Flood Victims Languish in Oil Boomtown

(by Jack Nicas, The Wall Street Journal, WSJ.com) – MINOT, N.D. – Seven months after a flood submerged a third of this thriving city on the edge of the state’s oil boom, Cindy Garrett is still living in a federally provided trailer on her neighbor’s lawn. Her problem: She can’t find workers to repair her house.

She waited four months for an electrician to rewire her home, and she is still waiting for a plumber to fix her broken pipes. If Minot weren’t booming, “we’d already be back in our home,” the retired 54-year-old said.

Natural disasters slammed cities across the nation’s midsection and South last summer, but few have faced the challenges of this flood-ravaged city of 41,000: a severe housing and labor shortage sparked by the nearby oil boom and now worsened by the flood.

Businesses here are struggling to keep up with roaring demand, while the 12,000 displaced residents are confronting an expensive real-estate market and a lack of skilled workers to rebuild.

After a winter that had been unusually mild until recently, just 10% to 20% of the flooded homeowners have been able to return to their homes—and most have done repair work themselves, city officials say. Meanwhile, officials are weighing whether to raze another 300 to 400 homes to bolster flood defenses.

Minot’s boom began in 2008, when geologists found that the nearby Bakken oil shale held as much as 4.3 billion barrels of crude. A gusher of oil workers boosted the local economy and filled almost all the city’s beds. Minot officials say that early last year, the city was beginning to catch up to demand for housing, retail and other services.

“We saw the light at the end of the tunnel,” said John MacMartin, president of the Minot Area Chamber of Commerce. “Then the flood came, and that tunnel collapsed.”

After heavy rains in Canada filled upstream reservoirs, the Mouse River spilled over its banks in June, flooding 3,230 homes, or about a quarter of the city’s residences. By the river’s crest—nearly four feet above its 1881 record—anywhere from two to 15 feet of floodwater covered 18 square miles here.

With home prices already high, swelling 40% from 2007 to 2010, the flood goosed the market again. In the six months before the flood, about 240 homes sold for a median price of $183,000, according to local real-estate data. In the six months since, about 310 homes sold for a median price of $232,000—a 27% jump.

“Finding a home here for under $150,000 is pretty much impossible, unless, of course, it’s flood-damaged,” said local real-estate agent Bob Timm.

With so many people looking for places to live, rent has also shot up since the flood, residents say. John Abbey, a waiter at a local diner, said the monthly rent for his two-bedroom apartment jumped to $900 from $495 this month, forcing him onto the couch to fit a second and third roommate.

During the flood, the Mouse filled the city’s central valley, home to most of Minot’s low-income residents. When their homes were destroyed, including 500 mobile units, many left town because they could no longer afford Minot.

The exodus has cost local businesses many of their employees—particularly in the service industry—while the rising cost of living pushes other workers to higher-paying jobs in the oil fields.

Angela Wright, manager of the local Pizza Hut, said about half of her 25 workers fled after the flood, and she has struggled to refill their positions. The restaurant now advertises $15-an-hour positions on its marquee.

Mr. MacMartin, the chamber president, said almost every business here is desperate for help. Local fast-food joints often close early because they can’t find enough workers, he said. At the airport, strangers share cabs because there aren’t enough drivers.

Mark Mattson, owner of a commercial construction company, said he turns down jobs because of a lack of workers. “I’ve got two to three people on each job right now when I should have eight to 10,” he said. Plenty of people want to move to Minot to work for him, he said, “but there’s nowhere to stay.”

A local development group says the city has 3,000 unfilled jobs—about double the amount a year ago—and Minot officials estimate the unemployment rate here is less than 2%. “For anyone that wants to work, there’s a job,” Mayor Curt Zimbelman said.

Several day-care centers were also destroyed in the flood, creating another shortage that has hurt the work force. “Finding a job’s not the problem. It’s finding someone to watch her,” said Andie Waltz, holding her two-year-old daughter’s hand.

Rev. Paul Kruger said the day care at his church, which has 173 children on the waiting list, turned down funds to expand because it couldn’t find potential workers a place to live.

Residents and city officials also say price-gouging has been prevalent since the flood among plumbers, electricians and builders. Jay Davis, a local radio-station owner, said bids to replace a water heater in his flooded home ranged as high as $1,600—double what he paid in 2008.

Dan Goins, an electrician who drove the eight hours to Minot from his Minneapolis home, said he charges a regular rate plus per-diem costs, but acknowledged he could ask for more. “Back home, you have to fight for the job,” he said. “Here, the customers are fighting for you.”

Write to Jack Nicas at jack.nicas@wsj.com.

(NOTE: This article was first published in The Wall Street Journal on Jan. 21st.)

Copyright 2012 Dow Jones & Company, Inc. All Rights Reserved. Reprinted here for educational purposes only. Visit the website at wsj.com.