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Real Estate

Rural affordable housing struggles with oil and gas boom

Waves of highly paid oil and gas drilling employees moving into rural areas is causing strain on local governments to provide affordable housing for locals who can no longer afford skyrocketing rents, according to a government study released Thursday.

Drilling for oil and gas increased substantially in these areas over recent years. South Texas counties surrounded by the Eagle Ford Shale, for instance, saw a 27% increase in jobs in 2011. In Williams County, N.D., the population grew by 8% in just one year as new jobs increased by 41% due to increased drilling in the Bakken Formation.

While these local governments are enjoying more tax revenue and economic development, the Department of Housing and Urban Development noted "serious disruptions" to housing markets.

"The tremendous influx of money and workers into oil and gas drilling areas quickly absorbs the supply of available, affordable housing," HUD found in its report. "In some cases, the increase in often highly paid workers results in the direct (or sometimes indirect by the employers) lease up of units at much higher rents than local residents not employed by the drilling companies can afford."

An elementary school in Ward County, N.D., for example, will see an increase of 1,200 students for the 2012-2013 school year. The local school district had to hire 52 new teachers, but they were having trouble finding affordable housing for them.

"A new teacher's starting salary is $31,000 a year. We have two fourplex buildings. We are going to ask for the new teachers to share a room with another teacher. It will help some, but affordable housing is an obstacle," Superintendent Viola LaFontaine told the local paper the Williston Herald.

One bedroom rents climbed as high as $1,000 per month, according to the report. Section 8 housing projects, which provide U.S. government-funded rental assistance, had been renting two-bedroom units for $485 per month, but after the drilling adjustments, rates more than doubled to $1,100, according to the HUD study. Even with subsidies, many tenants were forced to move.

An old junior high school will be converted into housing for low-income seniors at a cost of $8.5 million to taxpayers.

HUD researchers did say oil and gas companies are developing more workforce housing in order to keep the population influx from disrupting local markets. One camp in Williams County, N.D., held a capacity for 9,000 worker beds. Local boards recently lifted a moratorium on further camp developments put in place because infrastructures were already taxed to the limit.

Researchers found data to be limited and new analysis needed to be done in order to measure the effects increased drilling has on local housing stocks, demand and government resources.

jprior@housingwire.com

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