.
, but there's really no money in low income, "affordable" housing. The city would end up being landlords or having to pay for them and we don't really want our city fathers to end up with those kinds of headaches. They have enough on their hands already.
The Fargo development company that has drawn strong opposition from Williston residents regarding higher rents for renovated and new apartments in the city is not going to pursue a second apartment building project.
In a letter to the editor to The Herald, CEO Mike Marcil of The Marcil Group Inc. responds to a public hearing that was held by the Williston City Commission Tuesday evening. The hearing was to consider a proposed request by The Marcil Group Inc. and partner Valley Development Group of Valley City for a Tax Increment Finance District to help finance the construction of more new apartments in Williston.
The TIF was to help cover about $750,000 to clear about 17 acres on the Old Cimmeron Trailer Park near 32nd Street. The trailer park was last used in the 1980s and is now owned by the city.
Marcil's letter states "It has become clear that there is significant public opposition of The Marcil Group Inc. developing additional apartments in Williston. As a result, we have decided to withdrawal our proposal to build up to 108 new apartments in the area."
Marcil states the project would have provided essential housing to help alleviate the serious housing shortages in the area. He adds the additional investment was over $10.5 million and would have created additional construction jobs in the area for up to two years. "The Marcil Group will no longer have any involvement in the Williston market beyond having a minority equity stake in the apartments we already own," Marcil writes.
In the letter, Marcil then reviewed how he partnered with the Valley Development Group of Valley City to build 72 new apartment units in Williston.
"Now that the project is completed, we have selected Vesta Property Management (Vesta) as our new property management company. We have instructed Vesta to place a rent freeze on all rental units with existing tenants in Williston. This is comprised of 143 apartment units in the area," Marcil writes.
He continues to state all current residents in the corporation's buildings will be guaranteed to keep the same rent rate for up to one year. If an existing resident moves out, Vesta will raise or lower rents to the prevailing market rate, Marcil continues.
"We have done this as a gesture of good will to the community and to address escalating prices in the area," Marcil writes. "Vesta manages apartment units for other owners who may or may not have the same gesture of goodwill toward the community. Any concerns or questions concerning rent rates or availability should be directed directly to Vesta Property Management Inc."
Marcil states in his letter they are "deeply saddened by the extraordinary level of hostility to our company in the community. We have undertaken great risk in building needed housing in the area. We understand high prices and rent increases are painful, however we think the wholesale assault on our company is not fair or warranted."
Marcil writes his corporation is not the reason for high rents.
"We are the group trying to address the issue by building more housing. Instead of blaming us why not ask why no local investors are willing to build apartments in Williston. Maybe this is a better reason to be angry," he writes.
Marcil concludes his letter by stating the corporation wishes the community the best of luck in the future, "but we are moving our investment to communities who want to support our development efforts."
In a telephone conversation with Marcil Thursday morning, he stated his firm has been treated unfairly.
"The idea that we are the reason for oil going up to $140 a barrel and prices going up in Williston is just ridiculous. The prices in Williston going up is because there is a housing shortage," he said.
Marcil said his corporation has less than 10 percent of the rental units in Williston, "so we don't control the rental market in Williston. If landlords are raising rents in Williston, that is a market problem."
He said his firm has been "very vilified" in Williston and "we are very hurt by it."
"We've been portrayed as this big multinational company that is coming in and doing bad things in Williston," he said. "That is just crazy. We are a North Dakota company that makes rural investments."
He said they are a small company he founded three years ago that now has about 18 people to do rural housing projects in North Dakota. He said Williston residents need to look at other communities in the state where his corporation has worked to get an accurate sense of what the firm is about.
"Honestly, I've never been treated like this before," he said Thursday morning. "I'm so unbelievably mystified. I'm so confused by this thing."
Marcil said everyone in Williston is angry because the community has gone through five oil boom and bust cycles.
"Everybody who invested in 1983 went bankrupt, bankrupt, bankrupt," he said.
His organization, meanwhile, is the only group recently that indicated a desire to invest in Williston and had proposed a second project estimated to be worth $10 million. He thought local residents would welcome an organization that is finally willing to invest in the community.
"Instead, we are the villains from Fargo that just comes in there and kicks out old citizens from their houses," he said, which isn't true and which has nothing to do with his organization. "That is HUD related. That is not us. We are building market housing."
Marcil said he knows of other developers who also have decided to back away from projects that had been proposed for Williston.
"It's not just us. We get asked all the time 'How is the community treating you?' The city council has been great," he said.
But when you get protested with a project to build more capacity to lower prices in Williston, you can't get it done, he said.
"Maybe that is just the way it's going to be," Marcil said. "We're not going to get involved in it. We've taken our run at it. We've tried very hard to put in this project at great expense."
He said banks are unwilling to lend for projects in Williston, which means his organization would have needed to use its own cash to build.
"We went into Williston and we still believe the community has a real opportunity to grow. We believe in the fundamentals in that region," he said. "Actually, we've had a pretty good experience, outside of this (TIF) process, specifically working with the city. The city has been very easy to deal with."
But when he hears local residents cussing his organization, it's time to change course, he said.
"I wish Williston the best of luck. We're certainly going to support the investments we've made, but we're going to move on," he said.
Reached by telephone in Bismarck Thursday morning, Williston Mayor Ward Koeser said he had not seen Marcil's letter, which also had been e-mailed to some city officials, but had someone read it to him.
"I'm disappointed, but I recognize they are making a corporate decision," Koeser said of the Marcil decision. "We will carry on and work with who we can to solve the housing problem."
Koeser said Marcil came in and built the two new apartment buildings and "they did what they said they would do and we are happy."
At the same time, Marcil also bought a couple of other apartment complexes that it needed to house its workers, Koeser said.
"They made some substantial increases in rent," Koeser said of the existing residences Marcil bought and renovated. "The people involved were concerned that they couldn't pay those rents. So I guess they got involved and made it clear they didn't want Marcils to get any break or any incentive to build more."
By having the new units that Marcil built, Koeser said that helps with appraisals of other new units that might be built.
Tom Rolfstad of the city's Economic Development Office said the city faces a real appraisal gap because most of the apartment buildings in Williston haven't had a substantial amount of work done to them. Many of the apartments used today were built 25 to 30 years ago, he said.
"When you look at the cost today to build versus 25 to 30 years ago, you can't build for the rent levels of the existing buildings," Rolfstad said.
Rolfstad said local people and outside investors are concerned about the boom-bust cycles associated with the oil industry.
"Every investor is looking at what kind of return they can make in the short term versus the risk they are taking in the long term," he said.
To build new apartment units, "you had to be able to charge rents that were more than double what existing rents were. I think that is the reality in the community," Rolfstad said.
