS Percentage Percentage Increase Increase Year From 2000 From 2010 Weighted Average Per Unit 2000 Summary Average 2012 to 2010 to Bedrooms $207 $378 N/A 82.8% N/A 1 Bedroom $289 $418 $1, % 274.5% 2 Bedrooms $353 $584 $2, % 255.7% 3 or More Bedrooms $454 $665 $2, % 286.4% Overall Average $326 $511 $2, % 305.1% Average of 1, 2 & 3 BR Units $366 $556 $2, % 272.7% *Does not include those reported paying no cash rent Source: US Census Bureau and THK Associates, Inc. Table IV-14: Summary of Rent Trends in Williston, * 235-ACRE SITE 98 THK Associates, Inc.

108 H. Temporary Housing Statistics in the Two County Area RESIDENTIAL MARKET ANALYSIS In addition to the permanent housing units being built in Williams County, a significant amount of temporary housing has been set in place to accommodate the high volume of new workers coming to the area as the oil well drilling and servicing industry continues to expand. In Table IV-15, THK has provided a breakdown of these temporary housing solutions that include permitted man camps, unpermitted man camps, RV parks, hotels and miscellaneous. The miscellaneous section includes people living in RV s in parking lots, living in vehicles, living in private rental rooms, etc. We have assumed a 98.0% occupancy rate due to turnover. The weighted average person per unit/room is 2.9. In total, there are an estimated 5,396 temporary units being utilized at present providing temporary housing to 16,388 persons. The largest portion of this population currently resides in permitted man camps, with 6,690 workers living in these facilities. There are an estimated, 3,995 additional workers living in unpermitted man camps spread out throughout the county. There are currently 1,180 hotel rooms operating at nearly full capacity, although this number of available rooms will increase by 535 as there are four hotels under construction in Williston. There are also approximately 1,269 people living in known RV parks. Additionally, there are over 2,300 men that are temporarily living out of their recreational and personal vehicles. At an average occupancy rate of 98%, there are approximately 16,060 workers living in temporary housing at any given time in Two County area. Thus, based on the 2.9 weighted average persons per unit, there is a pent-up demand for approximately 5,598 housing units. It cannot be assumed that the 100% of people living in the listed temporary housing options will relocate to permanent housing if it is available. Thus, conservatively we have estimated that 80% of the workers living in temporary housing will relocate to permanent housing solutions if they were made available. Of these workers living in temporary housing that would relocate, it is probably that they would move from temporary housing into rental apartments, thus 85% of those who would relocate were estimated to relocate to multi-family rental apartments. That means that of the 5,598 units of pent-up demand, 4,478 would be required for those likely to relocate and of those, 3,807 units would be required from the multi-family rental apartment sector. Approximately 10%, or 448 units, would be demanded from the single-family detached sector and the remaining 5%, or 224 units, would be demanded from the single-family attached sector. 235-ACRE SITE 99 THK Associates, Inc.

109 RESIDENTIAL MARKET ANALYSIS Table IV-15: Temporary Excess Housing Options in Williams County Total # of Units/Rooms Total # of Persons (est) Permitted Man Camps* 3,055 9,777 Built Permitted Man Camps 2,091 6,690 Unpermitted Man Camps 1,248 3,995 RV Parks** 423 1,269 Hotels*** 1,180 2,124 Miscellaneous 770 2,310 TOTAL Constructed 5,712 16,388 Average Occupancy 98% Average Temporary Occupants 16,060 Weighted Ave. Persons per Unit/Room 2.9 Total Pent-up Demand Based on Weighted Ave. Persons per Unit/Room 5,598 Total Pent-up Demand Likely to Relocate (80%) 4,478 Total Pent-up Demand That Will Relocate 3,807 to Rental Apartments (85%) *Weatherford is planning on building a 350-bed man camp within City limits **There is a 705 unit RV park planned for the Bakken Industrial Park ***Currenlty there are 5 hotels with 783 rooms planned, four of which with 535 rooms are under constructio Source: City of Williston Economic Development, and THK Associates, Inc. 235-ACRE SITE 100 THK Associates, Inc.

110 RESIDENTIAL MARKET ANALYSIS 1. Man Camp Temporary Housing As of June 2012, there have been permits issued for approximately 9,777 man camp beds in Williams County. The permitted man camps range in size from 2 beds to 2,500 beds. Williams County issued a 6-month moratorium on new man camps in September of The ban expired in March of At this time, Williams County officials voted to extend the moratorium indefinitely for new man camps in the County. However, it will be permissible for existing man camps that have a minimum 200-bed existing facility to apply for expansion permits as long as they can prove that they will be able to handle the infrastructure demands. Of the original 9,777 beds that were permitted prior to the moratorium, it is estimated by Williams County officials that approximately 6,600 are complete and available for use. Table IV- 16 below summarizes the permitted man camps in Williams County that are approved for a minimum of 100 beds. These 23 man camps account for 8,501 of the total number of beds permitted in Williams County. In addition to the permitted man camps, there was a massive influx of unpermitted man camps at the beginning of the recent oil boom in 2008, 2009 and It is estimated by County officials that there are approximately 3,995 unpermitted beds spread out through the County in illegally operated man camps. With limited housing options and limited enforcement ability, the County has done little to this point to alleviate this problem. However, a new enforcement official started working at the County April 9 th, whose main job responsibility will be to enforce the man camp laws and begin the process of removing the unpermitted man camps. One new man camp has been permitted in Williams County since the moratorium began last September and that was a recent 500-bed man camp within the City limits that will be operated through the City of Williston. The man camp will be the only man within City limits and it will sit just west of the Halliburton Annexation on the east side of Williston. 150 to 200 beds will be dedicated to construction workers and will be removed from the camp earlier than the others, leaving approximately 300 to 350 beds on a long-term basis. 235-ACRE SITE 101 THK Associates, Inc.

111 RESIDENTIAL MARKET ANALYSIS Table IV-16: Major Man Camp Sites in Williams County, 2012* Type of Approval Renewal Number of Company Unit Date Date Approved Beds 1 Corey Moen RV Park 6/29/2010 N/A Contractor Lodging Solution Industrialized Modular Building 7/6/2010 4/16/ ATCO Structures Industrialized Modular Building 8/9/2010 8/9/ Contractors Lodging Industrialized Modular Building 8/31/2010 8/31/ Evans Rentals N/A 2/22/2011 3/1/ Black Gold Oilfield Service Industrialized Modular Building 3/29/2011 4/13/ Lodging Solutions Industrialized Modular Building 3/29/2011 4/13/ Lodging Solutions Industrialized Modular Building 3/29/2011 4/13/ Mel Falcon (Solsten Hotel) Industrialized Modular Building 4/26/2011 5/10/ Ameri-Tech Industry Industrialized Modular Building 4/26/2011 5/10/ Calfrac Well Service Skid Unit 4/26/2011 5/10/ Target Logistics Skid Unit & RV Park 5/31/2011 5/31/ Captial Oilfield Manufactured Home 5/31/2011 5/31/2013 2, Black Gold Oilfield Service Skid Unit 6/28/2011 6/28/ Evans Rentals N/A 6/28/2011 6/28/ Evans Rentals N/A 6/28/2011 6/28/ Alan Spencer Manufactured Home 6/28/2011 6/28/ Burke Remote Site Industrialized Modular Building 7/26/2011 7/26/ Lodging Solutions Industrialized Modular Building 7/26/2011 7/26/ Ameri-Tech Industry Industrialized Modular Building 7/26/2011 7/26/ Nabors Skid Unit 8/18/2011 8/18/ Go Motel Industrialized Modular Building 10/13/ /13/ Mary Moran Trailers Manufactured Home 3/29/2011 4/13/ Total 8,501 Percent of Total Permitted Beds 86.9% Total Man Camp Beds Permitted in Williams County 9,777 *Camps listed are those with permits for 100 beds or more Source: Williams County Planning Department & THK Associates, Inc. 235-ACRE SITE 102 THK Associates, Inc.

112 FIGURE 13 MAJOR MAN CAMP LOCATIONS IN WILLIAMS COUNTY SITE 235-ACRE SITE 103 THK Associates, Inc.

113 RESIDENTIAL MARKET ANALYSIS Table IV-17 below summarizes the 9 major temporary housing operators in Williams County, including; total permitted bed capacity, nightly rates, occupancy levels and typical amenities. Target Logistics is the largest temporary housing operator with permits for approximately 3,273 temporary beds plus an additional 140 bed permits for their recent (12/31/2011) purchase of the Kensington Hotel. The operators reported experiencing near 100% occupancy levels, with less than a 1% vacancy to account for unit turnovers. The average nightly rate of the 9 major operators is currently $131.63, with a high of $ by Moran Trailers and a low of $90.00 at the Burke Remote Site. The Moran Trailers typically rent monthly at $5,000 per month. They are individual 2 bedroom, 2 bathroom, fully furnished units that include weekly maid service. The less expensive Burke site was originally constructed to house Burke s construction workers, thus they have purposely kept the costs lower. Burke Lodge is also the only operator of the 9 not to offer at least 3 meals per day. Instead Burke offers a hot breakfast that is available in house or to go. The majority of the temporary housing is leased out based on 12-month contracts. For larger companies, some of the man camp operators are willing to work based on 6-month contracts. Several of the oil related companies in the area are providing housing subsidies to workers rather than in the past where they may have covered the entire living expense of a worker. The subsidies range from $400 per month to $3,000 per month depending on the pay grade of the employee. Average housing subsidies are approximately $1,000 per month. Some of the large service companies in the area have long-term leases on large blocks of temporary housing that they can use to shift crews in and out of areas each week. One such camp, the Muddy River Lodge, is operated by Target Logistics solely for Halliburton. Halliburton pays Target Logistics approximately $3,500 - $3,750 per month per bed to operate the facility and then deducts approximately $400 per week from the worker s pay to cover approximately 40% to 45% of their costs. In the long run, this is cheaper for companies like Halliburton as they are moving several crews of 20 to 30 men around from town to town each week. As more and more housing is constructed in the area, the temporary housing companies are creating better living environments through amenities in and out of the rooms to compete with newer product. In the beginning of the Bakken Basin oil boom man camps mainly consisted of multiple occupancy rooms and small bunks, now many more options are being offered. For instance, Black Gold Oilfield Services is now offering the following room types; single occupancy ($120/night), premium single occupancy ($135/night), double occupancy ($110/night), Jack and Jill room ($128/night), and a V.I.P. room ($145/night). All prices are listed per bed and based on a 12-month contract. 235-ACRE SITE 104 THK Associates, Inc.

114 RESIDENTIAL MARKET ANALYSIS Table IV-17: Williams County Major Temporary "Man Camp" Housing Operators, 2012 Permit Capacity Nightly Operator Total Beds Rate* Occupancy** Amenities 1 Target Logistics - Temporary Housing 3,273 $ % Insulated central corridors, 24-hr dining, convenience store, game/rec room, fitness center, saunas, refrigerators, microwaves, block heaters 2 Target Logistics - Hotel 140 $ % N/A 3 Capital Lodging 2,500 $ % Movie theater, game room, gym, WIFI, laundry service, maid service, general store, shuttle services, block heaters, car wash & vacuums, 3 meals 4 Black Gold Oilfield Service 900 $ % Rec hall, 3 meals, WIFI, game room, fitness center, lounge, daily housekeeping, free laundry facilities, customizable office spaces and manager's suites 5 Moran/Roughrider Holdings 604 $ % Individual 2 BR, 2 BA trailers, fully furnished, flat screen, new appliances, heated & air conditioned, weekly maid service 6 Evans Rentals 500 $ % N/A 7 Mel Falcon/Solsten XP 343 $ % Rec room, WIFI, daily housekeeping, free laundry facilities, business center, arctic entryways, 3 meals, convenience store, weekly linen change 8 Burke Lodge 224 $ % Internet cafe, free laundry facilities, general store, lounge, block heaters, daily cleaning, weekly sheet cleaning, breakfast 9 ATCO Structures 200 $ % Fitness center, game room, business center, free laundry facilities, internet, catered dining room (3 meals), weekly linen service Total 8, Percent of Total Permitted Beds 88.8% Average 965 $ % *Average rates based off minimum 6-month contract, 1-year contract is more typical **General occupancy 100% with all operators with 99% operation occupancy when including turnover Source: THK Associates, Inc. 235-ACRE SITE 105 THK Associates, Inc.

115 EXAMPLE MAN CAMP PHOTOS IN WILLIAMS COUNTY Muddy River Lodge Mary Moran Trailers 235-ACRE SITE 106 THK Associates, Inc.

116 EXAMPLE MAN CAMP PHOTOS IN WILLIAMS COUNTY Target Logistics Solsten Hotel 235-ACRE SITE 107 THK Associates, Inc.

117 EXAMPLE MAN CAMP PHOTOS IN WILLIAMS COUNTY Key Energy Tioga Lodge 235-ACRE SITE 108 THK Associates, Inc.

118 RESIDENTIAL MARKET ANALYSIS 2. Hotels/Motels Historical Lodging Data in the Two County Area As with housing, the hotel lodging market in the Two County environs is very under-supplied. There are currently 12 existing facilities with 1,012 rooms in Williston and an additional 7 existing facilities with 168 rooms in Roosevelt County. Most of the hotel rooms are leased by oil related companies for as far out as two years to house workers and visiting oil executives, leaving little if any supply for overnight or other business travelers. Occupancy rates are virtually 100%. There are four facilities under construction in Williston which will open in 2012, adding 535 rooms. As with the existing hotels many of these rooms are being leased in advance to oil related companies. Even with the addition of 535 rooms in 2012 there is still an under-supply of hotel/lodging facilities in the Williston environs. The hotel facilities are profiled in Section V. Hotel construction had been fairly stagnant until In 2000, there were 6 hotel facilities in Williams County, totaling 565 rooms. With an employment base of 12,759, this led to hotel rooms per employee. One new hotel was added in 2003, bringing the room total up to 620 rooms. With a slightly increased employment base of 12,847, there were rooms per employee in No new hotels were added to Williams County until 2011, when 3 hotels were added, which increased the total number of hotel rooms to 855. With large employment increases during 2010 and 2011, the new employment base of 27,674 resulted in rooms per employee in An additional 535 hotel rooms are currently under construction in Williams County and are expected to be operational in The addition of these rooms to the market, will almost double the total number of hotel rooms that existed in The new room total for Williams County will be 1,547. Employment is expected to continue to increase at an above average rate in 2012 to a total employment of 33,068, resulting in rooms per employee by the end of ACRE SITE 109 THK Associates, Inc.

119 RESIDENTIAL MARKET ANALYSIS 3. Recreation Vehicle (RV) Parks As of June 2012, there are approximately 363 traditional recreational vehicle sites within Williams County. The main, permitted RV parks in Williams County are listed below in Table IV- 18a. This number does not include the man camps that include RV parking, these figures are included above in the man camp totals. There are an additional 100 traditional RV sites in nearby Watford City. Also, there is a planned 705 site RV park north of the City in the Bakken Industrial Park that would triple the current Williams County total number of RV sites. The planned park north of town will coincide with the enforcement of illegal RV parking that is an ongoing problem around the City of Williston and throughout Williams County. The City council recently passed an ordinance that will allow the City to fine illegally parked RV s up to $500 per occurrence. The 11 listed RV parks are listed by number of sites, prices and amenities in Table IV-19. Table IV-18a: List of Major RV Parks in Williams County Area Total # Name of Sites Location 1 Lewis & Clark State Park 87 Epping 2 Buffalo Trails Campground 110 Williston 3 Fort Buford Campground 50 Williston 4 Blacktail Dam Campground 32 Williston 5 American Legion Park 15 Williston 6 ND Links & RV Park 20 Williston 7 Tioga City Park Campground 12 Tioga 8 Epping RV & Camping Park 6 Epping 9 Writing Rock County Park Campground 5 Alkabo 10 Epping Dam Campground 6 Epping 11 Trenton Lake 20 Trenton Total Number of Sites 363 Source: Campgrounds of America and THK Associates, Inc. Table IV-18b below lists the RV parks and number of sites per park in Roosevelt County: Table IV-18b: List of Major RV Parks in Roosevelt County Area Total # Name of Sites Location 1 Rancho Campground 25 Wolf Point 2 Diamond Coulee RV Park 20 Culbertson 3 Spark's RV Park 5 Froid 4 Poplar RV Park 10 Poplar Total Number of Sites 60 Source: Campgrounds of America and THK Associates, Inc. 235-ACRE SITE 110 THK Associates, Inc.

120 RESIDENTIAL MARKET ANALYSIS Table IV-19: Recreational Vehicle Sites in Williams County Total Full Rates Open Close RV Park/Location Sites Hookups Daily Monthly Date Date Amenities 1 Lewis & Clark State Park $ $25.00 year round RV dump station, showers, WIFI, picnic shelters, marina, Epping playground, showers Buffalo Trails Campground $28.00 year round 50 amp service, full water and sewer service, pets allowed, Williston laundry, general store, game room, playground Fort Buford Campground 50 0 May 15 - Sept amp service, sites do not accommodate pop-outs. Williston Blacktail Dam Campground 32 0 May 1 - Sept. 1 Electric service, showers, laundry. Williston American Legion Park Williston year round 6 ND Links & RV Park $30.00 $800 year round 50 amp service, full water and sewer service Williston Tioga City Park Campground April 1 - Oct 15 RV dump station, showers, tennis courts, playground, Tioga pool Epping RV & Camping Park 6 6 $12.00 $240 May 1 - Oct & 30 amp service, RV dump station, $65/week Epping Whiting Rock Country Park 5 0 Alkabo year round 10 Epping Dam Campground year round Electric service, swimming, boat dock. Epping Trenton Lake RV dump station, showers, playground, marina. Trenton Average $20.00 $520 Total Source: Campgrounds of America, North Dakota Tourism Department, & THK Associates, Inc. 235-ACRE SITE 111 THK Associates, Inc.

121 FIGURE 14 RECREATIONAL VEHICLE PARKS IN THE TWO COUNTY AREA MAP SITE 235-ACRE SITE 112 THK Associates, Inc.

122 RESIDENTIAL MARKET ANALYSIS PART III: RESIDENTIAL POTENTIALS A. Residential Subject Site Potentials Based on the preceding analysis of residential supply and demand in the Williams and Roosevelt County/Williston area, the following illustrates the recommendations for residential uses at the subject site. Given the site location, an analysis of competitive residential projects in the more urbanized Williston area, and the physical characteristics of the site; THK believes that the subject property will not compete favorably with traditional single family uses that can be found in planned communities, the subject site will not compete favorably for townhomes and condominiums, nor will the subject compete for rental apartments. All of the product types are well represented in Williston and other communities closer to services, schools and other conveniences. THK does recommend that the subject property can compete for mobile/modular and recreational vehicle residential uses which are in high demand and very suitable for the subject site and will mix well with commercial and light industrial uses. 1. Mobile/Modular/RV Demand and Absorption at the Subject Site Table IV-20 illustrates the projected Mobile/Modular/RV demand and acreage absorption at the subject site for the time period. Over the next decade, average annual demand for Mobile/Modular/RV units is expected to average 404 units per year when combining the demand for ownership and rental units. Based upon an approximate 20% capture rate, THK expects the subject site to capture approximately 81 Mobile/Modular/RV units per year on average. Unit density would average approximately 5.0 units per acre or approximately 16.2 acres per year. A small portion of the pent-up demand will go towards mobile/modular/rv units. The demand figures in Table IV-20 only account for new demand, thus the pent-up demand would be in addition to what is outlined below. 235-ACRE SITE 113 THK Associates, Inc.

123 RESIDENTIAL MARKET ANALYSIS Table IV-20: Projected Mobile/Modular/RV Unit Demand and Absorption by Price Range at the Subject Site, Cumulative Cumulative Subject Site Subject Site Mobile/RV Mobile/RV Combined Subject Site Subject Site Acreage Acreage Year Ownership Demand Rental Demand Demand Demand* Demand Demand** Demand Average Annual Demand ( ) Total Demand ( ) 2,713 1,730 4, *Assumes a 20% site capture rate **Assumes 5.0 units per acre Source: THK Associates, Inc. 235-ACRE SITE 114 THK Associates, Inc.

124 RESIDENTIAL MARKET ANALYSIS 2. Single-Family Attached and Multi-Family Demand and Absorption at the Subject Site Based on the rural location of the site and distance to services, THK does not recommend that any area of the site be utilized for neither single-family attached units nor multi-family rental apartments at this time. 235-ACRE SITE 115 THK Associates, Inc.

125 HOTEL MARKET ANALYSIS V. HOTEL MARKET ANALYSIS A. Historical Lodging Data for Williams County As with housing, the hotel lodging market in the Williston environs is very under-supplied. There are currently 12 existing facilities with 1,012 rooms in Williams County and 7 existing facilities in Roosevelt County with 168 rooms. Most of the hotel rooms are leased by oil related companies for as far out as two years to house workers and visiting oil executives, leaving little if any supply for overnight or other business travelers. Occupancy rates are virtually 100%. There are four facilities under construction in Williston that will open in 2012, adding 535 rooms. As with the existing hotels many of these rooms are being leased in advance to oil related companies. Even with the addition of 535 rooms in 2012 there is still an under-supply of hotel/lodging facilities in the Williston environs. Table V-1 below summarizes the total number of hotel facilities, rooms and rooms per employee in the Two County area. Hotel construction had been fairly stagnant until In 2000, there were 13 hotel facilities in the Two County area, totaling 733 rooms. With an employment base of 18,073, this led to hotel rooms per employee. One new hotel was added in 2003, bringing the room total up to 956 rooms. With a slightly increased employment base of 18,217, there were rooms per employee in No new hotels were added to Williams County until 2011, when 3 hotels were added, which increased the total number of hotel rooms to 1,359. With large employment increases during 2010 and 2011, the new employment base of 33,289 resulted in rooms per employee in An additional 535 hotel rooms are currently under construction in Williams County and are expected to be operational in The addition of these rooms to the market, will almost double the total number of hotel rooms that existed in 2010 in Williams County. The new room total for the Two County area will be 1,715. Employment is expected to continue to increase at an above average rate in 2012 to a total employment of 39,274, resulting in rooms per employee by the end of ACRE SITE 116 THK Associates, Inc.

126 HOTEL MARKET ANALYSIS Table V-1: Historical Hotel/Lodging Rooms Per Employee in the Two County Area Number of Number of Two Rooms Hotel Hotel County per Year Facilities Rooms Employment Employee Before , , , , , , , , , , , ,359 33, ,715 39, Total 23 1,715 39, Annual Growth Rate , *2012 includes the four hotels currently under construction in Williston Source: Williston Conventions and Visitors Bureau, Roosevelt County and THK Associates, Inc. 235-ACRE SITE 117 THK Associates, Inc.

127 B. Pent-up Hotel Room Demand in Williams County HOTEL MARKET ANALYSIS Table V-2 below summarizes a conservative estimate of the pent-up demand for hotel rooms in the Two County area. Based on the current occupancy levels of near 100% in the market area and discussion with owners/developers that have hotels currently under construction, the total number of rooms includes those that will be coming online in Based on a 99% occupancy rate, 1,698 of the 1,715 total hotel rooms will be occupied at any given time. Conservatively, typical hotel markets operate at an 80% occupancy rate. Thus, if the total number of occupied hotel rooms in the Two County area were stabilized at 80% then the market could currently support 2,144 rooms. Meaning, there is a pent-up demand for an additional 429 hotels rooms after including all 535 hotel rooms that are currently under construction in Williams County. Table V-2: Pent-up Hotel Room Demand in the Two County Area, 2012 Total Number of Hotel Rooms 1,715 Average Occupancy Rate 99% Average Number of Occupied Rooms 1,698 Stabilized Hotel Market Occupancy Rate 80% Total Hotel Rooms Supported at Stabilization 2,144 Total Pent-up Hotel Room Demand 429 Source: THK Associates, Inc. 235-ACRE SITE 118 THK Associates, Inc.

128 HOTEL MARKET ANALYSIS C. Completed Hotels/Motels in Williston Table V-3 provides a summary of completed hotels/motels in Williston as of June 1, There are currently 12 operating hotels/motels in Williston, with a total of 1,012 rooms. Of these, 6 hotels have been built since 2000, comprising 50.0% of the total rooms. 392 rooms have been added since No hotel rooms were added to the Williston market between 1990 and The remaining 6 hotels were built prior to 1990, comprising 50.0% of the current hotel room market. Of the 12 hotels in Williston, only 2 of them feature more than 100 rooms, 6 of them are between 75 and 99 rooms, while the remaining 4 have between 50 and 74 rooms. It should be noted that all of the hotels/motels in Roosevelt County were constructed prior to Date of Construction Hotels/Motels % of Total # of Rooms % of Total Before % 0 0.0% % % % % % 0 0.0% % % After % % Total % 1, % # of Rooms Hotels/Motels % of Total Under % % % % Over % Total % Source: THK Associates, Inc. Table V-3: Summary of Completed Hotels/Motels in Williston, 2012 An individual inventory profile of each hotel and motel in Williams County is listed below in Table V-4. A list of hotels that are currently planned and/or under construction in Williston is also listed in Table V-4. The rental rate range for the current 1,012 rooms in Williston is between $100 and $225 per night. As previously mentioned there are 4 hotel/lodging facilities under construction that will open in 2012 with 535 rooms. There are an additional 6 hotels planned or that will begin construction this summer for at least another 1,000 rooms. An individual inventory profile of each hotel and motel in Roosevelt County is listed below in Table V ACRE SITE 119 THK Associates, Inc.

129 HOTEL MARKET ANALYSIS Table V-4: Inventory of Hotels and Motels in Williston, 2012 Year of Number of Number of Price Range Name/ Address/ Phone Construction Rooms Suites (Average) Amenities Williston, North Dakota 1 Airport Internation Inn & Suites $119-$200 Pool, courtesy shuttle, jacuzzi, restaurant, lounge, cable/internet, refrigerator, nd Ave West meeting space, waterslide, and game room Candlewood Suites $194-$234 Cable/internet, refrigerator, laundry, fitness center and pets okay th Ave West El Rancho Motor Hotel $110-$130 Refrigerators, microwaves, café, dining lounge, cable/internet, inside & drive-up, nd Ave West HBO/ESPN, business center, WIFI, and casino HomStay Suites $65-$72 Jacuzzi, restaurant, cable/internet, refridgerator, laundry, picnic area, th Ave West fitness center, and pets okay Marquis Plaza & Suites $139-$164 Courtesy shuttle, conference room for 100, continental breakfast, business center, th Ave Northwest DSL, cable, dogs okay, WIFI, indoor pool, hut tub and vehicle plug-ins Microtel Inn & Suites $169-$209 Fitness center, continental breakfast, swimming pool and pets okay th Ave West Missouri Flats Inn $110-$130 Jacuzzi, cable/internet, meeting space, continental breakfast, refrigerator, th St West laundry, picnic area, fitness center and pets okay Super 8 Lodge $89-$102 Swimming pool, jacuzzi, lounge, casino, cable/internet, continental breakfast nd Ave West Travel Host Motel $63-$69 Courtesy shuttle, jacuzzi, lounge, cable/internet, casino, meeting space, nd Ave West continental breakfast, refrigerators, and laundry Vegas Motel $60-$65 Lounge, cable, continental breakfast, refiregerator, laundry, and pets okay nd Ave West Motel $99-$129 Cable, laundry, WIFI th Ave Holiday Inn Express $175-$225 Breakfeast are with continential breakfast, lobby, guest laundry, pool/spa, th St West fitness room TOTAL EXISTING 1, AVERAGE $100-$ ACRE SITE 120 THK Associates, Inc.

130 HOTEL MARKET ANALYSIS Table V-4 (cont.): Inventory of Hotels and Motels in Williston, 2012 Year of Number of Number of Price Range Name/ Address/ Phone Construction Rooms Suites (Average) Amenities Planned/Under Construction 13 Best Western Plus Inn & Suites (UC) Planning to add 50 rooms following year. North of Walmart Opening Spring Hampton Inn & Suites (UC) Refrigerators, microwaves, oversized workspaces, cable/internet, continental 1515 Gate Ave (Hospital Campus) breakfast, fitness room, indoor pool and spa, business center, laundry, snack shop, Opening Spring ,000 SF conference space, board room for 12, ballroom for Value Place (UC) Room hotels being constructed side-by-side N of 56th St West & Hwy 85 (July) Bakken Industrial Park 16 Value Place (Planned) additional Value Place Hotels planned in Williston by Nakota Development N of Hwy 85 on 32nd Ave West Sand Creek Retail Center 17 MainStay Suites (UC) Extended stay suites, gym, full kitchens, laundry, WIFI Albertson's Parking Lot Opening Fall Strata Estate Suites (Planned) N/A N/A Extended stay, heated garage, patio, cable/internet, living room, kitchen, range/oven, Permitted Dec 2011 dishes, microwave, dishwasher, refrigerator, in-room laundry, housekeeping. 19 Guesthouse Inn & Suites N/A Proposed 20 Radisson Hotel Sand Creek Town Center Beginning Const. Summer Country Inn & Suites Bakken Industrial Park Beginning Const. Summer Crown Pointe Lodge rooms to be available to travelers Tioga Beginning Const. Summer 2012 TOTAL PLANNED/U.C. 1, AVERAGE TOTAL 2, AVERAGE Source: Williston Conventions and Visitors Bureau and THK Associates, Inc. 235-ACRE SITE 121 THK Associates, Inc.

131 HOTEL MARKET ANALYSIS Table V-5: Inventory of Hotels and Motels in Roosevelt County, 2012 Number of Number of Price Range Name/ Address/ Phone Rooms Suites (Average) Amenities Wolf Point, Montana 1 Big Sky Motel 21 0 $79-$109 WIFI, continental breakfast, laundry facilities US Highway 2 E Homestead Inn 46 2 $79 - $132 Fitness center, continental breakfast, sauna & hot tub, guest laundry facilities, WIFI, 101 US Highway 2 East meeting room, airport shuttle, truck parking Sherman Inn 46 0 $40 - $55 Family dining room, loung, casino, airport shuttle, banquet and meeting rooms 200 E Main St Poplar, Montana 1 The Jolly Swagman Inn 13 0 $65 - $80 Access to Poplar's local gym and wellness center, WIFI 105 F St W, Hwy Lee Ann's Motel 10 0 $65 - $80 NA 150 F St W Culbertson, Montana 1 Diamond Willow Inn (Reopening soon) 12 0 $65 - $90 NA 104 6th St E Kings Inn Motel 20 0 $65 - $90 NA 408 6th St E TOTAL EXISTING AVERAGE 24 0 $65-$90 *Note: All of the above hotels/motels were constructed prior to 2000 Source: Roosevelt County and THK Associates, Inc. 235-ACRE SITE 122 THK Associates, Inc.

132 FIGURE 15 EXISTING & PLANNED HOTELS IN THE WILLISTON AREA MAP 235-ACRE SITE 123 THK Associates, Inc.

133 EXAMPLE HOTEL PHOTOS IN WILLISTON Motel 6 Best Western 235-ACRE SITE 124 THK Associates, Inc.

134 EXAMPLE HOTEL PHOTOS IN WILLISTON Hampton Inn & Suites Holiday Inn Express & Suites 235-ACRE SITE 125 THK Associates, Inc.

135 EXAMPLE HOTEL PHOTOS IN WILLISTON HomStay Suites Value Place Extended Stay 235-ACRE SITE 126 THK Associates, Inc.

136 D. Projected Hotel Room Demand in Williams County HOTEL MARKET ANALYSIS Table V-6 summarizes the total hotel room demand in the Two County area for the next decade. Based on continued employment growth, and a room per employee rate that is decreasing towards a more sustainable level, annual room demand is expected to average 247 rooms per year over the next decade. Once the 535 rooms that are currently under construction are removed from the total, there is expected to be a cumulative room demand of 1,937 additional rooms by 2022 in the Two County area. Employment in the Two County area is expected to increase from 39,421 in 2012 to approximately 107,380 in Based on a room per employee rate that is expected to decline from in 2012, to in 2022, there is expected to be a total demand in the Two County area for 3,831 hotel rooms in the next decade. Table V-6: Projected Hotel/Lodging Room Demand in the Two County Area, Projected Annual Two Rooms Total New Cumulative County per Room Room New Room Year Employment Employee Demand Demand* Demand , , , , , , , , , , , , , , , , , , , , , , , , , , , ,937 Average 74, , ,078 *Assumes that 535 hotel rooms will be added in 2012, also includes current pent-up hotel demand Source: Williston Conventions and Visitors Bureau, Roosevelt County and THK Associates, Inc. 235-ACRE SITE 127 THK Associates, Inc.

137 E. Subject Site Hotel Room Demand Potential HOTEL MARKET ANALYSIS Based on the location of the 235-acre subject site, THK does not recommend that any part of the site be used to construct a hotel. For the foreseeable future, hotels will continue to be located within or as close to city limits as possible. 235-ACRE SITE 128 THK Associates, Inc.

138 COMMERCIAL MARKET ANALYSIS VI. COMMERCIAL MARKET ANALYSIS PART 1: RETAIL MARKET ANALYSIS Overview Retail sales in the Williston and Williams County environs have sky rocketed in recent years. Sales in Montana and Roosevelt County were not included in this analysis due to the limited amount of services in Roosevelt County near the subject site. Pressures from the oil and gas workers have overwhelmed the retail sector with demand for product as well as demand for workers. Many stores such as Wal-Mart do not have time to stock many shelves and simply place items on pallets for shoppers. Convenience stores are over-run with demand for gas and small items at virtually all hours of the day. Stories are heard of prices doubling overnight to take advantage of the demand and retain workers. Even with the tremendous demand for retail goods and services national chain type tenants have been slow to react as land is scarce and the work force is still adjusting to accommodate the retail sector. In 2003 Williston reported less than $50,000,000 in total retail sales. In 2011 (third quarter) total retail sales in Williston were over $721,000,000 of which $609,000,000 were taxable. From 2003 to 2011 (third quarter) Williston has gone from the lowest dollar volume of retail sales of major cities in North Dakota to the largest, a remarkable gain in only eight years. The market has been slow to add retail space, resulting in very high sales per square foot ratios and in some cases even shortages of basic items. 235-ACRE SITE 129 THK Associates, Inc.

139 A. Retail Sales and Development Trends - National Trends COMMERCIAL MARKET ANALYSIS The most significant trend in retailing is the move away from larger regional shopping centers to smaller community and strip centers, such as that proposed for development at the subject site. This is due in large part to the enormous costs associated with constructing new regional malls, general saturation of these markets, and the uncertainty about the department store industry. Large department stores such as Sears, Wards and JC Penney have focused on penetrating markets outside of their traditional regional and super-regional trade area boundaries. Sears, for example, is actively developing "stand alone" stores specializing in automotive services, home appliances, paint/wallpaper and home improvements for locations in community/strip centers. A community/strip center can include off-price malls, fashion centers, home improvement/ doit-yourself centers, entertainment-oriented malls, auto malls, and centers anchored by a variety of stores such as warehouse/wholesale retailers, superstores, discount stores, junior department stores, or sports/health facilities. The community/strip center market has been particularly attractive to expansion minded chains (Ross Dress for Less, Home Club, Wal-Mart) that have been unable to find suitable locations in larger malls. More importantly, customer preferences have changed indicating a desire to do comparison shopping more quickly and closer to home. Finally, based on the Urban Land Institute's (ULI) Dollars and Cents of Shopping Center studies, community/strip centers are providing space to an increasing number of service retailers. The ULI reports that service tenants make up over 27% of the tenants in community centers and account for almost 8% of the leasable area. Examples of service-oriented businesses would include such personal services as beauty salons, dry cleaners, travel agencies, interior decorators, copying and fast print shops and video stores. In addition, banks, insurance and real estate agencies, medical, legal and accounting practices typically occupy space in community/strip centers. Service-oriented businesses find that community centers offer lower rents and common area changes, because they cost less to develop and operation than larger malls. 235-ACRE SITE 130 THK Associates, Inc.

140 COMMERCIAL MARKET ANALYSIS B. Growth Projections in the Subject Site Retail Primary Trade Area In the analysis to determine demand for real estate development, it is necessary to identify the primary area in which the subject sites typically will compete. The trade area is a function of population density, natural barriers, accessibility of the sites, and the location of competitive projects. For retail purposes, this is generally defined as an area that is accessible within a minute drive time. However, due to the relatively remote location of Williston and its relation to other towns in the vicinity, for purposes of this analysis, the Subject Site primary trade area has been designated as an approximate area halfway to other major retail hubs in the area such as Dickinson, ND and Minot, ND. A map of this trade area is shown below in Figure 22. The area encompasses all of Williams County plus portions of the neighboring counties in all directions. This primary trade area is predominantly the market environment in which the sites will draw much of their demand. Typically, historical growth trends of an area are incorporated into the projection for retail demand. However, the City of Williston and the entire area is an extreme case, in the fact that the area has experienced much greater than average population and employment growth in the past few years and projects to continue to for the next decade because of the current oil boom in the area. Thus, Table VI-1 below looks at the current population within the subject site retail trade area and projects this population for 2017 and The other major distinction between the subject site market and other retail markets around the country is the number current residents in the area who are not counted as living in permanent residences. Thus, there is temporary population in the area that must be included into the permanent population to account for money spent and retail demand by everyone that will utilize the subject site retail site. The current estimated permanent population of the subject site retail trade area is 47,316 people living in 17,639 households. When the temporary population from man camps, RV parks, hotels/motels, etc. is added to these figures, they increase to 68,397 people and approximately 25,497 households. These numbers are expected to increase to 138,505 people and 51,607 households in 2017 and 204,713 people and 75,447 households in ACRE SITE 131 THK Associates, Inc.

141 FIGURE 16 SUBJECT SITE RETAIL TRADE AREA MAP SITE 235-ACRE SITE 132 THK Associates, Inc.

142 COMMERCIAL MARKET ANALYSIS Table VI-1: Total Population and Households in the Subject Site Retail Trade Area, 2012 Year Permanent Residents Permanent Plus Temporary Population Households Population Households ,316 17,639 68,397 25, ,815 35, ,505 51, ,617 52, ,713 75, Median Household Income (Williams County) $64,126 Source: THK Associates, Inc. 235-ACRE SITE 133 THK Associates, Inc.

143 C. Sales Tax Revenues in North Dakota and Williston RETAIL MARKET ANALYSIS Table VI-2 shows recent sales tax revenue data for the State of North Dakota as well as the Williston Region. In 2011, there was $15.2 billion dollars spent on in-state, taxable retail sales. Based on an approximate state population of 700,000, this results in approximate sales per person of $21,714. Using $500 spent per square foot of retail space as an estimate, the total sales per person results in approximately 30.4 million square feet of retail space in North Dakota or 43.4 square feet per person. In Williston, the total taxable retail sales in 2011 were $609 million or $28,209 per person. Based on $500 spent per square foot of retail space, there is approximately 1.22 million square feet of retail space in the Williston area. This amount of space results in approximately 56.4 square feet of space per person. Based on the current oil boom resulting in the population explosion and limited housing supply, the higher square foot per person number is expected in Williston. With a total 2012 population estimate of 61,926 in the subject site retail trade area, approximately 2.69 million square feet of retail space could be supported. With estimated total populations of 125,400 in 2017 and 185,344 in 2022, the amount of retail square footage demand could grow to 5.45 million in 2017 and 8.05 million in A more in-depth look at retail trends and demands will be analyzed in the following sections. Table VI-2: Sales Tax Revenues for North Dakota and the Williston Region Taxable Retail Sales Sales per Retail Sq.Ft. Sq. Ft $500/Sq.Ft. per Person North Dakota Taxable Retail Sales $15,200,000,000 $21,714 30,400, Williston Taxable Retail Sales $609,000,000 $28,209 1,218, Estimated Retail Space Needs in the Williston Region Population Retail Sq.Ft ,397 2,970, ,505 6,015, ,713 8,890,400 Source: North Dakota Dept of Revenue and THK Associates, Inc. 235-ACRE SITE 134 THK Associates, Inc.

144 D. Retail Primary Trade Area Expenditure Patterns RETAIL MARKET ANALYSIS Table VI-3 shows a breakdown of household expenditures by category of retail establishments based upon the typical budget of trade area households in The current median household income of residents Williams County is estimated to be $64,126. The portion of household income available for retail expenditures is determined by subtracting payments for federal taxes, savings, housing, insurance, medical expenses, recreation and transportation from total income. These payments total approximately 62.9% of total income, or $40,646. The remaining 31% of income, or $18,007, is allotted for retail and personal service expenditures among 27 store types in the proportions shown in Table VI ACRE SITE 135 THK Associates, Inc.

145 COMMERCIAL MARKET ANALYSIS Table VI-3: Estimated Household Expenditure Patterns in the Subject Site Trade Area, 2012 Median Household Amount Percent Median Gross Income $64,126 Taxes $6, % of Gross Disposable Income $57, % of Gross Housing $20, % of Disposable Transportation $10, % Savings / Pensions $2, % Medical / Insurance $2, % Recreation $1, % Education $ % Miscellaneous $1, % Total Available for Retail $18, % of Disposable Store Type Hardware and Building Materials Building Materials and Supplies $ % of Retail Hardware $ % Food Stores Grocery $5, % Automotive Tire, Battery and Accessory $ % Apparel and Accessory Men's Clothing $ % Women's Clothing $ % Children's Clothing $ % Shoes $ % Other Apparel & Accessories $82 0.5% Furniture and Equipment Furniture $ % Home Furnishings & Accessories $ % Household Appliances $ % Radio, Television, Stereo, Computer $ % Records & Music $ % Eating and Drinking Places Restaurant $2, % Drug and Proprietary Drug / Cosmetics $ % Other Retail and Personal Services Liquor / Wine & Spirits $ % Sporting Goods & Bicycle $ % Books & Stationary $ % Jewelry $ % Hobby & Specialty $ % Florist $76 0.4% Miscellaneous Retail $1, % Video Tape Rental $68 0.4% Personal Care Products & Services $ % Dry Cleaner / Coin Laundry $ % Misc Personal Services $ % Total Retail $18, % Source: U.S. Department of Labor, Bureau of Labor Statistics; Northern Trust Real Estate, and THK Associates, Inc. 235-ACRE SITE 136 THK Associates, Inc.

146 E. Retail Development Trends - Regional COMMERCIAL MARKET ANALYSIS Table VI-4 shows characteristics of selected store types found in neighborhood/community retail shopping centers. This information is later synthesized with the primary trade area analysis to make site-specific demand projections. The table shows the operating characteristics of the major type of retail establishments that would be suitable tenants for a community shopping center. By comparing these performance characteristics with the expenditure patterns in the primary trade area for the subject site, the total dollar volume support and square footage support that will be generated for each retail use can be estimated. The first column of Table VI-4 illustrates the median household expenditure in the retail primary trade area by store type as shown previously in Table VI-3. The second column of Table VI-4 shows the sales per square foot GLA that the median store achieves based upon the performance characteristics of community shopping centers surveyed in the Urban Land Institute's Dollars and Cents of Shopping Centers. The next column shows the median store size in square feet of typical shopping center tenants. For purposes of this analysis, this is considered to be an indication of the threshold size given that the anticipated sales per square foot performance as shown in the second column would have to be supported in order to make their introduction onto the subject site feasible. The fifth column in Table VI-4 shows that annual sales of $1,872,637 would be necessary to support a hardware store; a restaurant requires annual sales of $1,003,541, a drug/cosmetics store needs sales support of $5,790,115 and so on. Finally, based upon the expenditure patterns of households in the primary trade area as shown in the first column, the minimum number of households required to support each type of establishment can be estimated. 235-ACRE SITE 137 THK Associates, Inc.

147 COMMERCIAL MARKET ANALYSIS Table VI-4: Characteristics of Selected Store Types Found in Regional/Community Shopping Centers Median Sales Per Median Threshold Minimum Household Square Foot Store Size Household Expenditure Store Type Expenditure GLA (Sq. Ft.) Support Support Hardware and Building Materials Building Materials and Supplies $414 $ ,846 4,095 $1,696,165 Hardware $295 $ ,857 6,341 $1,872,637 Food Stores Grocery/Convenience* $5,124 $ ,094 7,835 $40,146,705 Automotive Tire, Battery and Accessory $510 $ ,038 3,495 $1,781,452 Apparel and Accessory Men's Clothing $450 $ ,082 2,500 $1,125,608 Women's Clothing $630 $ ,957 1,522 $959,487 Children's Clothing $418 $ ,775 5,149 $2,154,075 Shoes $394 $ ,278 2,407 $947,329 Other Apparel & Accessories $82 $ ,361 11,589 $951,766 Furniture and Equipment Furniture $493 $ ,471 4,301 $2,119,373 Home Furnishings & Accessories $826 $ ,522 2,205 $1,821,462 Household Appliances $356 $ ,010 3,112 $1,109,125 Radio, Television, Stereo, Computer $649 $ ,013 1,701 $1,104,626 Records & Music $108 $ ,900 8,718 $945,632 Eating and Drinking Places Restaurant $2,631 $ , $1,003,541 Drug and Proprietary Drug / Cosmetics $597 $ ,741 9,706 $5,790,115 Other Retail and Personal Services Liquor / Wine & Spirits $431 $ ,648 3,070 $1,322,252 Sporting Goods & Bicycle $352 $ ,440 3,064 $1,077,546 Books & Stationary $346 $ ,155 1,842 $636,587 Jewelry $160 $ ,263 4,177 $666,662 Hobby & Specialty $122 $ ,790 7,477 $915,287 Florist $76 $ ,600 6,314 $479,424 Miscellaneous Retail $1,088 $ , $805,390 Video Tape Rental $68 $ ,000 14,128 $963,200 Personal Care Products & Services $460 $ , $365,806 Dry Cleaner / Coin Laundry $167 $ ,653 1,703 $285,010 Misc. Personal Services $759 $ , $745,220 Total Retail $18,007 Source: Urban Land Institute Dollars and Sense of Shopping Centers, Bureau of Labor Statistics; and THK Associates, Inc. 235-ACRE SITE 138 THK Associates, Inc.

148 F. Estimates for Retail Space Demand by Store Type COMMERCIAL MARKET ANALYSIS Secondary support for the subject site primary trade area is slightly higher than a typical trade area as there are a number of people that live outside of a typical retail trade area that are forced to drive longer distances to get to retail centers. Currently, as shown in Table VI-5, there is over $1.06 billion available for annual retail expenditures within the primary trade area, which will support nearly 2.5 million square feet of retail space. Based on household growth and secondary support over the next ten years, retail expenditures are expected to grow to nearly $3.2 billion by 2022, which will support nearly 7.5 million square feet of retail space. Total existing and supportable square footages, by store type, are summarized in Table VI-6 for 2012, 2017 and ACRE SITE 139 THK Associates, Inc.

149 COMMERCIAL MARKET ANALYSIS Table VI-5: Estimated Retail Sales and Square Footage Support in the Subject Site Trade Area, Percent Estimated Support Annual Annual From Sales per 2012 Support 2017 Support 2022 Support Household Secondary Square Dollars Dollars Dollars Store Type Expenditures Trade Area Foot GLA (000,000's) Square Feet (000,000's) Square Feet (000,000's) Square Feet Households 47,316 95, ,617 Hardware and Building Materials Building Materials and Supplies $ % $ $ ,187 $ ,328 $ ,452 Hardware $ % $ $ ,252 $ ,435 $ ,935 Food Stores Grocery $5, % $ $ ,869 $ ,059 $ ,277 Automotive Tire, Battery and Accessory $ % $ $ ,182 $ ,769 $ ,874 Apparel and Accessory Men's Clothing $ % $ $ ,802 $ ,223 $ ,951 Women's Clothing $ % $ $ ,113 $ ,779 $ ,624 Children's Clothing $ % $ $ ,967 $ ,409 $ ,489 Shoes $ % $ $ ,219 $ ,093 $ ,633 Other Apparel & Accessories $ % $ $ ,710 $ ,688 $ ,056 Furniture and Equipment Furniture $ % $ $ ,318 $ ,918 $ ,314 Home Furnishings & Accessories $ % $ $ ,794 $ ,283 $ ,627 Household Appliances $ % $ $ ,848 $ ,966 $ ,187 Radio, Television, Stereo, Computer $ % $ $ ,101 $ ,530 $ ,652 CDs, DVDs, etc. $ % $ $ ,488 $ ,412 $ ,340 Eating and Drinking Places Restaurant $2, % $ $ ,042 $ ,209 $ ,451,729 Drug and Proprietary Drug / Cosmetics $ % $ $ ,592 $ ,048 $ ,533 Other Retail and Personal Services Liquor/Wine & Spirits $ % $ $ ,022 $ ,320 $ ,709 Sporting Goods & Bicycle $ % $ $ ,414 $ ,488 $ ,776 Books & Stationary $ % $ $ ,184 $ ,097 $ ,067 Jewelry $ % $ $ ,883 $ ,213 $ ,524 Hobby & Specialty $ % $ $ ,069 $ ,690 $ ,053 Florist $ % $ $ ,987 $ ,348 $ ,855 Miscellaneous Retail $1, % $ $ ,982 $ ,939 $ ,553 DVD/Video Rental $ % $ $ ,932 $ ,388 $ ,650 Personal Care Products & Services $ % $ $ ,637 $ ,590 $ ,263 Dry Cleaner / Coin Laundry $ % $ $ ,404 $ ,244 $ ,812 Misc Personal Services $ % $ $ ,024 $ ,048 $ ,511 Total Retail $18, $ $1, ,659,020 $2, ,384,516 $3, ,958,447 Source: U.S. Department of Labor, Bureau of Labor Statistics; and THK Associates, Inc. 235-ACRE SITE 140 THK Associates, Inc.

150 COMMERCIAL MARKET ANALYSIS Table VI-6: Supportable Retail Space in the Subject Site Trade Area, Estimated Existing Supportable Supportable Supportable Store Type Square Footage Square Footage Square Footage Square Footage Hardware and Building Materials Building Materials and Supplies 112, , , ,452 Hardware 46, , , ,935 Food Stores Grocery (Includes Convenience/Gas Stations) 128, , , ,277 Automotive Tire, Battery and Accessory 28,000 96, , ,874 Apparel and Accessory Men's Clothing 14,500 64, , ,951 Women's Clothing 17, , , ,624 Childrens Clothing 7,500 58, , ,489 Shoes 3, , , ,633 Other Apparel & Accessories 6,500 10,710 21,688 32,056 Furniture and Equipment Furniture 12,500 91, , ,314 Home Furnishings & Accessories 7, , , ,627 Household Appliances 7,500 50, , ,187 Radio, Television, Stereo, Computer 5,000 93, , ,652 Records & Music 1,500 17,488 35,412 52,340 Eating and Drinking Places Restaurant 27, , ,209 1,451,729 Drug and Proprietary Drug / Cosmetics 4,000 34,592 70, ,533 Other Retail and Personal Services Liquor / Wine & Spirits 2,000 51, , ,709 Sporting Goods & Bicycle 7,500 66, , ,776 Books & Stationery 1,000 69, , ,067 Jewelry 1,000 17,883 36,213 53,524 Hobby & Specialty 4,000 22,069 44,690 66,053 Florist 0 14,987 30,348 44,855 Miscellaneous Retail 22, , , ,553 DVD/Video Rental 0 20,932 42,388 62,650 Personal Care Products & Services 7,500 92, , ,263 Dry Cleaner / Coin Laundry 0 57, , ,812 Misc Personal Services 15,000 80, , ,511 Total Retail 489,500 2,659,020 5,384,516 7,958,447 Source: THK Associates, Inc. 235-ACRE SITE 141 THK Associates, Inc.

151 G. Retail Inventory in the Williston Environs COMMERCIAL MARKET ANALYSIS Table VI-7 displays an inventory of the major regional/national recognized retail stores that exist within the Williston environs. This area includes the cities of Williston, ND, Dickinson, ND, Minot, ND and Sidney, MT. The cities listed here on beyond the subject site retail trade area defined above, however, the store lists and square footage totals bring context to the overall study and area. Currently in Williston, there is approximately 489,500 square feet of regional and/or national retail tenants. Likewise, there is approximately 646,000 square feet of similar retail in Dickinson, 1,496,500 square feet in Minot and an additional 145,000 square feet in Sidney. 235-ACRE SITE 142 THK Associates, Inc.

152 COMMERCIAL MARKET ANALYSIS Table VI-7: Retail Inventory in the Williston/Williams County Environs Est. Est. Est. Est. Store Name Sq. Ft. Store Name Sq. Ft. Store Name Sq. Ft. Store Name Sq. Ft. Williston, ND Dickinson, ND Minot, ND Sidney, MT 1 Wal-Mart Supercenter 210,000 1 Wal-Mart Supercenter 170,000 1 Target 95,000 1 Farm & Home Supply 13,000 2 Conlin's Furniture 10,000 2 Kmart 72,000 2 Ashley Furniture HomeStore 25,000 2 Pizza Hut 4,000 3 JC Penney Company 12,000 3 Herberger's 30,000 3 Sears 70,000 3 NAPA 3,500 4 Joan's Hallmark 2,000 4 Sears Hometown Store 6,000 4 O'Reilly Auto Parts 5,000 4 CarQuest 2,500 5 Maurices Inc. 4,000 5 O'Reilly Auto Parts 6,000 5 Zimmerman's Furniture 17,500 5 JC Penney 7,000 6 Sears Hometown Store 15,000 6 JC Penney 35,000 6 Wal-Mart Supercenter 220,000 6 Loaf N' Jug 1,500 7 Sherwin-Williams Company 9,000 7 Applebee's 5,000 7 Kmart 110,000 7 Pamida Discount Center 23,000 8 True Value Hardware 38,000 8 Dans Supermarket 28,000 8 Arrowhead Ace Hardware 20,000 8 Dairy Queen 2,500 9 Vanity 2,000 9 Dairy Queen 2,500 9 Anytime Fitness South 10,000 9 KFC 2, Simonson Station Store 1, Burger King 2, Anytime Fitness North 10, McDonalds 2, Subway 2, Wendy's 2, Aaron's Sales & Leases 15, Johnson Hardware & Furniture 9, Taco Johns 2, Tradehome Shoes 3, Applebee's 5, Reynolds Market 21, Albertsons 40, Maurices 3, AT&T Wireless 2, ProBuild 25, Applebee's 5, Radio Shcack 2, Best Buy 20, Chad's Furniture 13, Dairy Queen 2, Bath & Body Works 2, Ruby Tuesday 6, Finnicum's Furniture 12, Domino's Pizza 1, Vanity 2, Buffalo Wild Wings 15, Taco Johns 2, Economart 1, GNC 2, Burger King 2, Hardee's 2, Claire's 2, Conlin's Furniture 15, KFC 2, Papa Murphy's 1, Curves 5, McDonalds 2, Arby's 2, South Broadway Dairy Queen 2,500 TOTAL 145, Pizza Hut 3, Simonson Station Store North 1, Dairy Queen West 2, Anytime Fitness 10, Alltel 2, Scheels Sports Superstore 40, ProBuild 11, Christopher & Banks 3, Herberger's 60, Williston Home and Lumber 90, Victoria's Hallmark Shop 2, Barnes & Noble 20, O'Reilly Auto Parts 6, AT&T 2, Claire's 2, Arby's 2, MAC's Hardware, Inc 30, Aeropostale 2, Fleck's Furniture & Appliance 15, American Eagle 2, Furniture City 15, The Buckle 2, Newby's Ace Hardware, Inc 60, Eddie Bauer 3, Country Kitchen 5, Hot Topic 2, Domino's Pizza 1, Old Navy 12, Hardees 2, PacSun 2, KFC/A&W 3, Hobby Lobby 100, Mcdonalds 2, Christopher & Banks 3, Perkins 4, Maurice's 4, Ramada Restaurant 3, Vanity 2, Taco Johns 2, Victoria's Secret 3, Cenex Museum General 1, Foot Locker 2, Frankies West Side Conoco 1, Joan's Hallmark 2, Kovash Furniture 12, Spencer Gifts 2, Cenex 1, Alltel Cell Solutions 2, Anytime Fitness 10, Arby's 2, Pizza Ranch 3, Cold Stone Creamery 2, Pizza Hut 3, Subway 2, Sherwin Williams Co. 3, Taco Johns 2, Pita Pit 2, Miracle Mart 45, ProBuild 15, Bath & Body Works 2, T-Rex Conoco 1, GNC 2, Sanford's Grub & Pub 5, Kay Jewelers 3, Ashley Furniture Homestore 30, Zales Jewelers 3, Kum & Go 1, GameStop 2, Carquest Auto Parts 5, Radio Shack 3, Family Dollar Store 12, McDonalds Broadway 2, Taco Bell 2, McDonalds 24th Ave SW 2, Journeys 2, Payless Shoe Source 3, Tradehome Shoes 2, Verizon Wireless 2, Olive Garden 6, Denny's Restaurant 4, Domino's Pizza 1, Dressbarn 3, Karl's TV, Appliance & Furniture 8, Market Place Foods 40, Wendy's 2, OfficeMax 10, Papa Murphy's Pizza 1, Party City 10, JC Penney Co. 80, Perkins Restaurant 4, Pita Pit 2, Pizza Ranch 3, Sherwin-Williams Company 5, Staples, Inc. 22, FedEx 2, The UPS Store 1, Dollar Market 12, Dollar Tree 10, Sally Beauty Supply 3, Menard's 150, Slumberland Furniture 45, Tolleson's Carpet 18, Salvation Army Thrift Store 3, Spicy Pickle 2, Goodwill Store 3, JoAnne Fabrics 5, Starbuck 1, Papa Johns Pizza 1, Taco Johns - Minot Univ 2, Quiznos 2, Hardee's 2,500 TOTAL 489,500 TOTAL 646,000 TOTAL 1,496,500 4 CITY TOTAL 2,777,000 Source: THK Associates, Inc. 235-ACRE SITE 143 THK Associates, Inc.

153 COMMERCIAL MARKET ANALYSIS Table VI-8: Existing Retail by Store Type in Williston, 2012 Estimated Estimated Store Type Number of Stores Retail Space Hardware and Building Materials 1 Building Materials and Supplies 6 112,000 2 Hardware 6 46,500 Food Stores 3 Grocery (Includes Convenience/Gas Stations) 4 128,000 Automotive 4 Tire, Battery and Accessory 3 28,000 Apparel and Accessory 5 Men's Clothing 3 14,500 6 Women's Clothing 4 17,500 7 Childrens Clothing 2 7,500 8 Shoes 2 3,500 9 Other Apparel & Accessories 3 6,500 Furniture and Equipment 10 Furniture 2 12, Home Furnishings & Accessories 1 7, Household Appliances 3 7, Radio, Television, Stereo, Computer 2 5, Records & Music 1 1,500 Eating and Drinking Places 15 Restaurant 10 27,000 Drug and Proprietary 16 Drug / Cosmetics 1 4,000 Other Retail and Personal Services 17 Liquor / Wine & Spirits 1 2, Sporting Goods & Bicycle 2 7, Books & Stationery 1 1, Jewelry 1 1, Hobby & Specialty 2 4, Florist Miscellaneous Retail 2 22, Personal Care Products & Services 1 7, DVD/Video Rental Dry Cleaner / Coin Laundry Misc Personal Services 2 15,000 Total Occupied Retail Space ,500 Vacant Retail Space 0 0 Total Retail Space ,500 Retail Space Vacant Rate in Primary Trade Area 0.0% *Some stores such as Walmart are included in multiple store categories Source: THK Associates, Inc. 235-ACRE SITE 144 THK Associates, Inc.

154 COMMERCIAL MARKET ANALYSIS H. Retail Potentials and Recommendations at the Subject Site Table VI-9 below outlines the demand for specific type of retail establishments at the subject site. Overall, the subject site should capture approximately 1.6% of the regions retail demand. Types of retail demanded at the site include food, automotive, eating/drinking, liquor, dry cleaner/laundry and miscellaneous retail. The site could currently absorb up to 33,067 square feet currently and up to 117,767 square feet by Table VI-9: Retail Development Potentials at the 235-Acre Subject Site, Subject Site Space Requirements Space Requirements Space Requirements Store Type Capture Rate Requirements at the Site Requirements at the Site Requirements at the Site Hardware and Building Materials Building Materials and Supplies 0% 46, , ,452 0 Hardware 0% 70, , ,435 0 Food Stores Grocery (Includes Convenience/Gas Stations) 5.0% 204,869 10, ,059 27, ,277 43,414 Automotive Tire, Battery and Accessory 5.0% 68,182 3, ,769 8, ,874 12,994 Apparel and Accessory Men's Clothing 0% 50, , ,451 0 Women's Clothing 0% 84, , ,124 0 Childrens Clothing 0% 51, , ,989 0 Shoes 0% 142, , ,133 0 Other Apparel & Accessories 0% 4, , ,556 0 Furniture and Equipment Furniture 0% 78, , ,814 0 Home Furnishings & Accessories 0% 100, , ,127 0 Household Appliances 0% 43, , ,687 0 Radio, Television, Stereo, Computer 0% 88, , ,652 0 Records & Music 0% 15, , ,840 0 Eating and Drinking Places Restaurant 2.5% 458,042 11, ,209 23,880 1,424,729 35,618 Drug and Proprietary Drug / Cosmetics 0% 30, , ,533 0 Other Retail and Personal Services Liquor / Wine & Spirits 1.0% 49, ,320 1, ,709 1,507 Sporting Goods & Bicycle 0% 58, , ,276 0 Books & Stationery 0% 68, , ,067 0 Jewelry 0% 16, , ,524 0 Hobby & Specialty 0% 18, , ,053 0 Florist 0% 14, , ,855 0 Miscellaneous Retail 2.5% 176,482 4, ,439 9, ,053 14,326 DVD/Video Rental 0% 20, , ,650 0 Personal Care Products & Services 0% 85, , ,763 0 Dry Cleaner / Coin Laundry 2.5% 57,404 1, ,244 2, ,812 4,295 Misc Personal Services 2.5% 65,024 1, ,048 3, ,511 5,613 TOTAL RETAIL 1.6% 2,169,520 33,067 4,895,016 76,628 7,468, ,767 Source: THK Associates, Inc. 235-ACRE SITE 145 THK Associates, Inc.

155 COMMERCIAL MARKET ANALYSIS PART II: COMMERCIAL MARKET ANALYSIS A. New Employment Housed in Commercial/Flex Space Table VI-10 below, outlines the average proportions of new employment for each industry that will go into commercial space. For the purpose of this study, commercial space includes flex, office, industrial and other commercial uses. Table VI-10: Proportion of New Employment Housed in Commercial Space Industry Proportion of New Employment Housed In Commercial Space Forestry, fishing, related activities, and other 25.0% Mining 17.5% Utilities 25.0% Construction 20.0% Manufacturing 20.0% Wholesale trade 15.0% Retail Trade 20.0% Transportation and warehousing 30.0% Information 80.0% Finance and insurance 85.0% Real estate and rental and leasing 75.0% Professional and technical services 75.0% Management of companies and enterprises 80.0% Administrative and waste services 55.0% Educational services 20.0% Health care and social assistance 50.0% Arts, entertainment, and recreation 20.0% Accommodation and food services 22.5% Other services, except public administration 40.0% Government and government enterprises 55.0% Source: THK Associates, Inc. Table VI-11 below outlines the projected annual change in commercial employment over the next decade in the Two County area based on the employment projections provided earlier in the Economic Base and the percentages above in Table VI-10. The Mining, Construction, Real Estate and Health Care industries will lead the way for new employment and space demands over the next decade. 235-ACRE SITE 146 THK Associates, Inc.

156 COMMERCIAL MARKET ANALYSIS Table VI-11: Projected Annual Change in Commercial Employment in the Two County Area, Average Industry Ann. Change Forestry, fishing, related activities, & other Mining 1,389 1,744 2,139 2,577 2,999 3,415 3,819 4,204 4,575 4,938 5, Utilities Construction ,291 1,605 1,935 2,275 2,615 2,958 3,306 3, Manufacturing Wholesale trade Retail Trade ,036 1,102 1,162 1,216 1,265 1,312 1, Transportation & warehousing ,025 1, Information Finance & insurance 900 1,042 1,188 1,338 1,474 1,601 1,718 1,825 1,925 2,020 2, Real estate & rental & leasing 1,011 1,186 1,370 1,562 1,736 1,900 2,054 2,195 2,328 2,454 2, Professional & technical services ,068 1,173 1,272 1,362 1,445 1,522 1,595 1, Management of companies & enterprises Administrative & waste services ,051 1,109 1,163 1, Educational services Health care & social assistance 1,719 1,935 2,151 2,368 2,559 2,733 2,893 3,036 3,168 3,292 3, Arts, entertainment, & recreation Accommodation & food services ,069 1,170 1,263 1,352 1,437 1, Other services, except public administration ,006 1,045 1,080 1,113 1, Government & government enterprises 2,951 3,082 3,204 3,319 3,414 3,497 3,569 3,632 3,688 3,739 3, Farm Total 13,472 15,452 17,557 19,800 21,898 23,919 25,855 27,677 29,416 31,108 32,724 1,925 Projected Annual Change 1,663 1,980 2,105 2,244 2,098 2,022 1,936 1,821 1,739 1,692 1,616 Source: THK Associates, Inc. 235-ACRE SITE 147 THK Associates, Inc.

157 COMMERCIAL MARKET ANALYSIS B. Projected Commercial/Flex Space Demand in the Two County Area Table VI-12 displays the projected annual occupied commercial space demand as well as the multi-tenant commercial space demand in the Two County Area from 2012 to With an annual increase of 1,925 commercial employees over the next decade, there will be an average annual demand for 950,670 square feet of commercial space in the area. Approximately 80% or 760,530 square feet could be applied towards multi-tenant facilities. Table VI-12: Projected Commercial Space Demand in the Two County Market Area, Annual Projected Total Change Projected Annual Multi-tenant Commercial Commercial Occupied Commercial Commercial Space Year Employment Employment Space Demand Demand ,472 1, , , ,452 1, , , ,557 2,105 1,052, , ,800 2,244 1,121, , ,898 2,098 1,048, , ,919 2,022 1,010, , ,855 1, , , ,677 1, , , ,416 1, , , ,108 1, , , ,724 1, , ,340 Annual Average , , ,530 Note: Square footage/office worker: 500 Multi-tenant demand distribution: 80% Source: Urban Land Institute (ULI), and THK Associates, Inc. 235-ACRE SITE 148 THK Associates, Inc.

158 COMMERCIAL MARKET ANALYSIS C. Projected Commercial/Flex Space Demand at the Subject Site Table VI-13 below outlines the potential demand for commercial/flex space at the subject site. Based on a 20% coverage ratio and a 5.0% capture rate, the subject site could absorb on average 48,129 square feet per year or 5.5-acres. A total of 481,294 square feet or 55.2-acres could be absorbed at the site in the next decade. 235-ACRE SITE 149 THK Associates, Inc.

159 COMMERCIAL MARKET ANALYSIS Table VI-13: Projected Commercial Growth in the Williams County Market Area and the 235-Acre Subject Site, Total Commercial Cumulative Employment Projected Commercial Commercial Ann. Commercial Ann. Commercial Commercial Space Cumulative in Williams County Emp. Growth in Demand in Acreage Demand Space Demand Annual Acreage Demand at the Acreage Year Market Area Williams County Williams County in Williams County at the Subject Site* Demand at Site** Subject Site Demand at Site 2011 #REF! ,472 1, , ,289 ***PLANNING AND SITE PREPARATION*** ,452 1, , ,963 49, , ,557 2,105 1,052, ,476 52, , ,800 2,244 1,121, ,356 56, , ,898 2,098 1,048, ,752 52, , ,919 2,022 1,010, ,164 50, , ,855 1, , ,602 48, , ,677 1, , ,125 45, , ,416 1, , ,916 43, , ,108 1, , ,237 42, , ,724 1, , ,585 40, , TOTAL ,457,319 2,091, , Annual Average , , ,133 48, Note: Approximate square footage/office worker: 500 *Assumes the subject site will capture roughly 5% of the demand for new commercial construction in Williams/Roosevelt Counties based off of competitive projects **Assumes a coverage ratio of 20% Source: THK Associates, Inc. 235-ACRE SITE 150 THK Associates, Inc.

160 COMMERCIAL MARKET ANALYSIS D. Comparable Commercial/Flex Rents in the Williston Environs Table VI-14 below summarizes comparable commercial rents in the Williston environs. An $18.00 per square foot, triple net lease is pretty common currently in Williston for build-to-suit commercial/flex spaces. What little standard office space there is available commands much higher rents per square foot than the larger flex spaces. Space Annual Monthly Annual Monthly Area Type Square Footage Rent/SF* Rent/SF* Rent Rent Owan Industrial Park Office/Flex 2,000 $19.00 $1.58 $38,000 $3,167 Williston Industrial Park Warehouse/Flex 3,000 (min.) $18.00 $1.50 $54,000 $4, ,000 (max.) $18.00 $1.50 $1,800,000 $150,000 Dowtown Williston Office 4,000 $36.00 $3.00 $144,000 $12,000 Bennett Industrial Subdivision Warehouse/Transit 8,000 $15.75 $1.31 $126,000 $10,500 Bakken Industrial Park Warehouse/Flex 5,000 (min.) $18.00 $1.50 $90,000 $7, ,000 (max.) $18.00 $1.50 $3,600,000 $300,000 Ironwood Industrial Park Warehouse/Flex 5,000 (min.) $18.00 $1.50 $90,000 $7,500 40,000 (max.) $18.00 $1.50 $720,000 $60,000 Average $19.86 $1.66 *NNN leases Source: THK Associates, Inc. Table VI-14: Comparable Commercial Rents in the Williston Environs 235-ACRE SITE 151 THK Associates, Inc.

161 E. Commercial/Flex Lot Prices in the Williston Environs COMMERCIAL MARKET ANALYSIS (1) Missouri Ridge Commercial Park o Located at the NEC of US Highway 85/2 & 58 th Street NW o 310 total acres, divided into 5-, 10-, 20-, 40- & 80-acre lots 41 total lots No improvements o Lots sales as of June 1, acre 21 of 36 lots sold Ranging from $40,000 to $75,000 per acre 10-acre 3 of 5 lots sold Ranging from $35,000 to $40,000 per acre 80-acre 1 of 1 lots sold Price not available (2) Bakken Industrial Park o Located at SEC of US Highway 85/2 & County Highway 6 o 720 total acres o 21 of 27 lots sold in Phase I as of June 1, 2012 Range in size from 4- to 12-acres (3) NEC 58 th Street (CR 7) W & 137 th Avenue W o County Road 7 is proposed to connect the new truck bypass route o total acres zoned heavy industrial o For sale at $3.25/SF for entire parcel (approximately $3 million) o Will subdivide into 5-10 acre parcels for premium on price per square foot Miscellaneous sale listings: Sale Listings as of 9/27/2012 Location Land Use Type Lot Size Price Price/Acre Hwy 2 and 150th Ave Commercial 2.5 $150,000 $60,000 58th Street and Hwy 2 Commercial 5.0 $275,000 $55,000 58th Street and Hwy Commercial 5.0 $300,000 $60, th Ave NW Industrial 4.4 $1,200,000 $275,229 Hwy. 2 and 58th St Industrial 3.0 $200,000 $66,667 9 Miles North of Williston Industrial $6,500,000 $65,000 Highway 2 & 85 North Industrial 10.0 $1,000,000 $100,000 Source: THK Associates, Inc. 235-ACRE SITE 152 THK Associates, Inc.

162 FIGURE 17 COMMERCIAL/FLEX LOT SALES NEAR WILLISTON MAP SITE 235-ACRE SITE 153 THK Associates, Inc.

163 COMMERCIAL/FLEX SITE PHOTOS Missouri Ridge Missouri Ridge 235-ACRE SITE 154 THK Associates, Inc.

164 COMMERCIAL/FLEX SITE PHOTOS Bakken Industrial Park Bakken Industrial Park 235-ACRE SITE 155 THK Associates, Inc.

165 COMMERCIAL/FLEX SITE PHOTOS NEC 58 th St W & 137 th Ave W 235-ACRE SITE 156 THK Associates, Inc.

166 SITE RECOMMENDATIONS VII. SITE RECOMMENDATIONS A. Land Use Program The preceding market analysis has demonstrated and documented the significant demand for Mobile/Modular/RV sites in the Williams/Roosevelt County environs and at the 235-acre subject site property. THK recommends approximately 675 Mobile/Modular/RV residential lots averaging 5.0 units per acre for a total of 135-acres. THK recommends approximately 10-acres for convenience type retail uses. THK also recommends 55-acres to be used for commercial/flex/light industrial uses. The remaining 35- acres or 15% of the site is set aside for right-of-way and open space uses. Based on the preceding analysis, the entire property should be fully absorbed and stabilized in less than 10 years, assuming that the remainder of 2012 be used for planning and construction. Table VII-1: 235-Acre Subject Site Land Use Program Square FAR or Percent Absorption Price per Land Use Units Feet Density Acres of Total Period Lot/Acre Residential Mobile/Modular/RV % < 7 years $75,000 Sub-Total % Non-Residential Convenience Retail , % < 10 years -- Commercial/Light Industrial , % < 10 years -- Hotel/Lodging Sub-Total , % % R.O.W. and Open Space % TOTAL , % Source: THK Associates, Inc. 235-ACRE SITE 157 THK Associates, Inc.

167 WILLISTON INFRASTRUCTURE VIII. WILLISTON INFRASTRUCTURE A. Expansion Plans 1. Water Treatment Plant Currently the City of Williston s permits allow them to use approximately 36 MGD of water from their Missouri River water pact. The City s current capacity will only accommodate approximately 10 MGD of water. Phase I expansion, which is currently taking bids, is expected to be complete by the end of o Expand up to approximate 14 MGD capacity. o Alternative bids are being accepted to expand capacity to 21 MGD by the end of Waste Water Treatment Currently the City of Williston s waste water treatment plant has a capacity of 1.7 MGD. The plant has a peak capacity of 4.3 MGD, which translates to a Population Equivalent (PE) of 16,300 people. Expansion plans: o Phase I Immediate; currently expanding plant to handle a PE of 24,000 people by the end of o Phase I Permanent; expand plant to handle a PE of 37,500 people by the end of o Phase II Permanent; expand plant to handle a PE of 56,250 based on growth and development of the City. 3. Waste Water Collection Currently the City of Williston has 14-miles of collection systems in place, with a planned 4-miles to go to finish current expansion plans. The City has 3 lift stations in place, with 1 more to be constructed to complete the final 4-mile system. 4. Truck Reliever Route The City is currently constructing a temporary truck bypass route. The City hopes to finalize plans for the permanent route as soon as possible. 5. Landfill Expansion Williams County landfill is currently undergoing an expansion to try and accommodate the significant increase in trash and waste in recent years. 235-ACRE SITE 158 THK Associates, Inc.

168 WILLISTON INFRASTRUCTURE 6. Airport Expansion/Relocation An economic study completed in February 2012, concluded that either Sloulin Field International Airport needs to expand its current facilities or relocate from the current 600-acre space. Initial estimates for either solution range from $100 - $150 million. No timeline has been set as to when a decision on the airport s future will be reached. 235-ACRE SITE 159 THK Associates, Inc.

169 235-ACRE SITE 160 THK Associates, Inc. FIGURE 18 WILLISTON UTILITY MAP

170 FIGURE 19 WILLISTON PROPOSED TRUCK BYPASS ROUTES 235-ACRE SITE 161 THK Associates, Inc.