Houses Ready for Delivery to Ellendale Under Pilot Financing Program

Ellendale, Mayor Don Flaherty discusses the housing development that is coming to his town. Dirt has been done for 20 homes that are expected to be ready in the spring of 2025. (Jeff Beach/North Dakota Monitor)

(North Dakota Monitor) – Ellendale Mayor Don Flaherty stood at the edge of town where some heavy machinery sat parked on a patch of level black dirt.

There were no other signs of construction in early November, but the site was weeks away from having 20 homes that would be move-in ready.

The houses were already being built offsite, coming in to drop onto foundations that would be excavated and poured in the coming weeks.

The company building the homes, Minnesota-based Headwaters Development, worked with the growing large employer in Ellendale, data center operator Applied Digital, and the Bank of North Dakota through a new rural housing program to make it all work.

Michael Hoagberg, managing director of Headwaters Development, said the homes will start being delivered this month.

Headwaters also is building a 35-unit apartment complex, also built offsite. It will be delivered to Ellendale in sections and should go up next spring.

“So the Bank of North Dakota put in capital, Applied Digital put in capital, and then we as the developer/holder of the property had to put in capital as well,” Hoagberg said. “So there’s just a great aligning of the stakeholders and incentives to try to make this project successful.”

Kelvin Hullet, chief business development officer with the Bank of North Dakota, said one of the challenges with trying to build affordable housing is that a developer might spend $450,000 to build a home, but the appraised value of that new home might only be $400,000.

He called the R-WISH program “patient capital.” The Bank of North Dakota can help finance the project but give the developer more time to repay the loan while the value of the property increases.

Hullet said the real difference between housing financing programs and R-WISH is the presence of a corporate entity such as Applied Digital to provide some of the capital investment.

The loan goes through a local lender, in Ellendale’s case, that’s Starion Bank.

A local government entity also has to participate, which could be through donating land or developing other infrastructure such as utilities or roads.

Ellendale sold the 20 lots for the development for a total of $2,400, well below the market rate.

Flaherty said the sale was done with the stipulation that the lots be developed within 18 months.

The city sees the project as a way to boost population, boost the economy and boost the tax base.

“We knew that this would help stimulate growth,” Flaherty said. “A total domino effect.”

It helped that Ellendale already had the development platted and water and sewer hookups ready for the new homes.

Flaherty said the town of about 1,100 had more than 15 years ago planned a housing development when Ellendale leaders thought it might become more of a bedroom community to Aberdeen, South Dakota, about 40 miles south.

There had been one home built in the development called Ellendale Acres. That homeowner is about to get a bunch of new neighbors.

All the homes will be rental units for Applied Digital employees.

Nick Phillips is the vice president of Applied Digital in Ellendale. The company completed its first project in 2023 and was able to fill most of the jobs with local workers.

It is working on a major expansion that will be up and running early next year, with about additional 100 jobs. Phillips said he expects to fill at least some of those positions workers from outside the area. Two more expansions of a similar size are planned.

Phillips said Dickey County helped facilitate a meeting with local builders and subcontractors about trying to meet the housing needs of the company’s growing workforce.

“All the builders here, the electricians and the plumbers and the various trades, they just said they were having a hard time just keeping up and they didn’t really have the workforce to build 20 new houses,” Phillips said. “So we started looking for modular companies that could build offsite and then bring them in.”

Applied Digital got connected with Headwaters Development for what would become the first Headwaters project in North Dakota.

Headwaters owns the units but they are reserved for Applied Digital workers. Applied Digital has guaranteed that there will be demand.

Hoagberg said corporate involvement is key, making sure the housing demand is there for the long term.

Hullet said Ellendale is so far the only community to use the program, but it might also be used in Grafton, where Marvin Windows is a major employer.

There have been inquiries from other communities but Hullet said it is really targeted at communities with the potential for rapid growth.

The pilot program was created this year with $10 million from Bank of North Dakota profits. A single housing project can’t access more than $3.5 million, which is what was allocated for Ellendale.

The future of the program hinges on the budget adopted during the 2025 legislative session. Gov. Doug Burgum will announce his budget recommendations on Wednesday, and Gov.-elect Kelly Armstrong is working on his own budget proposal.

Hoagberg said he hopes the R-WISH program can flourish.

“Everyone benefits from it long term,” Hoagberg said. “I wish more states would do programs like this. It’s so creative and forward thinking.”

Headwaters is partnering with a management company to do all the snow removal and lawn care to make the homes minimum maintenance.

The homes will be 1,300 to 2,600 square feet, from two bedrooms and two bathrooms up to four bedrooms and three bathrooms.

The apartment building also is prebuilt, with one- two-bedroom units.

Hoagberg said Headwaters Development would like to do more projects in North Dakota and praised the R-WISH project. He said he hopes it gets more state funding and goes beyond being a pilot project.

The original goal for the Ellendale project was to have homes in place by October. Hoagberg said that was delayed mostly by all the documentation needed for the rollout of the program.

That should be much smoother on future projects, he said.

Another 20 rental houses are already planned for Ellendale.

“Now we can just repeat the process,” Hoagberg said.