WNDPB September 2011

www.prairiebizmag.com

WND Impact Table of Contents

2 Flooding impacted local businesses Kevin Nelson made it a personal point to help those during flooding in the state’s capital city

U.S. Highway 52 was closed near Minot because of flooding in June. The flood caused several major highways and roads to be closed, which caused problems for Verendrye and other businesses.

4 The floods impact on income taxes It may seem premature to start thinking about this year’s taxes

6 Developing angel and capital investors in western North Dakota It has been tough to get venture capital groups into North Dakota.

6 WND News Front Cover: Evan Anderson is helping transform ideas into reality.

See page 8 2

WNDPB September 2011

Flooding impacted local businesses Kevin Nelson, Associate Vice President, Civil Services/Aviation for Ulteig in Bismarck, ND, made it a personal point to help those during flooding in the state’s capital city during the week following Memorial Day. fter helping his sister and a friend, he started driving around the community helping those needing sandbagging help. “They had the look of desperation,” he says. “In addition, some people weren’t building the dikes the right way and weren’t too happy to see me when I told them they had to redo the dike. At first it was overwhelming, but then they were relieved when they found out that the changes would make the dikes sturdier.”

Ulteig was just one of the many companies along the Missouri River and Souris River that either helped or was impacted by the flood devastation. Along with Nelson’s individual commitment, Ulteig also worked with the Corps of Engineers, contractors, and the city of Bismarck to estimate and check the water elevation.

Business-wise, Nelson states that the flooding took Ulteig away from productive work. “We knew we could get caught up if we put in more hours,” he explains. “Helping this community is important to us, because without the community, business would be nothing. We’ve realized what the long-term effect will be.”

For example, Ulteig had jobs scheduled to start

A

in June that haven’t started because construction is behind schedule as a result of the flood fighting effort around the region.

MASSIVE EFFORT BY ENERGY COMPANIES TO MAINTAIN POWER In Minot, ND, Xcel Energy put forth a massive effort during the flood to maintain power so that critical city facilities and homes unaffected by flood waters would still have electrical service, states Kathy Aas, Community Relations Manager for Xcel Energy.

“Most of Xcel Energy’s electricity system remained energized and dangerous throughout the flooding event,” she says. “Due to the rapid influx of water during this flood event, it was difficult to safely disconnect service even within the mandatory evacuation areas. As the water receded, Xcel Energy worked to de-energize the electrical system in flooded areas by removing meters one at a time.”

Xcel Energy, who serves 17,000 customers in Minot and nearby communities, de-energized almost 3,400 electric meters. As of the middle of July, the energy company has only been able to

reconnect more than 700 meters, most of which are only temporary services.

Verendrye Electric Cooperative, a non-profit electric distribution cooperative that provides electricity to more than 9,000 customers and around 12,500 electric meters in seven counties, estimates that almost 1,000 members were impacted in some way by the flood.

“A good example of how some of the city members were affected would be the Holiday Village mobile home park, located in southeast Minot,” says Tom Rafferty, Verendrye Electric Cooperative Communications Manager. “When the river crested, those mobile homes were inundated nearly up to the rooftops. The park has about 260 members and we had to disconnect the entire park because of safety reasons and because the entire park was evacuated.”

Rafferty adds that the goal was to leave the power on as long as possible so that people running sump pumps could continue to do so.

“But when water is several feet high in areas, power had to be disconnected for safety reasons,” he explains.

Proudly serving Western North Dakota with Industrial Electric Wiring Specializing in: • Controls & Instruments • Control Houses • Compressor & Pumping Stations • Site Lighting • Heavy Commercial Electrical Wiring

Call us today 218-236-9233

FIGHTING FLOOD WATERS ON SEVERAL FRONTS I Keating Inc. Furniture World had to battle the flooding in both Bismarck and Minot.

In Bismarck, the company was concerned about flood waters potentially reaching the Kirkwood Mall. Arrangements were made to lease the former Home Depot building. “Once we had that building leased, we knew we could minimize the threat of losing substantial investment in inventory and the building also could provide us with the opportunity to continue our operations,” says Matt Kramer, Owner of I. Keating Inc. Furniture World. “It was critical for us to maintain operation for two reasons. First, we wanted to ensure that employees could continue to have jobs and income, and second we wanted to continue to provide service to our customers.”

Kramer was also concerned about the homes and belongings of the employees and residents of Bismarck allowing use of company trucks and employees to safely move people and their belongings. “We allowed our staff to leave work in order to help with the flood fight in a variety of ways – from moving homes to sandbagging,” Kramer says.

Kramer adds that Minot had many of the same concerns as Bismarck. The main store is right on the edge of the flooding and there was a warehouse that was impacted by flood waters. “Fortunately, we had time to move any inventory that would have been affected,” Kramer states. “The flood in Minot directly impacted more homes,

For more than 40 years, Moorhead Electric has been building an unsurpassed knowledge of the electrical needs for nearly every industry. We pride ourselves on our ability to execute under any condition for any customer; conducting our business with trust, integrity, quality and high safety standards.

www.moorheadelectric.com WNDPB

3

WND Impact including 15 of our employees.”

BUSINESS IMPACT FROM THE FLOOD Kramer says that he knows that many other businesses were impacted on a far greater level than his company was. “We are still in the process of measuring the business impact,” he states. “Door traffic at our two largest stores was significantly impacted for the months of June and July. Our Bismarck store experienced a short term decline in business, but recovered quickly and was back to normal numbers by the end of June.”

As for Minot, Kramer states that door traffic was significantly impacted for three weeks due to Broadway being closed. The Minot store is still experiencing the flood effects (as of the end of July.)

“With the amount of homes affected in the Minot area at more than 4,000, it could be some time before our business recovers to the pre-flood numbers.”

The flood also resulted in additional business expenses for I. Keating Inc. Furniture World. The company leased the Home Depot Building in Bismarck for three months and some additional warehouse space in Minot for three months.

Along with working longer hours to catch up on work, Ulteig has seen an impact on its bottom line, Nelson says. “The flooding delays revenue we have been expecting for the year,” he states. “We are staying plenty busy with other projects.”

Nelson adds that the business side is coming back, however, some of Ulteig’s clients are still impacted. “Projects are impacted because water is still so high,” he states. “Businesses are slowly getting back to normal.”

For the electrical companies, the flood did damage equipment and washed out poles and undergrounds lines, as well as damaged switchgears and transformers.

Flooding devastated Minot causing challenges for the businesses.

In-House Manufacturing Custom Grain Handling Systems Catwalk & Towers

The flood’s impact ELEVATE YOUR SAVINGS!

Site Planning • Grain Storage Buildings • Dryers • Parts/Service Call, Click or stop by to discuss your project needs.

Advanced Ag Construction 420 MAIN STREET, HORACE, ND 58047

877.293.6050 / 701.306.1463 www.advancedag.biz • info@advancedag.biz Ser ving The Hear tland W ith Pride!

4

WNDPB September 2011

It may seem premature to start thinking about this year’s income taxes when there is still water surrounding our homes and businesses and on the calendar says it’s summer. But there is good reason to do just that. pecial rules for income tax deductions resulting from the disaster may allow some individuals to claim refunds from previous years’ taxes paid, and provide cash for cleanup. Many of the receipts needed to prove the loss are easily accessible now (they are still in the jockey box of the pickup), and those that are not available will take some time to assemble before the filing deadline for 2011 income tax returns. Tax professionals are aware of the special rules governing casualty loss reporting, and have time now to assist with these issues. And the records necessary to file an insurance claim are the same as those needed for claiming tax deductions, saving valuable time in the long run.

Individuals with damages to property need records to

S

“Hundreds of meters are damaged and will have to be replaced,” Rafferty states. “It is too early to put a total dollar value on the damage.”

Along with flood work, Verendrye continues to do the normal, non-flood restoration work. “Minot is growing and we have many new homes and businesses that we will be hooking up this summer and fall,” Rafferty says.

For Xcel Energy, in addition to system damages, the Service Center was completely flooded with water reaching about 6 ½ feet inside the building.

Aas says the company is grateful to Montana Dakota Utilities for sharing office and warehouse space. Additionally, Minot State University assisted Xcel Energy with housing needs for additional workers.

“With motels filled to capacity or flooded, Xcel Energy leased RVs for some employee housing,” she says. “We are also grateful to the Minot Public Schools for allowing us to locate them on their property.”

Aas adds that as homeowners rebuild, they are encouraged to check out efficiency rebates for central air conditioning and other equipment. “The utilities in the state worked to increase the amounts of rebates available to FEMA-registered homeowners through December 31 as part of a package of offerings through the American Recovery and Reinvestment Act (ARRA) in partnership with the North Dakota Department of Commerce. These rebates help make highly efficient units more affordable and customers can see the benefits for years to come in reduced energy costs.” WNDPB Alan Van Ormer - avanormer@prairiebizmag.com

on income taxes…

Let Us Show You How Our Services Can Save You: establish the original cost of the property. Taxpayers must establish the market value of the property both before and after the flood damage, as well as amounts spent to restore or replace the property. If documents were damaged or lost, there are options to reconstruct the records needed for tax reporting.

Businesses also require records to support the cost of property lost, amounts spent to repair or replace property, and to account for the expenses of protecting property from damage.

Most businesses have insurance to assist in these circumstances, so good recordkeeping will minimize the tax cost of receiving insurance proceeds. Employers must also comply with additional reporting if the business provided any form of assistance to its employees.

No need to be intimidated by all of the rules. There are several reliable resources available: IRS and the state of ND both publish information on their websites that is very readable ( www.irs.gov and www.nd.gov/tax); and tax professionals can guide in planning for the best outcome in each unique situation.

Casualty losses from the flood do affect income taxes, so act now to improve the financial impact of the floods on you.

WNDPB Carleen Shilling is a CPA and a partner with Eide Bailly LLP. She can be reached at cshilling@eidebailly.com.

TIME & MONEY • • • • • • • •

More Time For Your Business Reduce Administrative Burden Avoid Payroll Tax Errors & Penalties Ease Regulatory Compliance Burden Payroll Confidentiality • Direct Deposit Employees Save Money Through Flex Plan Free Your Staff For More Profitable Tasks Accounting services available through Great Plains Dynamics and Quickbooks • QuickBooks Pro Advisor on Staff

Outsourcing...

A Better Way Of Doing Business.

4007 State Street. Bismarck , ND 58503 1-800-258-9848 • (701)258-9848 fpspayroll.com WNDPB

5

WND Finance

Developing angel and capital investors in It has been tough to get venture capital groups into North Dakota. However, the North Dakota Development Fund is playing the role of a smaller-investor type to help businesses get started and create jobs.

“

e’re a gap-financing type fund,” states Dean Reese, CEO of the North Dakota Development Fund. “We deal with financial institutions throughout the state, as well as finding ways to fit the needs of the

W

company.”

Niles Hushka has been an angel and venture investor for at least 10 years. He is also a mentor at the Idea Center in Bismarck, ND. “Angel investors must be risk takers with compassion,” he states. “They are people who have attempted and been successful but also have failed.”

The group that Hushka participates in focuses on successful businesses that need cash to make major leaps forward. “You get involved only when you are asked,” he states. “You watch and read everything that involves your companies and then step in only when your help is requested.”

Hushka adds that the biggest challenge is keeping a positive attitude. “Seven out of 10 of your investments fail!” he exclaims.

Reese adds that the biggest issue the fund deals with is risk. “We can do loans and equity investments in the companies,” he states. “The main thing is working with companies who are coming to the state, current companies who are expanding, along with start-ups, and finding more and better paying jobs.”

WND News DICKINSON DEALING WITH INFRASTRUCTURE WORK North Dakota state officials have authorized nearly $54 million in grants to help oilimpacted cities with infrastructure needs. Dickinson, ND will receive the $5 million it requested to help pay for a waste water treatment facility.

Construction of 40 lots has also started in the Diamond Acres Subdivision in northeast Dickinson.

The plan is to develop almost 190 lots for single and multi-family homes, as well as 10 commercial lots.

6

WNDPB September 2011

LAND BOARD APPROVES $53 MILLION TO HELP COMMUNITIES IMPACTED BY OIL AND GAS DEVELOPMENT The Board of University and School Lands (Land Board) has approved $53.5 million in grants to help communities impacted by oil and gas development pay for needed infrastructure projects.

Dickinson, Williston, and Minot were granted $21 million to fund infrastructure projects that support growing populations. Williston will receive $12 million, Dickinson, $5 million, and Minot, $4 million. In addition, smaller cities in the region will also share the remaining $32.5 million.

The grant funds are expected to help address housing infrastructure needs including street construction and improvement projects, municipal water lines and sewer lines.

State taxes paid on oil and gas production will be funding the grants.

western North Dakota The North Dakota Development Fund is like an angel investor or venture capitalist in that they have an exit strategy and provide equity for projects. One difference is that an angel investor or venture capitalist is looking at a return on investment.

“Our strategy for a return on investment isn’t in the same realm,” Reese states.

The North Dakota Development Fund plays a role of a smaller investment type, usually around $300,000, but Reese says the fund has went higher. “We negotiate our own exit strategy and like to be out within five years,” he adds. “We generally like to see companies have their ‘prototype developed and tested before requesting funding’.”

The North Dakota Development Fund was created in 1991 under ‘Growing North Dakota Legislation,’ an initiative that was looking at ways to help fund companies. Since 1991, an estimated $27 million has been placed in the fund and more than $85 million has been invested in ‘Primary Sector’ North Dakota companies. Primary Sector is defined as an individual, corporation, limited liability company, partnership or association, which through the employment of knowledge or labor adds value to a product, process, or service that results in the creation of new wealth. Primary Sector includes tourism, but not production agriculture and is typically businesses such as manufacturing, food processing, or exported service companies.

Reese says the Fund has been selfsustaining since 2003 and the Fund has worked with at least 480 companies.

WNDPB

1ST PHASE

Alan Van Ormer avanormer@prairiebizmag.com

GRANITE PEAK BREAKS GROUND ON WILLISTON INDUSTRIAL PARK Work on the Bakken Industrial Park Subdivision, a 770 real estate project, has started along U.S. Highway 2 and 85 north of Williston. The industrial park is expected to help Williston with a planned and orderly development of Williston’s commercial and industrial land.

Site construction on 447 acres in the first phase of the project started on Aug. 1. It includes earthwork, roads, infrastructure, and sewer lines.

WNDPB

7

WND Innovation

From napkin scribbles to products: Innovative Solutions helps transform ideas into reality On a shelf in the corner of the boardroom sits a pile of red and black calculators with buttons worn out from thousands of tests. A black shoe with a rubber tip insert covering the fragile stiletto heal stands nearby and packages of strange pumpkin carving gadgets hang on a hook. n the back of the shop, wheel chairs sit up against the wall and a police car prototype is parked in the parking lot. Welcome to Innovative Solutions…the place where ideas become reality.

“Our core strength is helping people solve problems,” explains Evan Anderson, CEO of Innovative Solutions, LLC. “This company started with an initial focus of helping inventors. After a while we found that those same skills were needed in other industries to help them with product development.”

With its beginnings dating back to 2001, Innovative Solutions offers services such as Design, Prototyping, Manufacturing, Photorendering, Animation and Inventor Services to a very diverse client base that stretches across several industries. Anderson’s passion for the invention and problem solving process is evident in each project that he and his team of six employees take on. His extensive background in manufacturing management and product development helps round out his team that includes a strong engineering and fabrication staff with the ability to create in-house prototypes – the first edition of a product where you try it out and make it better before manufacturing it for sale – ensuring flexibility and speed for their clients.

“We’ve learned what it takes to go from a scribble on a napkin to a product to sell!” exclaims Anderson. Some of those ideas that started out as scribbles include components for medevac helicopters, an electrical harness test system for a manufacturing environment, Talon – a police pursuit ending device, an automated test stand for a truck lid, an age calculator for bar and restaurant use, a lancet for drawing blood samples, and even a gadget called The Pumpkin Gutter – a device invented by

I

Anderson that provides a quick and easy way to remove pumpkin strings and seeds while carving. The Pumpkin Gutter has gained national attention by being featured on Martha Stewart and The Today Show. The product is currently available on Amazon.com and will be available at large retail outlets this fall.

“Innovative Solutions is an invaluable asset for someone in my situation,” says Randy Lang, a client that has been working with Innovative Solutions for over a year on two projects. Lang is currently testing prototype products that the IS team designed and created.

Modifications that need to be made are handled skillfully, and Anderson has also facilitated a patent search through an attorney for Lang’s products.

“With my employment and family obligations, there would be no possible way for me to accomplish this task,” explains Lang. “I am very thankful for Evan’s business. Innovative Solutions is a conduit for bringing ideas to fruition. I believe this service to be invaluable.”

The IS client base also includes larger corporations such as Bobcat, Phoenix International and Sanford Health as well as companies and individuals located in California, Texas, and Illinois. “We have experience in so many different industries,” says Anderson, “and we always bring lots of differing viewpoints to the table to make sure we leave no stone unturned no matter what the project!”

Innovative Solutions is located in Bismarck, ND. You can visit their website at www.innovativesolutions-llc.com. WNDPB Mandy Anderson is a Bismarck, ND-based freelance writer. She can be reached at mandy@mandybanderson.com.

TUBULAR TRANSPORT & LOGISTICS TO MANAGE NORTHERN PLAINS COMMERCE CENTRE Tubular Transport & Logistics (“TTL”), a rail transloading and distribution company based in Rifle, CO, has been named as the new operator and lease holder for the Northern Plains Commerce Centre (“NPCC”).

Under the new lease agreement, TTL will continue to service the existing local rebar, wire, and lumber accounts while seeking additional opportunities for transloading locally delivered products. In addition, TTL will add new business, including oil country tubular goods (OCTG) for distribution into the Bakken.

“We are enthusiastic about this opportunity to bring additional jobs to Bismarck,” commented Vince McLeod III, president of TTL. “In addition to continuing current operations, we expect to generate $100 million in taxable sales for North Dakota in the first year of operation through our partnership with Energy Tubulars.” Energy Tubulars, Inc. (“ETI”) brokers OCTG for use at oil drilling sites throughout the United States.

In addition to maintaining existing operations at the NPCC, TTL intends to retain the existing staff as well as hire additional employees.

“We have been very impressed top to bottom with the staff at NPCC, from the skills of existing management to the quality of care that forklift 8

WNDPB September 2011

operators have given the products at the site,” said Dan Heykoop, executive vice president. “This opportunity for TTL is especially exciting for the possibility of adding quality people to our team.”

Current projections are that TTL operations will add 25 new fulltime jobs for the City of Bismarck. “Our growth projections suggest that we will need 7 to 10 truck drivers and 6 handlers by year’s end and will employ 30 by the end of year three,” Heykoop added.

Tubular Transport and Logistics is a joint venture between two California-based companies, Budway Enterprises, Inc. (“Budway”) and Energy Tubulars, Inc. (“ETI”).

As a joint venture between these two companies, Tubular Transport and Logistics allows ETI to better control its supply chain by leveraging Budway’s transloading and trucking experience. TTL’s inventory control systems provide real-time visibility to customer inventories and GPS tracking of shipments. The foundation of ETI’s OCTG business provides economic support for Budway to expand transload operations into new locations. TTL also provides trucking services for all the products it transloads.