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TOUR FINDINGS AND STATE RESPONSE

FROM 2012 WESTERN INFRASTRUCTURE DEVELOPMENT MEETINGS

Presented February 21, 2012

OVERVIEW

State agencies visited 14 western North Dakota cities in January 2012 to gain the perspectives of local leaders and to provide an update on the states progress to address infrastructure development, safety, and planning throughout the region. State officials met with nearly 600 local leaders and community representatives to better understand the immediate and long-term impacts and opportunities North Dakota communities are facing due to oil and gas development. These meetings have been a follow through to those conducted by the Governor in December. Participating agencies included: ND Department of Commerce ND Department of Transportation ND Water Commission Upper Great Plains Transportation Institute Bank of North Dakota

ND Housing Finance Agency ND Department of Trust Lands ND Health Department ND Highway Patrol

The Legislative Assembly, in its regular and special sessions, appropriated $1.2 billion to address infrastructure, housing and safety needs in western North Dakotas oil-producing counties during the current biennium. As of Jan. 31, 2012, approximately $806 million remains to be distributed . Based on information gathered during the community meetings, agencies involved have identified the following areas where the state of North Dakota will have a significant response.

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Williston Truck Reliever Route Williams County and the city of Williston addressed various options for a temporary reliever route and selected a plan with existing county road alignments on February 7, 2012. The NDDOT and its consultant are working to finalize the BYPASS WILLISTON TEMPORARY environmental and cultural review and complete the plans to bid the temporary bypass project for a mid-summer 2012 completion.

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Traffic volumes have greatly increased in western North Dakota, creating a number of areas where traffic congestion is significantly impacting communities. The ND Department of Transportation is aggressively addressing infrastructure improvements to enhance safety and traffic movement. In the first seven months of the biennium, the state provided about $307 million for transportation projects in Oil Country. About $605 million in additional funding remains to be invested in the regions transportation system during the 2011-2013 biennium.

Williston and other western cities are dealing with an influx of truck traffic due to oil development activities.

1. Create truck reliever routes or bypasses to assist in moving truck traffic out of city centers and help to alleviate traffic congestion. The ND Department of Transportation (NDDOT) will expedite truck reliever routes planned for the most impacted cities.

The temporary route is located on the existing County Highway 1 north of US Highway 2 to County roadway 6 then east to US Highway 2 north of Williston. The estimated project cost is $10 million. The next phase, which would include a process for the development and construction for a permanent truck reliever route, will begin as soon as a final route is selected.

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New Town Truck Reliever Route 6 4 2 1 3 4 5 2 3 New Town Truck The city of New Town is working on getting Reliever Route 9 10 in place the needed environmental and cultural 12 11 11 9 PH 8 10 2 7 AS reviews along with a design for a truck reliever SE E PHA 1 11 route northeast of the city. The NDDOT has10been 14 H BAY 18 17 SANIS 15 14 16 15 assisting in this process. The project should be bidO F UR 13 BEARS 14 MEM and completed by summer 2012. The estimated ORIAL B15 IDGE R 22 NEW TOWN 23 23 19 21 22 cost of the reliever route is $6 million. The next 24 20 22 phase would extend the truck reliever route 27 28 west from ND Highway 1804 to ND Highway 23, and would include a process for the development and 25 26 29 30 27 construction for a permanent truck reliever route as soon as a final route is selected.

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Watford City Southwest Truck Reliever Route The NDDOT has received a request to develop and build a truck reliever route around Watford City. NDDOT is currently in the process of hiring a consultant engineer to develop location options for a truck reliever route. Route selection, environmental and cultural reviews, and design must be completed before construction can begin. Finalization of a truck reliever route is a local decision. Dickinson Truck Reliever Route The NDDOT has hired a consulting firm to develop the environmental and cultural review and complete the design plans for a truck reliever route in Dickinson. Upon selection of the route environmental and cultural reviews and design must be completed before construction can begin. Finalization of a truck reliever route is a local decision. Alexander U.S. Highway 85 Reconstruction and Truck Reliever Route The NDDOT is working with a consultant to establish the planning needed to rebuild U.S. Highway 85 through the city of Alexander by summer 2012. The consultant will also be responsible for completing the environmental and cultural review work and planning for the next phase which will be a permanent truck reliever route around the city. Killdeer Truck Reliever Route The city of Killdeer has expressed interest in a truck reliever route for their city, but a formal request for a route has not yet been submitted to NDDOT.

2012 WESTERN INFRASTRUCTURE DEVELOPMENT

2. Work to increase safety by providing turn-off lanes where possible and by ensuring proper traffic signage is in place. NDDOT will develop a plan to add turn-off lanes this season on US Highway 2 from Stanley to Williston, working with city and county governments as part of the land-use planning and platting process. Additional turn-off lanes will be developed throughout the regions state highway system. NDDOT is reviewing the status of signage, traffic lights and speed limits in Oil Country with an emphasis on improved safety of the traveling public. The creation of turn-off lanes to address traffic flow will be pursued in cooperation with private company investments (i.e. water depots, crew camps, etc.) as new approaches are installed. Local governments will be encouraged to seek direct company investments in turn-off lanes as new highway approaches are developed.

3. Reduce damage to highways through load limit enforcement. ND Highway Patrol will promote increased use of portable scales on state and county highways. ND Highway Patrol will increase the personnel and time allocated to load limit enforcement. ND Highway Patrol and NDDOT will develop a proposal for the Legislature to consider allowing counties to share in the fines collected on county roads.

4. Work with state and local leaders to manage traffic dust. This summer Dunn and McKenzie counties will be working with NDDOT, the ND Health Department and the Upper Great Plains Transportation Institute to evaluate various dust management strategies through a $440,000 matching grant with the ND Oil and Gas research program. The findings of this research will aid in finding solutions to reduce the impacts from dust. NDDOT will encourage cities and counties to develop voluntary dust management efforts with local haulers.

2012 WESTERN INFRASTRUCTURE DEVELOPMENT

5. Expedite pipeline and gathering system development. The ND Pipeline Authority will continue to encourage, incentivize and expedite the development of intrastate and gathering pipelines (water, oil, gas) which will remove trucks from the roads. The ND Pipeline Authority will facilitate education and discussion between industry and landowners to address concerns related to the rapid development of the states pipeline infrastructure.

2012 WESTERN INFRASTRUCTURE DEVELOPMENT

HOUSING
North Dakotas robust economy and growing population have created strong demand for housing throughout the state, but nowhere is the demand for affordable housing more acute than in the states oil- and gas-producing counties. Housing demand is greatest in communities that are in close proximity to areas of concentrated oil and gas development. Adding to the demand for affordable housing in Ward County is the displacement of residents who are recovering from major flooding in the Souris River Basin. Officials, based on the working meetings with local leaders, have identified the following issues regarding the demand for affordable housing in the states oil and gas counties: 1. Local officials request funding assistance for public infrastructure critical to residential development. The state has provided $135 million in grant funds to facilitate housing construction and to meet other impacts from energy development. To date approximately $76 million of the $135 million grant funds remain to be distributed. The ND Department of Trust Lands Energy Impact Office will continue working with counties, cities and other political subdivisions to provide grants to extend city streets, expand sewer systems, expand landfills and provide other public infrastructure upgrades that facilitate the continued development of housing.

Large scale units are needed to meet demand and increase the availability of affordable housing.

The City of Minot is also eligible for state flood impact grants through the ND Department of Trust Lands which will also help with residential development. The Bank of North Dakota will bring additional resources into the Flex PACE Program to provide lowinterest rate loans to property developers who construct multi-family housing projects in oil-producing counties. Flex PACE buys down interest rates on building loans to as low as 1 percent.

2012 WESTERN INFRASTRUCTURE DEVELOPMENT

2. Communities in oil and gas counties need funding support to develop housing for low-income and moderate-income residents. Community leaders from Williston to Bowman said rising rents and home values are creating a significant shortage of affordable housing for teachers, county and city employees, and low- and moderate-income residents. The Housing Incentive Fund, administered by the ND Housing Finance Agency (NDHFA), provides $15 million in tax credits for developers of low- and moderate-income housing during the 2011-2013 biennium. Ninety percent of the fund, or $13.5 million, is targeted to projects in the 17 oil and gas counties. To date, the NDHFA has leveraged $3.8 million in conditional commitments for the construction of 286 affordable housing units in Oil Country. The residential housing projects, valued at $42 million, are in various stages of construction. NDHFA will work with communities considering the establishment of Community Land Trusts. Operated by non-profit organizations, Community Land Trusts can develop an inventory of affordable housing for low- and moderate-income families.

3. Communities seek expertise in the planning and development of residential growth. Specific challenges include managing rapid residential growth, lack of available land within city limits, planning for anticipated growth, and planning to meet the various types of housing needs. A variety of sources are available to local leaders to assist them in residential development and growth. The NDHFA provides technical assistance directly and through its Statewide Technical Assistance Team (STAT) to cities, counties and other political subdivisions. NDHFA will continue to meet with local officials to assist in developing strategic housing plans that take into account communities expected growth and the current and future needs for housing for low- and moderate-income residents. The ND Department of Commerce will provide coordination and information services for regional housing development and serve as a resource on building codes, zoning ordinances and permitting processes that promote responsible development. ND Department of Commerce and NDHFA will encourage communities and counties in their region to adopt best practice ideas. Cooperative efforts will maximize resources and make region-wide services more effective.

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SAFETY
North Dakotans enjoy a quality of life that is the envy of the nation, and an important contributor to that quality of life is the emphasis we place on public safety. Whether strengthening our emergency response capabilities, protecting our communities or keeping our roadways safe, public safety remains a top priority. As western North Dakotas economy and population continue to grow, safety will be at the forefront of our planning and development. Officials, based on the working meetings with local leaders, have identified the following public safety concerns in the states oil and gas counties: 1. Greater law enforcement presence across the region. Many communities in the west are hiring additional law enforcement staff to deal with the increased demands. This greater presence also increases visibility and awareness among motorists. In order to support local law enforcement, Governor Dalrymple directed the placement of nine additional ND Highway Patrol officers in western communities, with four more troopers to be deployed in July 2012.
Increased visability and awareness is an added benefit of increasing law enforcement numbers in the west.

The ND Highway Patrol will continue to partner with smaller communities that do not have their own law enforcement resources to provide increased visibility and enforcement.

2. Greater emphasis on motorist safety. The implementation of turn-off lanes, better signage, more stoplights and reduced speed limits will be reviewed and implemented by the NDDOT. Stronger traffic enforcement and increased fines will be implemented, especially at locations where traffic flows intersect. Aerial surveillance will be used by the ND Highway Patrol to improve enforcement. The ND Highway Patrol will expand the Trooper-on-a-Bus program to protect students on school buses and allow officers to issue traffic citations from a school bus for those violating safety laws. This program has been successfully implemented in smaller western North Dakota communities, including Alexander, with six additional schools participating in the coming weeks.

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3. Improve safety of truck traffic. Truck size and weight enforcement will be increased on state and county highways. ND Highway Patrol and NDDOT will develop a proposal for the Legislature to consider allowing counties to share in the fines collected on county roads. The state will consider options for expediting the permitting of pipelines (water, oil, gas) and gathering systems to reduce truck traffic on the regions roadways. The ND Highway Patrol will increase saturation programs and safety inspections for both commercial motor vehicles and drivers. The ND Highway Patrol will continue to work with the motor carrier industry to educate drivers about legal loading and truck safety. The ND Highway Patrol, NDDOT and the ND Petroleum Council are currently working together as part of ProgressZone, a public outreach campaign designed to promote traffic safety in Oil Country.

4. Strengthen emergency management services. Energy Infrastructure and Impact Grants will help communities address emergency services training, equipment and hiring needs. These grants will assist ambulance services, fire department and emergency responders. The State Board of Trust Lands recently allocated $7 million for these grants, targeted to the most highly-impacted communities.
Emergency service needs (EMT, ambulance, fire, etc.) are growing along with western populations.

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PLANNING & COORDINATION


Meeting western infrastructure needs is a combined effort of state and local governments working together along with industry. Planning and coordination is a key element to ensuring our communities make the best decisions possible about their futures. The items identified in this area, support progress on immediate issues while developing thoughtful plans for long-term investments that will enhance the infrastructure of the region. 1. Better coordination efforts are needed between all partners in western North Dakota. Assign a state Energy Impact Coordinator to monitor local issues and report on the regions needs to the Governors Office and cabinet members on a regular basis. Governor Dalrymple has charged the ND Department of Commerce to work with state, local and industry leaders to assist in planning efforts of all kinds. ND Department of Commerce will assist local governments and other entities in knowledge sharing and best practices such as zoning ordinances, financing opportunities, main street development, etc. so all are better prepared to support infrastructure growth and economic development. Use the already established Business Hotline number as a central intake point for questions regarding western development issues 1-866-432-5682 (4Dakota).

2. Monitor oil development permitting processes to ensure the best information is available regarding impacts. The state will seek to work cooperatively with industry to better forecast future oil expansion so local level planning can address projected growth through water availability, roads and housing infrastructure. The ND Industrial Commission Oil and Gas Division will monitor the drilling permit process to identify if there are ways in which expansion of infrastructure and oil well development can be better coordinated. Governor Dalrymple, along with the ND Industrial Commission Oil and Gas Division and the ND Department of Commerce, will continue conversations with industry to urge them to forecast development short- and long-term to assist communities in their infrastructure planning efforts.

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3. Review the Oil and Gas Distribution Fund to determine if resources can be more effectively targeted with adjustments to the formula. Oil and gas taxes are distributed monthly to oil-producing counties and cities. The legislative forecast provides for $247.2 million to be distributed to counties and cities during the 2011-13 biennium. Higher levels of production, if they hold throughout the biennium, could produce additional revenue. The ND Tax Department and the ND Department of Trust Lands will work with local government to explore how formula adjustments could more effectively distribute funds into the most highly impacted areas. Previously used financing methods, such as the coal distribution fund, will also be reviewed for effectiveness in financing education buildings and other infrastructure.

4. Rapid school enrollment growth requires extensive planning for future school building capacity. The legislature provided a special supplemental distribution of funds to help school districts meet growing operating expenses due to rapid enrollment growth. However, construction of new school buildings will require financing options beyond those currently available. The Office of Management and Budget will develop a proposal for the legislative assembly to consider for sources of funds to finance school building construction in rapidly growing districts. The proposal will include possible waivers on debt ceiling limits and budget growth limits on certain rapidly growing districts. The ND Department of Commerce will assist in coordinating planning services for school districts that need assistance. The state recognizes other school growth challenges and will organize additional meetings with school districts in oil and gas producing counties.

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5. Participate in long-range planning efforts. Many long-range planning efforts are being conducted that will continue to support the strategic coordination of efforts not only in the west but statewide. The Upper Great Plains Transportation Institute (UGPTI) completed planning for road reconstruction on the poorest roads in oil and gas counties in 2010, which is being implemented now as part of 2011 legislative action. UGPTI will update the statewide road plan again in 2012 and every two years thereafter. The ND Housing Finance Agency has commmisioned a statewide housing study to be completed in the summer 2012. The study will include specific assessments regarding the need for housing in Oil Country. This information will be used in conjunction with the western area housing study conducted by the ND Department of Commerce in 2010. These combined efforts will advance the states housing development strategy. To expand North Dakotas vision for the future, Governor Dalrymple and the ND Chamber of Commerce have teamed up to launch 2020 & Beyond, a 20-year plan that will advance North Dakotas development opportunities well into the future. 2020 & Beyond will provide a report to Governor Dalrymple and the North Dakota Legislature in the fall of 2012 outlining its recommendations for furthering North Dakotas growth and enrichment. Succeed 2020 aims to improve North Dakotas education and workforce development systems and increase students achievement in middle grades and high school, access to and success in postsecondary education, and preparation for 21st century careers. The overarching goal is to create successful transitions from school to college and careers for North Dakota students. Vision West ND, a partnership formed between the Southwest Rural Economic Area Partnership and the North Dakota Association of Oil & Gas Producing Counties, is working with 14 western communities over the next year to assist in strategic planning through a $1.5 million grant from Housing and Urban Development. The Vision West ND project will assist in bringing counties and cities together to work cooperatively to best support the infrastructure needs of the west. In addition, the strategic planning effort can help address individual community and regional needs for everything from education and main street business to recreation and childcare.

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PARTICIPATING AGENCIES

FROM 2012 WESTERN INFRASTRUCTURE DEVELOPMENT MEETINGS

ND Department of Commerce Al Anderson, Commissioner 1600 E Century Ave, Ste 2 PO Box 2057 Bismarck, ND 58502-2057 Phone: 701-328-5300 Toll-Free: 866- 432-5682 www.NDCommerce.com ND Housing Finance Agency Mike Anderson, Director 2624 Vermont Avenue PO Box 1535 Bismarck, ND 58502-1535 Phone: 701-328-8080 Toll-Free: 800-292-8621 www.NDHFA.org ND Department of Transportation Francis Ziegler, P.E., Director 608 East Boulevard Avenue Bismarck, ND 58505-0700 Phone: 701-328-2500 Toll-Free: 800-366-6888 www.DOT.nd.gov ND Department of Trust Lands Lance Gaebe, Commissioner 1707 North 9th Street PO Box 5523 Bismarck, ND 58506-5523 Phone: 701-328-2800 www.Land.nd.gov

ND Water Commission Todd Sando, P.E., State Engineer 900 E Boulevard Ave # 770 Bismarck, ND 58505 Phone: 701-328-2750 www.SWC.nd.gov ND Health Department Terry Dwelle, M.D., State Health Officer 600 East Boulevard Avenue Bismarck, ND 58505-0200 Phone: 701-328-2372 www.NDHealth.gov Upper Great Plains Transportation Institute Denver Tolliver, Associate Director NDSU Dept 2880 PO Box 6050 Fargo, ND 58108-6050 Phone: 701-231-7767 www.UGPTI.org ND Highway Patrol Colonel James Prochniak, Superintendent 600 E Blvd Ave, Dept 504 Bismarck, ND 58505 Phone: 701-328-2455 www.nd.gov/NDHP Bank of North Dakota Eric Hardmeyer, President 1200 Memorial Highway Bismarck, ND 58504 Phone: 701-328-5600 Toll-Free: 800-472-2166 www.BankND.nd.gov

State of North Dakota Governor Jack Dalrymple 600 East Boulevard Avenue Bismarck, ND 58505-0001 Phone: 701-328-2200 www.Governor.nd.gov