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Financial analysis shows Bison World passes capital budgeting test

The project would add millions of dollars of value to the state of North Dakota.

bison world group meeting 122222.jpg
David Haukaas, investment adviser for the Bison World Fund, talks about the independent financial analysis that he has worked on. Also pictured, from left, are Brian Lunde, Bison World Fund member; Connie Ova, CEO of the Jamestown/Stutsman Development Corp.; Corry Shevlin, vice president of business development for JSDC, and Alex Schweitzer, chair of the Bison World Fund.
John M. Steiner / The Jamestown Sun
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JAMESTOWN – An independent financial analysis of Bison World has found that it passes the capital budgeting test and adds millions of dollars of value to the state of North Dakota if the project moves forward.

The net present value of the project is above zero and means all future profits would exceed the cost to build it now, said David Haukaas, an investment adviser for the Bison World Fund. Net present value is the difference between the present value of cash inflows and the present value of cash outflows over a period of time, according to Investopedia, a financial media webite.

“Whenever the net present value is positive, that means by doing the project, it is adding money to the company or the state,” Haukaas said. “The only time you would never do this project is if you have other projects that are way more successful out there. But this says you add value to the state, the residents by millions and millions of dollars by saying yes to this project.”

The financial analysis uses an attendance model that includes the percentage of visitors that North Dakota saw in 2021. North Dakota saw about 21.7 million visitors from 49 states in 2021.

During the first year of operations, the net present value of Bison World would be $9.8 million with 1% of the visitors or 217,100, $46.1 million with 1.5% of the visitors or 325,650 and $100.6 million with 2.25% of the visitors or 488,475.

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Haukaas said all numbers in the independent financial analysis are indicative and can shift around some. He said the numbers of potential visitors used for the study are very conservative.

“We did it that way so we would know whether it (the project) was viable,” he said.

The Bison Wold project calls for the construction of a bison-themed cultural and entertainment park adjacent to Interstate 94 on land currently owned by the state of North Dakota through the North Dakota State Hospital. When complete, the park would include an amphitheater, museums and other attractions to entertain and educate visitors about the American bison, which is the national mammal.

Bison World Winter site plan
This rendering shows what Bison World could look like during the winter. Winter activities include ice skating and sleigh rides among others.
Contributed / Apogee Attractions

Apogee Attractions, designer of the project, was also asked to include items for visitors during the fall and winter.

“With any of these facilities, we try to extend the season as long as you can,” said Robert McTyre, president and founder of Apogee Attractions. “When it comes to fall and winter, we often do special events and special activities to encourage people to come out to enjoy the season.”

Lunde said some North Dakota legislators are interested in having a year-round facility.

A additional rendering from Apogee Attractions shows an ice rink, a “lazy river” skating path, sleigh rides, a fire pit, a North Pole gazebo with live reindeer nearby and a place for snow and ice sculptures. The items would be located in the plaza area behind the mall, storefronts and ticket booths.

The cost of the Bison World project is estimated at $75 million to $80 million.

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David Haukaas, investment adviser for the Bison World Fund, talks about what is included in the independent financial analysis of the Bison World Project.
John M. Steiner / The Jamestown Sun

Haukaas was retained by the Bison World Fund to do an independent financial analysis that Apogee Attractions and Eide Bailly had previously completed. Haukaas previously worked with Ameriprise Financial where he did contract negotiations and business development before joining the mergers and acquisitions team in finance. He was later recruited by Abu Dhabi Investment Authority, one of the largest investment companies in the world, where he worked through the ranks and covered all asset classes to equity, bonds, hedge funds, private equity and real estate.

Brian Lunde, a member of the Bison World Fund, said he heard Haukaas was moving back to Jamestown and the group retained him.

“We wanted him to go and take a fresh look at everything that had been done but to do an independent financial analysis from somebody that’s an investment consultant type, not an accountant,” he said.

Haukaas said he used metrics, numbers and expertise from Apogee Attractions and numbers from the state of North Dakota to check if the project is viable from a financial perspective.

“After running multiple different sensitivity analysis and really digging into the numbers and questioning everything, the answer came out that it is definitely a financially viable project that not only can stand alone by itself, but does add economic benefit to the region as well as the state of North Dakota,” he said.

A financial forecast of Bison World was conducted by Eide Bailly in 2021.

The independent financial analysis conducted by Haukaas answers four questions about the Bison World project:

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  • Can it be profitable?
  • Will it create jobs?
  • Will it benefit North Dakota?
  • Does it pass the capital budgeting test?

“Overall, it is a profitable endeavor, it creates hundreds of jobs, it brings millions of dollars to the state of North Dakota, basically monetizing a lot of the tourism that’s already flowing through and increasing tourism and awareness of what North Dakota has to offer and it passes the capital budgeting test,” Haukaas said.
Sen. Terry Wanzek, R-Jamestown, said the project will be "very transformational" for Jamestown and the state.

“This part of the state hasn’t grown much when we do the new census,” he said. “I’m thinking something of this nature could help put us on the map a little bit more and draw more interest, especially for younger people in our area to attract young people who never grew up here maybe to our city.”

Can it be profitable?

During the first year of operations, the Bison World project would have a revenue of about $11.3 million if it captured 1% of the visitors, $17 million capturing 1.5% of the visitors and $25.5 million capturing 2.25% of the visitors, Haukaas' analysis shows.

“Even if we talk about it from a break-even standpoint, I think the market penetration is roughly around 0.7% (of visitors), so roughly that range, it can still work,” Haukaas said.

The earnings before interest, taxes, depreciation and amortization or operating profit is $2.8 million with 1% of the visitors, $4.2 million with 1.5% of the visitors and $6.3 million with 2.25% of the visitors during the first year of operations.

Will it create jobs?

The analysis shows 30 full-time jobs would be created directly with Bison World in its first year of operations. Haukaas said the number of full-time jobs that could be created is probably around 30 to 45.

The number of part-time jobs created would be 63 if Bison World captured 1% of the visitors, 244 capturing 1.5% of the visitors and 516 capturing 2.25% of the visitors during its first year of operating.

“The part-time jobs come more into play for the seasonal aspect of things,” Haukaas said.

Alex Schweitzer, chair of the Bison World Fund, said part-time employees aren’t all going to come from the Jamestown area. For example, in Medora, part-time employees come from all over the state, region, country and internationally.

“There is potential to draw on those people that spend money when they are in the area just for the summer,” he said.

Will it benefit North Dakota?

Haukaas said Bison World would create indirect and induced jobs, ranging from 400 to 900 depending on how much of the visitors are captured in the first year of operating. He said indirect jobs are those that are created to provide services as part of the value chain of Bison World.

“If somebody is selling paper cups, and Bison World wants paper cups, create jobs for selling paper cups,” he said.

He said induced jobs are those that are created that add additional benefits to the region.

“Induced are almost like the additional benefits to the region so you might need more servers in your restaurants,” he said. “You might need more nurses at the hospital. You might need more staff at the hotels. Businesses can grow from around there (Bison World).”

The analysis shows a gross domestic product of $30.2 million, an output of $49.5 million and $3.4 million in taxes if Bison World captured 1% of the visitors in its first year. The analysis shows a gross domestic product of $45.3 million, an output of $74.2 million and $4.6 million in taxes if Bison World captured 1.5% of the visitors and a gross domestic product of $68 million, an output of $111.3 million and $6.4 million if it captured 2.25% of the visitors.

Haukaas said taxes include personal income and sales and use tax among others.

Schweitzer said Bison World will enhance businesses in Jamestown. Lunde said corporations in the retail world could look at Jamestown if they see hundreds of thousands of visitors stopping in Jamestown.

Investing in Bison World

Haukaas said an investment in Bison World by the state is a permanent investment. He said once Bison World is built it is not going anywhere.

“With different inducements or incentives that are given to companies to do business within North Dakota, just like with other states or countries, once that company realizes the total value of that kind of gift, they can leave,” he said.

He said a key part of the project is Bison World is self-funding. He said there won’t be one capital campaign after another to keep the doors open.

Wanzek said the state Legislature passed HB 1425 during the last session, which sets targets for investing a greater portion of the Legacy Fund principal in North Dakota and requires that the State Investment Board give preference to qualified investment firms with a presence in the state.

He also said Gov. Doug Burgum proposed a $50 million granting pot of money that he’s promoting to be used for tourism destination points. In his budget address, the governor proposed a destination development fund of $50 million to be matched one-to-one by private or non-state sources to build or expand unique attractions.

Lunde said a public-sector investment needs to happen first before private funds get earmarked for the project.

“We are kind of following the new model that exists in lots of industries that a public sector commitment precedes private sector involvement,” he said.

Lunde said if the project gets funded this spring, a groundbreaking ceremony could occur in the summer of 2023 with a projected target date of spring 2026 for opening.

He said the state is losing millions of dollars every year because the land for the proposed project has not been turned into a productive economic development opportunity that produces revenue. He said state-owned land at exit 258 along Interstate 94 is undeveloped and is the best exit left in the country that could have a destination tourism attraction within three blocks of it.

Related Topics: JAMESTOWNSTUTSMAN COUNTYBISON WORLDTOURISMNORTH DAKOTA
Masaki Ova joined The Jamestown Sun in August 2021 as a reporter. He grew up on a farm near Pingree, N.D. He majored in communications at the University of Jamestown, N.D.
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